Colorado Technical University
Dr. Shirl Smith
Applied Managerial Decision Making
Phase 3 DB 1
October 24, 2012
Null and Alternative Hypotheses
There are several different statistical methods that can be used to aid in business decision making (CTU, 2012). Hypothesis testing and multivariate statistics are just two examples of the statistical methods that can be used. My goal today is to present information in such a way as to assist my senior manager in better understanding hypothesis testing, along with the ideas of null and alternative hypotheses. The formal method used by researchers to accept or reject a statistical hypothesis is known as hypothesis testing (Easton & McColl, n.d.). Hypothesis testing is one of the most important processes in both scientific research and business decision making (CTU, 2012). It begins with an assumption (hypothesis) being made about an experiment or test (which could be true or could be false) (Easton & McColl, n.d.). Information is collected to make a determination on whether or not to accept or reject the hypothesis. Some cases when hypothesis testing can be used to help solve business problems are: Does Airline D have a better on-time arrival record than Airline S? Do the Smartphones from Company A really operate better than the Smartphones from Company G? There are two types of statistical hypotheses, and they are called the null and alternative hypothesis (CTU, 2012). The null hypothesis is the claim that will be tested (Easton & McColl, n.d.). The null hypothesis is generally represented by the character “Ho” and is regarded as true until testing and evidence prove otherwise (Easton & McColl, n.d.). For example using one of the business problems above, the null hypothesis would be written as: Ho – Airline D has a better on-time arrival record than Airline S. When testing the null there are only two outcomes and they are we can...