Objective: The purpose of this step is to define the tolerable limits on the decision errors.
* Determine the possible range of the parameter of interest
* Define both types of decision errors and identify the potential consequences of each.
* Specify a range of possible parameter values where the consequences of decision errors are relatively minor (grey region).
* Assign probability values to points above and below the action level that reflect the acceptable possibility for the occurrence of decision errors.
* Check the limits on decision errors to ensure that they accurately reflect the relative consequences for each type of decision error.
* Chose a Statistical or a Non-statistical Design
* Determine the Range of the Parameter of Interest
* Identify the Decision Errors
* Choose the Null Hypothesis
* Specify the Grey Region
* Define the Tolerable Limits on Decision Errors
* The acceptable decision error rates based on a consideration of the consequences of making an incorrect decision.