Question

A large number of companies are trying to reduce the cost of prescription drug benefits by requiring employees to purchase drugs through a mandatory mail-order program. Suppose a large national retail company is considering requiring a mandated mail order program. The company is concerned about employee attitude and satisfaction levels and wishes to determine employee attitude regarding such a mail order prescription program. The company will move to the mail order system if more than 50% of the surveyed employees provide positive feedback on the program. The company disseminates information on the program and randomly surveys 600 employees. The results showed 310 employees favored the plan while the remainder of the surveyed employees responded unfavorably.  Answer the following questions:

A. Perform the appropriate test to determine if more than 50% of the company's employees favored the mail-order prescription program. Perform the test using the P-VALUE method. Use an alpha of .05 and be sure to show all required steps.

B. Define a Type I Error for this problem. Be specific - generic definitions will not be accepted.

C. Define a Type II Error for this problem. Be specific - generic definitions will not be accepted.

Answer 1

A. the null and alternative hypothesis

test statistic,

here , n= 600, p and q are 0.5 under H0

therefore z = 0.82

p value = 0.4122

since p value > 0.05 , the result is not significant

we donot reject H0

there is not sufficient evidence to conclude that more than 50% of the company's employees favored the mail order prescription program

B. type 1 error is the error of rejecting true null hypothesis

that means on the basis of test we conclude that more than 50% of the company's employee favored the mail order prescription program when actually it is not . As a result the company will move to mail order prescription program which is actually not favored by most of its employees resulting in bad impact on satisfaction level of employees .

C. type 2 error is accepting a false null hypothesis

that means on the basis of test we conclude that not more than 50% of the company's employee favored the mail order prescription program when actually it is . As a result the company will not move to mail order prescription program which is actually favored by most of its employees resulting in bad impact on satisfaction level of employees .