A minimum-risk and cost-efficient two-sample sequential testing framework for the shifted exponential models with application to precipitation data

Abstract

This paper investigates the problem of comparing the location parameters of two shifted exponential models through a novel double sequential sampling framework. The proposed hypothesis testing procedure is developed by controlling the type I error probability at a preassigned level while minimizing a loss function that incorporates both the type II error probability and the associated sampling cost. The corresponding optimal fixed-sample-size expressions are shown to depend on unknown scale parameters, rendering the desired testing accuracies unattainable in practice under fixed-sample designs. To overcome this difficulty, a double sequential sampling procedure is proposed to test the difference between location parameters when the scale parameters are unknown and unequal. The proposed methodology is shown to possess desirable asymptotic properties, including first-order efficiency, second-order efficiency, and second-order risk efficiency. Extensive simulation studies and a real-data application that involves heavy precipitation episodes at meteorological stations demonstrate the practical effectiveness and applicability of the proposed procedure.