Also, the president wondered whether the suggested program would have the desired effect of reducing the production defective rugs. If each employee produced about 20 rugs per month, what statistical technique would you use to help answer these questions
To answer these questions, we must create and analyze appropriate statistical model. This model should give formalized and clear description of studied random processes with the most important factors and probabilistic parameters.
First of all, it is necessary to note that proposed policy has no any effect upon quality of manufactured rugs. Indeed, a non-zero () probability of producing defective rugs is caused by the defects, which are due to factors beyond employees' control. Therefore, any stimulation of employees (receiving a citation, providing parties in the honour, getting a half day off, etc.) to make no defective rugs is ineffective because of absence of real mechanisms for quality control by employees.
Let's disclose this proposition. Let probability of producing defective rug is formed by two additive probabilities, and : . Here, probability is caused by all factors beyond employees' control, e.g. malfunctions of automated equipment facilities. Another probability is caused by factors which can be controlled by employees, e.g. managing errors or keying mistakes when operating non-automatically.