Successful management, business and finance homework help

Discussion Topic

In this Discussion, you will examine practical applications of hypothesis testing. Make sure to read the chapter on Hypothesis testing before posting.

Successful management is about making decisions to bring about desired change. A manager who has a specific objective will execute an action, hoping that the result will be the achievement of that objective. However, due to the multitude of factors that are in play in any real-life situation, it is difficult to tell if the desired outcome has been achieved or if the new numbers are only due to randomness.

For example, a sales manager implements a bonus system and sees the sales figures go up by 3% in the next month. She claims success, but was this really due to the bonus system or could the increase be the result of random fluctuations, something that would have happened anyway? Can the manager confidently claim that there has been a significant change, something that could not be the result of random fluctuations?

Another example may be where HR is worried there may be a difference between the salaries of men versus women that may need to be corrected. Is the difference between average salaries of the two genders significant, or could it be due to coincidence? Can someone claim there is discrimination at work?

Hypothesis testing answers such questions and is key to managing intelligently. Without these answers, you cannot be sure if the actions you are taking are working out or whether things really are the way you think they are. If you do not know these, how can you know what to do?

For this Discussion, describe a situation from your work experience where decisions are being made that would benefit from hypothesis testing. Follow the template below and answer all questions:

1. Describe the decision situation: What is the desired outcome or the question that needs to be answered, and what are the actions being considered? Without hypothesis testing, how are decisions being made currently?
2. How would you set up the hypothesis test? State what the null and alternative hypothesis would be, what kind of a test you would use.
3. Describe the data you would use: What do you need, how much do you need, where would it come from? Is all the data currently being recorded or will it need to be collected? If it needs to be collected, will it need to be sampled (why), or can the entire data be recorded? Please make sure to answer all these questions in your explanation.
4. How would you explain to management the significance of this test? How would you convince them that using this is necessary? What would be drawback of not using a hypothesis test in this situation?

Student 1 Reply:

1.Describe the decision situation: What is the desired outcome or the question that needs to be answered, and what are the actions being considered? Without hypothesis testing, how are decisions being made currently?

The Mosaic Life Care Distribution department receives lip balm for patient use by cases of 300 each. It is simply too difficult to issue lip balm by the 1 each unit of measure to the departments requesting it. Also, issuing an entire case of 300 each to the requesting departments is just too much. Most of the nursing floors wouldn’t go through that much lip balm in a 6 month period. As a solution, Mosaic Distribution caregivers are now required to break down each case of lip balm into small bags of 25 each prior to the lip balm reaching the storeroom shelf. There have been several calls made into the department that the bags of lip balm do not have 25 each in them. In this situation, the question that needs to be answered is as follows – Is the packaging process of lip balm out of control as determined by the amount of lip balm in each bag?

2.How would you set up the hypothesis test? State what the null and alternative hypothesis would be, what kind of a test you would use.

Null Hypothesis – The average amount of lip balm in each smaller bag is 25 each.

Alternative Hypothesis – The average amount of lip balm in each smaller bag is not 25 each.

The best way to test this hypothesis is to perform a physical count on each of the smaller lip balm bags. The physical counts can be done for all of the bags that currently remain on the storeroom shelf and those that remain in supply bins that were recently ordered and waiting to be taken to the requesting locations. It would be best to have an initial count performed, and then a second count performed by another caregiver to verify the total.

3.Describe the data you would use: What do you need, how much do you need, where would it come from? Is all the data currently being recorded or will it need to be collected? If it needs to be collected, will it need to be sampled (why), or can the entire data be recorded? Please make sure to answer all these questions in your explanation.

There are over 200 hospital and clinic locations that request and order patient lip balm from the storeroom. It is not reasonable or even possible to perform a count at each of the 200 + locations. A count would need to be performed on the bags that currently reside on the storeroom shelf first. If there are orders waiting to be delivered that include lip balm, they need to be counted as well. Regarding the supply closets on the nursing floors, the bags can only be counted and used for data if they are still sealed shut. Any open bags would be void and the data could not be used.

Since the necessary data is currently not being recorded, going forward each time a case of lip balm (300 ea.) is received on the receiving dock and broken down into smaller bags (25 ea.), a second count and verification can be performed before the lip balm even hits the shelf. This would eliminate any room for error and inconsistency. When errors or inconsistencies are found, they will be documented and recorded.

I will need to take samples to use for my data. As previously discussed, physical counts will need to be performed and the necessary data will be obtained in this fashion.

4.How would you explain to management the significance of this test? How would you convince them that using this is necessary? What would be drawback of not using a hypothesis test in this situation?

This test is significant because our customers (every supply closet, nursing floor, clinic, etc.) have an annual budget that they are guided by. If they have a charge that hits their cost center for 25 lip balm, and they are receiving less than that, they are being shorted. Alternatively, if the bags contain more than 25 each, it hurts the Distribution cost center since they will be swallowing the additional cost.

It is possible that the vendor may be miss-filling the lip balm as well. While the case says that it contains 300 each, it may contain 298 or 303. Either way, the customer should get exactly what they are paying for. This scenario only relates to lip balm, but with other items that follow the same practice, the cost savings or expenditure could be quite substantial and have a greater impact.

Not using a hypothesis test in this situation will result in continuous customer frustration and complaints. Customer dissatisfaction could result in low feedback and survey scores which ultimately determines and weighs in on the annual bonus payout for the Distribution department.

Student 2 Reply:

Hello Class and Professor,

1.Describe the decision situation:

Working for a major organization, many things come to mind that I could describe but I have decided to discuss how our coding managers distribute books. Each year, we are given updated coding manuals to better do our jobs. Each and every book has to be signed for. Each year the same thing happens, someone ends up without a book. All are accounted for on the invoice from the book store but compliance seems to think that people are taking more than one. Maybe they want to have one for home as well, or maybe they are giving them away to someone that they know, that can’t afford them.

2.How would you set up the hypothesis test?

The null hypothesis would be compliance thinking that the books are being stolen. If they would set up a designated time to hand out books and have a live body there to account for all the books and signatures, this problem could be avoided. Their thought is we are all grown and know that we only take one book so why should they baby sit. They have a point but sometimes, grown individuals just can’t be honest. If compliance would start distributing the books this way, they will eliminate this issue.

3.I would explain that using this method of distribution will not only eliminate the theft of books but ensure that each book is signed for and accounted for when they are picked up by the employee. Then no one can say they didn’t get one and each person will have the tools necessary to perform job duties.

Thank you,