Sunday, September 18, 2011

Alpha Risk & Beta Risk

Alpha Risk : Also name as Type I Error, is the risk of rejecting the Null Hypothesis when in fact it is true.

Example of Type I Error;
Production operator is making a wrong judgement to reject a good part. Therefore producer is facing some level of risk to loss due to the Type I error commit by the production operator, because of this, Type I Error ( Alpha Risk ) also name as Producer Risk.

Better Risk : Also name as Type II Error, is the risk of accepting the Null Hypothesis when in fact it is false.

Example of Type II Error;
Production operator is making a wrong judgement to accept a rejected part. Due to rejected parts was accepted and deliver to the market, consumer is facing some level of risk to accept the rejected part. Therefore, Type II error also name as Consumer Risk.

Alpha Risk and Beta Risk is used in Power & Sample Size estimation

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