Case Study using normal distribution

A company supplies pins in bulk to a customer.  The company uses an automatic lathe to

produce the pins.  Due to many causes - vibration, temperature, wear and tear, and the like - the
lengths of the pins made by the machine are normally distributed with a mean of 1.012 inches
and a standard deviation of 0.018 inch.  The customer will buy only those pins with lengths in
the interval 1.00 ? 0.02 inch.  In other words, the customer wants the length to be 1.00 inch but
will accept up to 0.02 inch deviation on either side.  This 0.02 inch is known as the tolerance.

1.  What percentage of the pins will be acceptable to the customer?

In order to improve percentage accepted, the production manager and the engineers discuss
adjusting the population mean and standard deviation of the length of the pins.  
2.  If the lathe can be adjusted to have the mean of the lengths to any desired value, what should
it be adjusted to?  Why?
3.  Suppose the mean cannot be adjusted, but the standard deviation can be reduced.  What
maximum value of the standard deviation would make 90% of the parts acceptable to the
consumer (Assume the mean to be 1.012)
4.  Repeat question 3, with 95% and 99% of the pins acceptable.
5.  In practice, which one do you think is easier to adjust, the mean of the standard
deviation?  Why?
The production manager then considers the costs involved.  The cost of resetting the machine to
adjust the population mean involves the engineers' time and the cost of productin time lsot.  The
cost of reducing the population standard deviation involves, in addition to these costs. The cost
of overhauling the machine and reengineering the process.
6.  Assume it cost $150x2 to decrease the standard deviation by (x/1000) inch.  Find the cost of
reducing the standard deviation to the values found in questions 3 and 4.
7.  Now assume that the mean has been adjusted to the best value found in question 2 at a cost of
$80.  Calculate the reduction in standard deviation necessary to have 90%, 95%, and 9(% of the
parts acceptable.  Calculate the respective coasts, as in question 6.
8.  Based on your answers to questions 6 and 7, what are your recommended mean and standard
deviations?

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Subject: Statistics

Book: Complete Business Statistics, Aczel & Sounderpandian ( sixth ed)

Chapter 4: The Normal Distribution

Problem 4-61

Scores on a management aptitude examination are believed to be normally distributed with mean 650
(out of a total of 800 possible points) and standard deviation 50. What is the probability that a
randomly chosen manager will achieve a score above 700? What is the probability that the score will be
below 750?

Problem 4-72

Total annual textbook sales in a certain discipline are normally distributed. Forty-five percent of the
time, sales are above 671,000 copies, and 10% of the time, sales are above 712,000 copies. Find the
mean and the variance of annual sales.

Chapter 5: Sampling and Sampling Distributions

Problem 5-56

Explain why the sample variance is defined as the sum of squared deviations from the sample mean,
divided by n - 1 and not by n.

Problem 5-71A new kind of alkaline battery is believed to last an average of 25 hours of continuous use
(in a given kind of flashlight). Assume that the population standard deviation is 2 hours. If a random
sample of 100 batteries is selected and tested, is it likely that the average battery in the sample will last
less than 24 hours of continuous use?

Chapter 6: Confidence Intervals

Problem 6-71

The legal blood alcohol limit in France is 0.05 percent. Recently, the French have begun doing
something they never would have considered before: taking home half-empty bottles of wine in order to
avoid exceeding the blood alcohol limit when driving home from a restaurant. If the following are the
blood alcohol levels of a random sample of French diners who take home some of their wine, construct
a 95% confidence interval for the blood alcohol level of the population of such people.

0.01, 0.07, 0.09, 0.03, 0.03, 0.005, 0.008, 0.01, 0.08, 0.04, 0.03, 0.02, 0.04

Based on your answer, does the average French diner who takes home a bottle of wine break the law?

Problem 6-89
The lengths of pins produced by an automatic lathe are normally distributed. A random sample of 20
pins gives a sample mean of 0.992 inch and a sample standard deviation of 0.013 inch.

a. Give a 95% confidence interval for the average lengths of all pins produced.

b. Give a 99% confidence interval for the average lengths of all pins produced.

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