The Supervisor of an Automobile Sales and Service Industry Would

question 89

Essay

The supervisor of an automobile sales and service industry would like the variance of the number of automobiles serviced not to exceed 5 units-squared.He would recruit one more service executive if the variance exceeds this threshold.In a recent random sample of 14 services,he computes the sample standard deviation as 3.3.He believes that the automobile services are normally distributed.
A)State the null and the alternative hypotheses to test if the threshold has been crossed.
B)Use the critical value approach to conduct the test at α = 0.01.
C)What should the supervisor do?

• A)State the null and the alternative hypotheses to test if the threshold has been crossed.
• B)Use the critical value approach to conduct the test at α = 0.01.
• C)What should the supervisor do?

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Definitions:

Control Costs

The practice of managing and regulating expenses to ensure they do not exceed budgets.

Activity Level

A measure of the volume of production or operations, usually influencing costs and revenues in managerial accounting.

Decentralization

Control of operations is delegated to many managers throughout the organization.

Top Management

The highest level of managers in an organization, responsible for controlling and directing the overall operations.