Instruction 10-5
a Buyer for a Manufacturing Plant Suspects That

question 162

Short Answer

Instruction 10-5
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 similar various 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.
$\begin{array}{llll}\text {Material}&\text {Primary Supplier}&\text {Secondary}&\text {Difference}\\&&\text { Supplier }\\ 1 & \$ 55 & \$ 45 & \$ 10 \\2 & \$ 48 & \$ 47 & \$ 1 \\3 & \$ 31 & \$ 32 & -\$ 1 \\4 & \$ 83 & \$ 77 & \$ 6 \\5 & \$ 37 & \$ 37 & \$ 0 \\6 & \$ 55 & \$ 54 & \$ 1 \\\hline \text { Sum: } & \$ 309 & \$ 292 & \$ 17 \\\text { Sum of Squares: } & \$ 17,573 & \$ 15,472 & \$ 139\end{array}$

-Referring to Instruction 10-5,if the buyer had decided to perform a two-tailed test,the p-value would have been between __________ and __________.

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Definitions:

Capital Rationing

The process of selecting the most profitable projects to invest in when capital is limited.

Sales Volume

The quantity of goods or services sold or delivered in a given period.

Sensitivity Analysis

A way of assessing how the modification of an independent variable's values affects a dependent variable, under a specific set of hypotheses.

Rate Of Return

The positive or negative change in an investment's value over a certain period, expressed in terms of a percentage of the investment’s beginning cost.