Hypothesis test and its application in business
Use the Internet or Strayer Library to research articles on hypothesis test and its application in business. Select one (1) company or organization which utilized hypothesis test technique for its business process (e.g., whether or not providing flexible work hours improve employee productivity.) Give your opinion as to whether or not the utilization of such a technique improved business process for the selected company or organization. Justify your response.
Hypothesis testing represents a systematic method evaluate decision making process as well as help in the interpretation of data. A company that uses this method must have at least two hypotheses—the null hypothesis and the alternative hypothesis. An example of an organization that uses this method is the National Football League (NFL). The basic idea comes from the “challenge” that a coach can use to dispute a call on the field by a referee. For example, a referee may say that the other team has scored. But, it is a very close play and the other team thinks that the referee could be wrong. At this point, the coach of that team may elect (under certain conditions) to challenge the call. Once a call is challenged, the play call is reviewed. During the review, the referees are looking for “clear evidence” that the play on the field was incorrect. If they find it, they will overturn the call. If not, they will make the statement “the ruling on the field stands” and the game continues. The null hypothesis would be “the call on the field is correct” and the evidence would be the video replays available to the referees. The null hypothesis will only be rejected if there is significant evidence. The competing hypothesis is the alternative. We can almost think of this as the hypothesis that “something interesting is happening.” When the refs overturn a call, they are saying “we reject the null hypothesis, there is evidence towards the alternative hypothesis”. That is, “we have enough evidence to make us question the original call”. In this case, the video was enough to make them seriously question the null hypothesis (that the call was correct). Failing to reject the null hypothesis doesn’t say much. In the case of the NFL ref’s, it simply means that there wasn’t enough evidence to make them change their minds about the call being correct. They aren’t saying it was correct, just that they can’t, based on this evidence, overturn the call.
The utilization of this technique has definitely improved the business process of the NFL. It allows the league to make to make rulings correctly and consistently on the field during gameplay.