Case 10.1: Motive Power Company-Part 1 – Further Instructions and Guidance
Required Tasks:
Cregg Hart is manufacturing manager for Larabee Engineering, a locomotive engine and rail car manufacturer. The company has been very successful in recent years, and in July 2016 signed two major contracts totaling nearly $200 million. A key to the company’s success has been its focus on quality. Customers from around the world have been very pleased with the attention to detail put forth by Larabee Engineering.
One of the things Cregg has been adamant about is that Larabee Engineering’s suppliers also provide high quality. As a result, when the company finds good suppliers, it stays with them and tries to establish a long-term relationship. However, Cregg must also factor in the costs of parts and materials and has instructed his purchasing staff to be on the lookout for “better deals.”
Recently, Sheryl Carleson, purchasing manager, identified a new rivet supplier in Europe that claims its rivets are as good or better quality than the current supplier’s but at a much lower cost. One key quality factor is the rivet diameter. When Sheryl approached Cregg about the possibility of going with the new sup-plier for rivets, he suggested they conduct a test to determine if there is any difference in the average diameter of the rivets from the two companies.
Sheryl requested that the new company send 100 rivets, and she pulled a random sample of 100 rivets from her inventory of rivets from the original supplier. She then asked an intern to measure the diameters to three decimal places using a micrometer. The resulting data from both suppliers are given in the file called Larabee.
Required Tasks
Identify and explain the key issue in the case study.
Briefly summarize the data (include an explanation of the results of descriptive statistics of the data, the variables included, how the data was collected, and any pertinent information about the data available in the case study)
Develop histograms showing the distribution of rivet diameters from the two suppliers.
The histograms have been done for you using Excel’s Histogram option. Please include them in your report. For their own individual benefit and in order to gain additional insight, students are encouraged to reproduce them using Excel.
Explain what the histogram shows in your report in relation to how closely the sample fits the normal distribution. What is the implication of these results for the samples?
Compute the sample means and standard deviations for the two sets of data. The results have been provided below. Students are encouraged to attempt to reproduce them using Excel.
The means and standard deviations are shown in the following Excel output.
Original Supplier New Supplier
Mean 0.37545 Mean 0.37495
Standard Error 0.001062 Standard Error 0.001983
Median 0.3745 Median 0.3745
Mode 0.376 Mode 0.391
Standard Deviation 0.010622 Standard Deviation 0.019829
Sample Variance 0.000113 Sample Variance 0.000393
Kurtosis -0.67951 Kurtosis 0.506221
Skewness 0.266628 Skewness 0.178825
Range 0.044 Range 0.109
Minimum 0.354 Minimum 0.328
Maximum 0.398 Maximum 0.437
Sum 37.545 Sum 37.495
Count 100 Count 100
Comment on whether it appears the assumptions required for testing the differences of means for two populations are satisfied.
What are the assumptions for comparing these two samples?
Are the assumptions satisfied?
Explain and justify your answers.
Select a level of significance for testing whether the two suppliers have rivets with equal mean diameters. Discuss the factors you used to arrive at the level of significance you have selected.
Students could perform any of three types (see textbook) of hypothesis test. Explain the logic behind each of the three possible hypothesis tests.
The following is Excel output for a significance level of 0.02. Comment on what the results mean.
t-Test: Two-Sample Assuming Unequal Variances
Original Supplier New Supplier
Mean 0.3755 0.3750
Variance 0.000113 0.000393199
Observations 100 100
Hypothesized Mean Difference 0
df 151
t Stat 0.2223
P(T<=t) one-tail 0.4122
t Critical one-tail 2.0716
P(T<=t) two-tail 0.8244
t Critical two-tail 2.3513
Students are required to present a well-organized report including the result tables and charts presented above. What conclusions can be drawn from the results of the statistical analyses? Students must also make appropriate practical
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