Question

A buyer for a manufacturing plant suspects that his primary supplier of raw materials is overcharging. To determine if his suspicion is correct, he contacts a second supplier and asks for the prices . He wants to compare these prices with those of his primary supplier: ​ Primary Secondary Material Supplier Supplier Difference 1 $55 $45 $10 2 $48 $47 $1 3 $31 $32 -$1 4 $83 $77 $6 5 $37 $37 $0 6 $55 $50 $5 7 $47 $40 $7 mean: $4.00 standard deviation: $4.08 the hypotheses that the buyer should test are

Answer 1

Answer:

The hypothesis that the buyer should test is the paired t-test for the mean difference.

Explanation:

We are given that a buyer for a manufacturing plant suspects that his primary supplier of raw materials is overcharging. To determine if his suspicion is correct, he contacts a second supplier and asks for the prices.

The data is given below;

Material        Primary supplier        Secondary supplier     Difference

   1                        $55                              $45                         $10

   2                        $48                              $47                          $1

   3                        $31                              $32                         -$1

   4                        $83                              $77                          $6

   5                        $37                              $37                          $0

   6                        $55                              $50                          $5

   7                        $47                              $40                          $7

The hypothesis that the buyer should test is the paired t-test for the mean difference because we are interested in comparing the difference between the cost of raw materials charged by both the suppliers.