A Local Company Makes Snack-Size Bags of Potato Chips

question 4

Multiple Choice

A local company makes snack-size bags of potato chips. The company produces batches of 400 snack-size bags using a process designed to fill each bag with an average of 2 ounces of potato chips. However, due to imperfect technology, the actual amount placed in a given bag varies. Assume the population of filling weights is normally distributed with a standard deviation of 0.1 ounce. The company periodically weighs samples of 10 bags to ensure the proper filling process. The last five sample means, in ounces, were 1.99, 2.02, 2.07, 1.96, and 2.01. Is the production process under control?

• A) No, because the sample means show a downward trend.
• B) Yes, because the sample means show a downward trend.
• C) No, because the sample means fall within the upper and lower control limits.
• D) Yes, because the sample means fall within the upper and lower control limits.

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Definitions:

Profit-Maximizing

The act of adjusting production and sales to achieve the highest possible profit under given market conditions.

Demand

The quantity of a product or service that consumers are willing and able to purchase at a given price.

Profit

The financial gain made in a transaction or business operation, calculated as the difference between revenue and costs.

Positive Profits

When a company's total revenue exceeds its total costs, resulting in a financial gain.