TABLE 10-7 A Buyer for a Manufacturing Plant Suspects That His Primary

question 64

Short Answer

TABLE 10-7
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.
Primary Secondary
Material Supplier Supplier 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
Sum: $309 $292 $17
Sum of Squares: $17,573 $15,472 $139
-Referring to Table 10-7, what is the 99% confidence interval estimate for the mean difference in prices?

---

Definitions:

Empirical Evidence

Information acquired by observation or experimentation that is used as a basis for knowledge.

Critical Thinkers

Individuals who actively and skillfully analyze, assess, and reconstruct their thinking, thereby enhancing the quality of their thoughts and decisions.

Reasonable Explanations

Logical or rational interpretations or accounts for phenomena, actions, or events based on evidence and reasoning.

Critical Thinkers

Individuals who actively and skillfully analyze, assess, and reconstruct their thinking, thereby making informed decisions.