BADM220 Chapter 8

Chapter 8: Sampling Methods and the Central Limit Theorem

Introduction
In this chapter, we begin our study of sampling and how samples are used to infer something
about a population.
Sampling Methods
I. Reasons to sample
A. Contacting the whole population would be time consuming.
B. The cost of studying all the items in a population may be prohibitive.
C. It may be physically impossible to check all the items in the population.
D. Some tests might destroy the items in the population.
E. Sample results are usually adequate.
II. Sampling Methods
A. Simple Random Sample A sample selected so that each item or person in the
population has the same chance of being included.
1. Example: Self-Review 8-1, p. 251
The following class roster lists the students enrolling in an introductory course in
business statistics. Three students are to be randomly selected and asked
various questions regarding course content and method of instruction.

(a) The numbers 00 through 45 are handwritten on slips of paper and

placed in a bowl. The three numbers selected are 31, 7, and 25. Which
students would be included in the sample?

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(b) Now use the table of random digits, Appendix B.4, to select your
own sample. (Hint: Read the first paragraph on page 250 for an
explanation of how to use the table of random digits.)

(c) What would you do if you encountered the number 59 in the table
of random digits?

B. Systematic Random Sample A random starting point is selected, and then every kth
member of the population is selected. k is calculated as the population size divided
by the sample size. A random number between 1 and k is chosen as the starting point
(and included in the sample), then every kth member is selected.
1. Example: Self-Review 8-2, page 254
Refer to Self-Review 8-1 and the class roster on page 251. Suppose a systematic
random sample will select every ninth student enrolled in the class. Initially, the
fourth student on the list was selected at random. That student is numbered
03. Remembering that the random numbers start with 00, which students will
be chosen to be members of the sample?

C. Stratified Random Sample A population is divided into subgroups, called strata, and
a sample is randomly selected from each stratum. For example, the students on the
class roster of the Self-Review problem could be divided into subgroups based on
class rank. Then, a random sample is chosen from each group.
1. Example: How can the students on the class roster in Self-Review 8-1 be
divided into strata?

(Solution: The students could be divided into groups based on gender: male and
female. Another possibility is by class standing: freshman, sophomore, junior,
and senior. )
D. Cluster Sample A population is divided into clusters using naturally occurring

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geographic or other boundaries. Then, clusters are randomly selected and a sample is
collected by randomly selecting from each cluster. For example, the students on the
class roster could be divided by their county of residence.

Sampling Error
I. Sampling Error
A. Since a sample is only a part or portion of the population, it is unlikely that the
sample mean would be exactly equal to the population mean. Likewise, it is unlikely
that the sample standard deviation would be exactly equal to the population
standard deviation. We expect a difference between the sample statistic and the
population parameter.
B. Sampling Error - The difference between a sample statistic and its corresponding
population parameter.
C. For the mean, the sampling error is the difference between the sample mean and
the population mean,
.

Sampling Distribution of the Sample Mean

I. Sampling Distribution of the Sample Mean - A probability distribution of all possible sample
means of a given sample size.
A. Example: Self-Review 8-3, p. 260 (Remember to check your answers in Appendix E.)
The lengths of service of all of the executives employed by Standard Chemicals are:
Name
Mr. Snow
Ms. Tolson
Mr. Kraft
Ms. Irwin
Mr. Jones

Years
20
22
26
24
28

(a) Using the combination formula, how many samples of size 2 are possible?

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(b) List all possible samples of 2 executives from the population and compute their means.
Sample Number Executives in Sample
Years of Service Sample Mean
1
2
3
4
5
6
7
8
9
10
(c) Organize the means into a sampling distribution.
Sample Mean

Number (frequency)

Probability

(d) Compare the population mean and the mean of the sample means.

(e) Compare the dispersion in the population with that in the distribution of the sample mean.
(Hint: Calculate the range as the measure of dispersion for both the population data and
the sample data.)

(f) A chart portraying the population values follows. Is the distribution of population values
normally distributed (bell-shaped)?

(g) Is the distribution of the sample mean computed in part (c) starting to show some tendency
toward being bell-shaped?

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The Central Limit Theorem
I. Central Limit Theorem - If all samples of a particular size are selected from any population, the
sampling distribution of the sample mean is approximately a normal distribution. This
approximation improves with larger samples. Most statisticians consider a sample of 30 or
more to be large enough for the central limit theorem to be employed.
A. Mean of the Sampling Distribution:
B. Standard Deviation of the Sampling Distribution of the Sample Mean/Standard Error
of the Mean:

Using the Sampling Distribution of the Sample Mean

I. Formula for finding the z value:

(different version of the formula from book)

II. Complete the four-step process for finding probability of a normal distribution:
1) translate the question into probability notation
2) convert to z score
3) rewrite the probability in terms of z
4) sketch the area under the curve and calculate the area using Table B.3, page 732.
III. Example: p. 272, #16
A normal population has a mean of 75 and a standard deviation of 5. You select a
sample of 40. Compute the probability the sample mean is:
(a) Less than 74.

(b) Between 74 and 76.

(c) Between 76 and 77.

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(d) Greater than 77.

Solutions to above: (Note: I did not provide the sketches of the areas under the curve, but would
strongly recommend that you make the sketches.)
(a) P( < 74); find

; P(z < -1.26) = .5 - .3962 = .1038

(b) P(74 76); find

(c) P(76 77); find

(d) P( > 77) = P(z > 2.53) = .5 - .4943 = .0057

; P(-1.26 z 1.26) = .3962 + .3962 = .7924

; P(1.26 z 2.53) = .4943 - .3962 = .0981