TABLE 10-8
a Buyer for a Manufacturing Plant Suspects That

question 163

Short Answer

TABLE 10-8
A buyer for a manufacturing plant suspects that his primary supplier of raw materials is overcharging. In order to determine if his suspicion is correct, he contacts a second supplier and asks for the prices on various identical materials. He wants to compare these prices with those of his primary supplier. The data collected is presented in the table below, with some summary statistics presented (all of these might not be necessary to answer the questions which follow). The buyer believes that the differences are normally distributed and will use this sample to perform an appropriate test at a level of significance of 0.01.
$\begin{array}{crrr}&\text { Primary}&\text { Secondary }\\\underline{\text {Material }}&\underline{\text {Supplier}}&\underline{\text { Supplier }}&\underline{\text {Difference }}\\1 & \$ 55 & \$ 45 & \$ 10 \\2 & \$ 48 & \$ 47 & \$ 1 \\3 & \$ 31 & \$ 32 & -\$ 1 \\4 & \$ 83 & \$ 77 & \$ 6 \\5 & \$ 37 & \$ 37 & \$ 0 \\6 & \$ 55 & \$ 54 & \$ 1 \\\hline \text { Sum: } & \$ 309 & \$ 292 & \$ 17\\\text { Sum of Squares: } &\$ 17,573& \$ 15,472 &\$ 139\end{array}$





-Referring to Table 10-8, what is the 99% confidence interval estimate for the mean difference in prices?

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Definitions:

Fordism

A manufacturing philosophy that aims for mass production and high efficiency, characterized by large-scale industrial processes and assembly line production.

Taylorism

Refers to a scientific management theory developed by Frederick Winslow Taylor, emphasizing efficiency, productivity, and systematic organization of work.

Scientific Management

A management theory that analyzes work flows to improve economic efficiency, especially labor productivity, by employing empirical research methods.

Specialized Fields

Areas of expertise or study that focus on a specific subject matter, technique, or profession, often requiring advanced knowledge and skills.