(A) Determine a 95% Confidence Interval for the Proportion Defective

question 31

Essay

(A) Determine a 95% confidence interval for the proportion defective for the process today.
(B) Based on your answer to (A), is it still reasonable to think the overall proportion defective produced by today's process is actually the targeted 4%? Explain your reasoning.
(C) The confidence interval in (A) is based on the assumption of a large sample size. Is this sample size sufficiently large in this example? Explain how you arrived at your answer.
(D) How many units would have to be sampled to be 95% confident that you can estimate the fraction of defective parts within 2% (using the information from today's sample)?

---

Definitions:

Utility Function

(Of an individual) the total utility generated by an individual’s consumption bundle.

Risk-Averse

A characteristic of individuals who prefer certain outcomes over others with equal or potentially higher expected returns but with more uncertainty.

Income

The financial gain earned or received by an individual or entity, usually through work, investments, or other forms of economic activities.

Expected Utility

A concept in economics and finance that represents the total utility that an entity expects to gain under uncertain conditions.