A company is said to be of compliance if more than 9% of all invoices contain errors, and it is considered to be seriously out of compliance if more than 12% of all invoices contain errors. Suppose an auditor randomly selects a sample of 1600 invoices and finds that 200 contained errors.
a. Construct a 95% confidence interval for this company's error rate
b. How should the company be rated as seriously out of compliance require 5% level of significance?
c. What is the probability a company would be rated as seriously out of compliance by this test if 15% of all invoices at that company contain errors?
d. What sample size should the auditor use to estimate the error rate to within 2% with 99% confidence if it is assumed that the error rate will be no more than 20%
Note: Present the Hypothesis Test, test statistic and p-value