Therefore, the wholesaler’s hypotheses are: H only if the mean life of the sampled bulbs is significantly below 800 hours. Hence, in a two- tailed test, there are two rejection regions. If the life time is shorter, he would lose customers to his competitors.
If the lifetime is longer, he has to bear a very high manufacturing cost because the filaments would be excessively thick.
In order to check, if the manufacturing process is working well, he takes a sample of the output to test the hypothesis H: p = 800.
H,: p If we test a hypothesis at the 5 per cent level of significance, this means that we will reject the null hypothesis if the difference between the sample statistics and the hypothesized population parameter is very large. We can see that 95 per cent of all the area under the curve is included in an interval extending 1.96 s on either side of the hypothesized mean.
i Assuming the hypothesis to be correct, then the significance level indicates the percentage of sample means that is outside certain limits. Thus, there is no significant difference between the sample statistics and the hypothesized population parameter, which is 95 per cent of the area. The wholesaler buys light bulbs in large lots and does not accept a lot of bulbs unless their mean life is 800 hours.