LCT12 - Introduction to Business Statistics Lecture 12 The...

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1 Introduction to Business Statistics L e c t u r e 1 2 The Concepts of Hypothesis Testing Example 1. ( Distribution Strategy ) An Asian manufacturer of industrial filters for the chemical industry has decided to locate a distribution facility in Europe if more than 25% of the chemical companies in Europe would buy his products. In a survey of 36 European chemical companies, 10 indicate interest in arranging a contractual relationship to acquire filters from the manufacturer. What should be his decision? On surface it is a decision whether to establish a distribution facility or not. Actually it is a choice between two conflicting statements about a population parameter.
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2 The Nature of the Decision: A choice between two conflicting statements about one or more population parameters. The two statements are referred to as hypotheses and they are not treated equally. Statistical Hypotheses: Null hypothesis ( H 0 ): Usually the null hypothesis is a statement of "no effect" or "no difference", and represents the "status quo". Often, incorrect rejection of H 0 has more serious consequence. Alternative Hypothesis ( H a ): One would like to support or establish. Thus Example 1 is a hypothesis testing problem about the population proportion.
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This note was uploaded on 11/23/2010 for the course BBA ISOM111 taught by Professor Hu during the Fall '08 term at HKUST.

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LCT12 - Introduction to Business Statistics Lecture 12 The...

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