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1.4.3 Risks Associated with Making Bad Decisions

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It is important to note that whenever decisions are made based on samples, you risk making bad decisions. Bad decisions in practice lead to difficulties and problems for producers as well as consumers. These bad decisions in statistical terms are referred to as type I and type II errors as well as alpha (α) and beta (β) risks, respectively. It is important to know the following key points about these risks:

 Sooner or later, a bad decision will be made.

 The risks associated with making bad decisions are quantified in probabilistic terms.

 α and β risks added together do not equal 1.

 Even though α and β go in the opposite direction (that is, if α increases, β decreases), there is no direct relationship between α and β.

 The values of α and β can be kept as low as you want by increasing the sample size.

Figure 1.3 Detecting practical and statistical differences.

Statistical Quality Control

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