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

1) The production manager should consider that the length of the chips to be manufactured must meet the specification of 1.2 cm

2) The 95% confidence interval for mean length of chips is ( 0.9 cm , 1.1 cm) which implies that we are 95% confident that the mean length of the computer chips lies between 0.9 cm and 1.1 cm however to meet the specification, the length of computer must be 1.2 cm.

This concludes that the produced chips does not meet the specification.

3) The production manager may say that the confidence interval of 95% that we used to estimate the average length of chips does not provide the wider interval which includes the length to meet the specification.

Another interval of more precision can be used to get the wider confidence interval to justify that the production team is meeting the specification.

4) If the production manager does not consider the meausre to ensure that the produced chips meet the specification and instead justifies the result of 95% confidence interval then it will definitely result in possible loss of sales and net profit.