A Mining Company Made Some Changes to Their Mining Process

question 32

Essay

A mining company made some changes to their mining process in an attempt to save fuel. Before the changes were made, it took an average of 20 gallons of diesel fuel to mine 1,000 pounds of copper. Suppose the standard deviation of fuel used per 1,000 pounds of copper mined is 6 gallons. After the changes were made, the company only used an average of 18 gallons of diesel for the next 30,000 pounds of copper mined.
A) How unusual would it be to get a sample average of 18 gallons or less for 30,000 pounds of copper mined if the changes to the mining process had no effect?
B) Do you think the changes in the mining process actually lowered the fuel used? Explain.

• A) How unusual would it be to get a sample average of 18 gallons or less for 30,000 pounds of copper mined if the changes to the mining process had no effect?
• B) Do you think the changes in the mining process actually lowered the fuel used? Explain.

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Definitions:

Distribution

Distribution involves the process of making a product or service available for the consumer or business user that needs it.

Materials Standards

The set specifications or benchmarks for the quality, quantity, and cost of materials used in manufacturing.

Price Variance

The difference between the actual cost of a product or service and its standard or expected cost, which can indicate issues with budgeting or pricing strategy.

Direct Materials

Raw materials that can be directly traced to the production of a specific product and are a variable cost.