Computational procedure of performance assessment of lifetime index of businesses for the pareto lifetime model with the right type II censored sample

Abstract

Process capability analysis has been developed for assessing quality performance. In the paper, process capability analysis is utilized to measure business performance. In practice, lifetime performance index C L is used as a means of measuring business performance, where L is the lower specification limit. In the technology of data transformation, this study constructs a maximum likelihood estimator (MLE) of C L under the pareto distribution with the right type II censored sample. The MLE of C L is then utilized to develop the new hypothesis testing procedure in the condition of known L. Finally, we give two examples and the Monte Carlo simulation to assess the behavior of this test statistic for testing null hypothesis under given significance level. Moreover, the managers can then employ the new testing procedure to determine whether the business performance adheres to the required level.