Question

The average customer wait time at a QuickServe Restaurant chain is currently 8 minutes. The restaurant is considering implementing a new order processing system if sample data suggests it significantly decreases the average customer wait time.

What is the Type I Error and what are the business consequences of a Type I Error?

Answer 1

A Type I Error refers to falsely concluding a new system decreases wait times, leading to financial loss and potential service disruption.

Step-by-step explanation:

The Type I Error in the context of the QuickServe Restaurant chain's consideration to implement a new order processing system refers to the incorrect rejection of a true null hypothesis. Specifically, it involves concluding that the new system significantly decreases average customer wait times when, in fact, it does not.

The business consequences of a Type I Error in this scenario may include unnecessary allocation of resources to a system that does not deliver the expected improvement, leading to financial losses and potential disruption of service if the new system is less efficient than the current one.