Type 1 and type 2 errors

Due to the COVID-19 Pandemic, the HR Office is trying to choose who will be retained among the employees. The portfolio of each was given to the HR Director. For each employee, the HR Director gathers information by trying to verify the years in service, expertise, qualifications, performance evaluation, etc. but some doubt about who among the employees are qualified always remains when a decision to retain or not is to be made.

1. What are the type I and II decision error costs?

2. Which decision error is more likely to be discovered by her boss?

3. How does this affect the HR Director’s decisions on employee retention?