Two Proportion Z Test

Cost Data Integrity Project

Analyze Two Critical Processes
Why the Z Test was selected?

1. Type of Data = Attribute data (either defective or not defective)

2. Parameter involved = Proportion of defects
3. Samples = Two samples from two independent populations
4. Objective = Measure with statistics the difference in defects between two processes

Critical Defect No. 1 - Vendor Invoices Posted to PMS

H0: p1 = p2 Null Hypothsis: Number of Vendor Invoices not entered is the same regardless of reconciliation control procedure
H1: p1 > p2 Alternative Hyposis: Number of Vendor Invoices not entered is higher when reconciliation procedure is not followed
n1: population of projects that have no reconciliation procedure in place
n2: population of projects that do have a reconciliation procedure in place

Size => 141 62 Confidence Level => 0.99

Observation Sample n1 Sample n2 Alpha or Sign Level => 0.01
d1 d2 Decision Cut Off => 2.326
1 12 2
2 11 1 You should reject the Null Hypothesis if the Test Statistic
3 8 1 is higher than the Decision Cut Off Value of: 2.326
4 9 0
5 7 0 Calculate the Test Statistic:
6 11 1 1. Proportion of defects (d1 / n1) 0.55
7 10 0 2. Proportion of defects (d2 / n2) 0.10
8 9 1 3. Overall Proportion of defects (d1+d2) / (n1+n2) 0.41
Average (u) 9.625 0.750 4. Calculate the Test Statistic (z) 6.00
Variance 2.839 0.500
Std Deviation 1.685 0.707 Conclusion:
Total Defects 77 6 Test Statistic of 6.00 is higher than 2.326
Reject the Null Hypothesis and Accept the Alternative

1
Critical Defect No. 2 - Timesheets Entered into PMS

H0: p1 = p2 Null Hypothsis: Number of Timesheets entered is the same regardless if Managers review and approve timesheets
H1: p1 > p2 Alternative Hyposis: Number of Timesheets not entered is higher when Managers do not review and approve timesheets
n1: sample timesheets on those projects where Managers do not approve timesheets
n2: sample timesheets on those projects where Managers do approve timesheets
Confidence Level => 0.99
Size => 436 312 Alpha or Sign Level => 0.01
Observation Sample n1 Sample n2 Decision Cut Off => 2.326
d1 d2
1 26 6 You should reject the Null Hypothesis if the Test Statistic
2 19 4 is higher than the Decision Cut Off Value of: 2.326
3 22 5
4 25 6 Calculate the Test Statistic:
5 18 5 1. Proportion of defects (d1 / n1) 0.64
6 27 4 2. Proportion of defects (d2 / n2) 0.20
7 23 5 3. Overall Proportion of defects (d1+d2) / (n1+n2) 0.45
8 24 6 4. Calculate the Test Statistic (z) 11.98
9 22 6
10 25 5 Conclusion:
11 21 4 Test Statistic of 11.98 is higher than 2.326
12 26 5 Reject the Null Hypothesis and Accept the Alternative
Average (u) 23.167 5.083
Variance 8.152 0.629
Std Deviation 2.855 0.793
Total Defects 278 61

n: number of total items in sample

d: number of defects found per sample
z: test statistic for the Z Test
PMS: Project Management System