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Credit histories with data-entry errors. A company called
Chapter 13, Problem 87SE(choose chapter or problem)
Credit histories with data-entry errors. A company called CRW runs credit checks for a large number of banks and insurance companies. Credit history information is typed into computer files by trained administrative assistants. The company is interested in monitoring the proportion of credit histories that contain one or more data-entry errors. Based on her experience with the data-entry operation, the director of the data processing unit believes that the proportion of histories with data-entry errors is about 6%. CRW audited 150 randomly selected credit histories each day for 20 days. The sample data are presented below.
a. Use the sample size formula to show that a sample size of 150 is large enough to prevent the lower control limit of the p-chart they plan to construct from being negative.
b. Construct a p-chart for the data-entry process.
c. What does the chart indicate about the presence of special causes of variation? Explain.
d. Provide an example of a special cause of variation that could potentially affect this process. Do the same for a common cause of variation.
e. Should the control limits be used to monitor future credit histories produced by the data-entry operation? Explain.
Questions & Answers
QUESTION:
Credit histories with data-entry errors. A company called CRW runs credit checks for a large number of banks and insurance companies. Credit history information is typed into computer files by trained administrative assistants. The company is interested in monitoring the proportion of credit histories that contain one or more data-entry errors. Based on her experience with the data-entry operation, the director of the data processing unit believes that the proportion of histories with data-entry errors is about 6%. CRW audited 150 randomly selected credit histories each day for 20 days. The sample data are presented below.
a. Use the sample size formula to show that a sample size of 150 is large enough to prevent the lower control limit of the p-chart they plan to construct from being negative.
b. Construct a p-chart for the data-entry process.
c. What does the chart indicate about the presence of special causes of variation? Explain.
d. Provide an example of a special cause of variation that could potentially affect this process. Do the same for a common cause of variation.
e. Should the control limits be used to monitor future credit histories produced by the data-entry operation? Explain.
ANSWER:
Step 1 of 15
(a)
Obtain the sample size determination for monitoring a process proportion as shown below:
Choose n, such that 
Where, n is the sample size and 
The estimate of the process proportion p 
Thus, the value of 
