Micron Electronics makes personnel computers that are then sold directly over the phone and over the Internet. One of the most critical factors in the success of PC makers is how fast they can turn their inventory of parts. Faster inventory turns means lower average inventory cost. Recently at a meeting, the VP of manufacturing said that there is no reason to continue offering hard disk drives that have less than a 20 GB storage capacity since only 10% of Micron customers ask for the smaller hard disks. After much discussion and debate about the accuracy of the VP’s figure, a sample of 50 orders from the past week’s sales was taken. This sample revealed 7 requests for drives with less than 20 GB capacity. A. Determine the probability of finding 7 or more requests for hard disk drives with low storage capacity if the VP’s assertion is correct. Do you believe that the proportion of customers requesting hard drives with low storage capacity issmaller than 0.10? Explain B. Suppose a second sample of 50 customers was selected. This sample again yielded 7 requests for less than a 20 GB drive. Combining this sample information with that in part a, what conclusion would you now reach regarding the VP’s 10% claim? Base your answer on probability. Solution http://en.wikipedia.org/wiki/Intel.

1. Micron Electronics makes personnel computers that are then sold directly over the
phone and over the Internet. One of the most critical factors in the success of PC makers
is how fast they can turn their inventory of parts. Faster inventory turns means lower
average inventory cost. Recently at a meeting, the VP of manufacturing said that there is
no reason to continue offering hard disk drives that have less than a 20 GB storage
capacity since only 10% of Micron customers ask for the smaller hard disks. After much
discussion and debate about the accuracy of the VP’s figure, a sample of 50 orders from
the past week’s sales was taken. This sample revealed 7 requests for drives with less than
20 GB capacity.
A. Determine the probability of finding 7 or more requests for hard disk drives with
low storage capacity if the VP’s assertion is correct. Do you believe that the
proportion of customers requesting hard drives with low storage capacity issmaller than 0.10?
Explain
B. Suppose a second sample of 50 customers was selected. This sample again
yielded 7 requests for less than a 20 GB drive. Combining this sample
information with that in part a, what conclusion would you now reach regarding
the VP’s 10% claim? Base your answer on probability.
Solution
http://en.wikipedia.org/wiki/Intel