A firm is studying the delivery times of two raw material suppliers. The firm is basically satisfied with supplier A and is prepared to stay with that supplier if the mean delivery time is the same as or less than that of supplier B. However, if the firm finds that the mean delivery time of supplier B is less than that of supplier A, it will begin making raw material purchases from supplier B.
n1 = 50
x ̄1 = 14 days x ̄2 = 12.5 days
i. Assume all the requirements for the hypothesis test are satisfied.With α = 0.05, test the hypothesis that the mean delivery time of supplier B is less than that of supplier A. Use the p−value method.
ii. What action would you recommend in terms of supplier selection?
iii. Explain the consequence of a Type 1 in the context of this problem. What is the maximum probability of a Type 1 error for this test?