Statistics for Business: Decision Making and Analysis, 3rd Edition

... amount of advertising can overcome.

What Do You Think?

1. Identify the following mistakes as either Type I or Type II errors.

   1. A jury convicts an innocent defendant.⁵

      ⁵ Type I, the jury took action rather than accept the default.

   2. A retailer fails to stock fashion items that become popular in the coming season.⁶

      ⁶ Type II, the company should have acted by stocking the items.

   3. A diagnostic test does not detect the presence of a serious virus infection.⁷

      ⁷ Type II, failure to detect.

   4. A company hires an applicant who is not qualified for the position.⁸

      ⁸ Type I, action (hiring) incorrectly taken.

Setting the Control Limits

If we take the supervisor’s concern over meeting her production quota as paramount, then we need to concentrate on the first error. She ...