A manufacturer of computer chips has a computer hardware com

A manufacturer of computer chips has a computer hardware company as its largest customer. The computer hardware company requires all of its chips to meet specifications of 1.2 cm. The vice-president of manufacturing, concerned about a possible loss of sales, assigns his production manager the task of ensuring that chips are produced to meet the specification of 1.2 cm.

Based on the production run from last month, a 95% confidence interval was computed for the mean length of a computer chip resulting in:
95% confidence interval: (0.9 cm, 1.1 cm)

What are the elements that the production manager should consider in determining his company’s ability to produce chips that meet specifications?

Do the chips produced meet the desired specifications?

What reasons should the production manager provide to the vice-president to justify that the production team is meeting specifications?

How will this decision impact the chip manufacturer’s sales and net profit?

Solution

a. There are several elements to take into consideration when determining thecompany’s ability to produce chips that meet specifications. The first should bethe raw material(s) of the product. These materials should be of quality in order toavoid errors in measurements. For example, the plastic would not be modified insize due to heat or cold, etc. The accuracy of the machines should make precisecalculations to ensure that the product is within the confidence interval. To makethese calculations, you will need to know the mean and standard deviation.

b. No, the chips produced to not meet the desired specifications of 1.2 cm. The 95% confidence interval of (0.9cm to 1.1cm) of last month’s chips indicates that there isa 95% certainty that a majority of the chips fall under the requested specification length of 1.2cm.

c. The reasons the production manager should provide to the vice president to justify that theproduction team is meeting specifications is first the small sample size.If the sample size islarge enough the confidence interval could have included the value of 1.2cm, which wouldindicate they are meeting specifications.The population is one month of production which maynot be an accurate representation of the total production.

d. If the chips manufactured do not meet the required specifications this decision could impact thechip manufacturer by the loss of sales and net profit and give a bad reputation for the company’squality affecting future business.