UPSC MainsMANAGEMENT-PAPER-II202315 Marks
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Q6.

The following table gives the production in three shifts and the corresponding number of defective goods that turned out in three weeks. Test at 5% level of significance whether weeks and shifts are independent.

How to Approach

This question requires applying statistical hypothesis testing, specifically the Chi-Square test of independence. The approach involves formulating null and alternative hypotheses, calculating the expected frequencies, computing the Chi-Square statistic, determining the degrees of freedom, and comparing the calculated statistic with the critical value at the given significance level (5%). The answer should clearly demonstrate each step of the process and state the conclusion based on the test results. A well-organized table for observed and expected frequencies is crucial.

Model Answer

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Introduction

In quality control and production management, understanding the relationship between different factors influencing defect rates is critical for process optimization. Statistical methods, such as the Chi-Square test of independence, are frequently employed to determine if two categorical variables are associated. This test helps determine whether the occurrence of defects is independent of the shift or week in which the production takes place. The question provides production data across three shifts and three weeks, allowing us to assess whether these variables are statistically independent at a 5% significance level. This analysis is fundamental to identifying potential systemic issues in the production process.

Chi-Square Test of Independence

The Chi-Square test of independence is a statistical test used to determine if there is a significant association between two categorical variables. In this case, we want to test if the week and shift are independent in terms of the number of defective goods produced.

1. Hypotheses Formulation

  • Null Hypothesis (H0): Weeks and shifts are independent. There is no association between the week and the shift in terms of the number of defective goods.
  • Alternative Hypothesis (H1): Weeks and shifts are not independent. There is an association between the week and the shift in terms of the number of defective goods.

2. Data Organization and Observed Frequencies

First, we need to organize the given data into a contingency table showing the observed frequencies.

Shift Week 1 Week 2 Week 3 Total
Shift 1 10 12 15 37
Shift 2 15 18 20 53
Shift 3 20 25 30 75
Total 45 55 65 165

3. Calculating Expected Frequencies

The expected frequency for each cell is calculated as (Row Total * Column Total) / Grand Total. This represents what we would expect to see if the two variables were truly independent.

Shift Week 1 (Expected) Week 2 (Expected) Week 3 (Expected)
Shift 1 (37 * 45) / 165 = 10.08 (37 * 55) / 165 = 12.47 (37 * 65) / 165 = 14.35
Shift 2 (53 * 45) / 165 = 14.49 (53 * 55) / 165 = 17.69 (53 * 65) / 165 = 20.91
Shift 3 (75 * 45) / 165 = 20.45 (75 * 55) / 165 = 25.00 (75 * 65) / 165 = 29.55

4. Calculating the Chi-Square Statistic

The Chi-Square statistic is calculated using the formula: χ2 = Σ [(Oij - Eij)2 / Eij], where Oij is the observed frequency and Eij is the expected frequency for each cell.

Calculating for each cell and summing up:

  • ((10 - 10.08)2 / 10.08) + ((12 - 12.47)2 / 12.47) + ((15 - 14.35)2 / 14.35) +
  • ((15 - 14.49)2 / 14.49) + ((18 - 17.69)2 / 17.69) + ((20 - 20.91)2 / 20.91) +
  • ((20 - 20.45)2 / 20.45) + ((25 - 25.00)2 / 25.00) + ((30 - 29.55)2 / 29.55) = 0.07 + 0.02 + 0.04 + 0.00 + 0.01 + 0.08 + 0.00 + 0.00 + 0.02 = 0.24

Therefore, χ2 = 0.24

5. Determining Degrees of Freedom and Critical Value

Degrees of Freedom (df) = (Number of Rows - 1) * (Number of Columns - 1) = (3 - 1) * (3 - 1) = 4

At a significance level of 5% (α = 0.05) and with 4 degrees of freedom, the critical value from the Chi-Square distribution table is 9.488.

6. Decision and Conclusion

Since the calculated Chi-Square statistic (0.24) is less than the critical value (9.488), we fail to reject the null hypothesis. This indicates that there is not enough evidence to conclude that weeks and shifts are dependent in terms of the number of defective goods produced. The observed differences in defect rates across weeks and shifts could be due to random chance.

Conclusion

In conclusion, the Chi-Square test of independence, performed at a 5% significance level, did not reveal a statistically significant association between the week and shift in relation to the production of defective goods. This suggests that the observed variations in defect rates are likely due to random fluctuations rather than a systematic relationship between these two factors. Further investigation might explore other potential contributing factors to defect rates, such as operator skill, machine maintenance, or raw material quality.

Answer Length

This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.

Additional Resources

Key Definitions

Chi-Square Test
A statistical test used to determine if there is a significant association between two categorical variables. It compares observed frequencies with expected frequencies under the assumption of independence.
Degrees of Freedom (df)
The number of independent pieces of information available to estimate a parameter. In the context of the Chi-Square test, it's calculated based on the number of rows and columns in the contingency table.

Key Statistics

According to a report by the National Institute of Standards and Technology (NIST), the cost of poor quality (including defects) to US businesses is estimated to be around 4% of sales revenue.

Source: NIST, 2023 (Knowledge Cutoff)

A study by McKinsey found that companies with strong quality management systems experience a 20-30% reduction in defect rates and a corresponding increase in profitability.

Source: McKinsey, 2022 (Knowledge Cutoff)

Examples

Automobile Manufacturing

In automobile manufacturing, a Chi-Square test could be used to determine if there's a relationship between the shift (day, night, swing) and the number of defects found in the finished vehicles. This helps identify if certain shifts are more prone to errors.

Frequently Asked Questions

What if the expected frequencies are too small (less than 5)?

If expected frequencies are too small, the Chi-Square test may not be reliable. In such cases, you can combine categories or use Fisher's exact test, which is suitable for small sample sizes.

Topics Covered

StatisticsEconomicsHypothesis TestingData AnalysisProduction Management