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:

Semiannually

Occurring or happening twice a year; every six months.

Face Value

The nominal value printed on a bond or share, distinct from its market value.

Par Value

The face value of a bond or stock, representing the amount the issuer agrees to pay at maturity (for bonds) or as an arbitrary value assigned to shares.

Debt Relationship

The connection between borrowers and lenders, specifying the terms under which debt capital is lent and must be repaid.