COMPLETE

BUSINESS
STATISTICS
by
AMIR D. ACZEL
&
JAYAVEL SOUNDERPANDIAN
7th edition.
Prepared by Lloyd Jaisingh, Morehead State
University

Chapter 6

Confidence Intervals
McGraw-Hill/Irwin

Copyright 2009 by The McGraw-Hill Companies, Inc. All

6-2

6 Confidence Intervals
Using

Statistics
Confidence Interval for the Population Mean When the Population
Standard Deviation is Known
Confidence Intervals for When is Unknown - The t Distribution
Large-Sample Confidence Intervals for the Population Proportion p
Confidence Intervals for the Population Variance
Sample Size Determination
The Templates

6-3

6 LEARNING OBJECTIVES
After studying this chapter you should be able to:
Explain

confidence intervals
Compute confidence intervals for population means
Compute confidence intervals for population proportions
Compute confidence intervals for population variances
Compute minimum sample sizes needed for an estimation
Compute confidence intervals for special types of sampling methods
Use templates for all confidence interval and sample size computations

6-4

6-1 Using Statistics

Consider the following statements:

x = 550

A single-valued estimate that conveys little information

about the actual value of the population mean.

We are 99% confident that is in the interval [449,551]

An interval estimate which locates the population mean

within a narrow interval, with a high level of confidence.

We are 90% confident that is in the interval [400,700]

An interval estimate which locates the population mean

within a broader interval, with a lower level of confidence.

6-5

Types of Estimators

Point Estimate

A single-valued estimate.
A single element chosen from a sampling distribution.
Conveys little information about the actual value of the population
parameter, about the accuracy of the estimate.

Confidence Interval or Interval Estimate

An interval or range of values believed to include the unknown population

parameter.
Associated with the interval is a measure of the confidence we have that the
interval does indeed contain the parameter of interest.

Confidence Interval or Interval

Estimate
confidenceinterval
intervalor
orinterval
intervalestimate
estimateisisaarange
rangeor
orinterval
intervalof
of
AAconfidence
numbersbelieved
believedto
toinclude
includean
anunknown
unknownpopulation
populationparameter.
parameter.
numbers
Associatedwith
withthe
theinterval
intervalisisaameasure
measureof
ofthe
theconfidence
confidencewe
wehave
have
Associated
thatthe
theinterval
intervaldoes
doesindeed
indeedcontain
containthe
theparameter
parameterof
ofinterest.
interest.
that

A
A confidence
confidence interval
interval or
or interval
interval estimate
estimate has
has two
two components:
components:

A
A range
range or
or interval
interval of
of values
values

An
An associated
associated level
level of
of confidence
confidence

6-6

6-7

6-2 Confidence Interval for

When Is Known

If the population distribution is normal, the sampling distribution of the mean is

normal.
If the sample is sufficiently large, regardless of the shape of the population
distribution, the sampling distribution is normal (Central Limit Theorem).

eithercase:
case:
InIneither

Standard Normal Distribution: 95% Interval

0.4

0.95
1.96 x 196
P
.
P 1.96 n x 196
.
0.95

n
nn

0.3

f(z)

oror

x 1.96 0.95
x 196
P
.
P x 196
.
x 1.96 n 0.95

nn
n

0.2
0.1
0.0
-4

-3

-2

-1

6-2 Confidence Interval for when

is Known (Continued)
Beforesampling,
sampling,there
thereisisaa0.95probab
0.95probability
ilitythat
thatthe
theinterval
interval
Before

1
.
96
1.96 n
n
willinclude
includethe
thesample
samplemean
mean(and
(and5%
5%that
thatititwill
willnot).
not).
will
Conversely, ,after
aftersampling,
sampling,approximat
approximately
ely95%
95%of
ofsuch
suchintervals
intervals
Conversely

1
.
96
x 1.96 n
n
willinclude
includethe
thepopulation
populationmean
mean(and
(and5%
5%of
of them
themwill
willnot).
not).
will

is a 95% confidence interval for .

That
is,
x

1.96
That is, x 1.96 nis a 95% confidence interval for .
n

6-8

A 95% Interval around the Population

Mean
Sampling Distribution of the Mean

Approximately95%
95%of
ofsample
samplemeans
means
Approximately
canbe
beexpected
expectedto
tofall
fallwithin
withinthe
the
can
interval 1.96 , 1.96 ..
interval

0.4

95%

f(x)

0.3

0.2

0.1

2.5%

2.5%

0.0

1.96

1.96

Conversely,about
about2.5%
2.5%can
canbe
be
Conversely,

expectedto
tobe
beabove
above 196
and
.
expected
and
n
2.5%can
canbe
beexpected
expectedto
tobe
bebelow
below
2.5%
1.96

2.5% fall below

the interval

..

x
x

2.5% fall above

the interval

x
x
x
x

95% fall within

the interval

6-9

outside

So5%
5%can
canbe
be expected
expected
to
fall

1
.
96
,

1
.
96
So
to
fall
outside

n
n
the
interval
the interval
..

95% Intervals around the Sample

Mean
Sampling Distribution of the Mean
0.4

95%

f(x)

0.3

0.2

0.1

2.5%

2.5%

0.0

1.96

1.96

x
x
x
x

x
x

5%of
ofsuch
suchintervals
intervalsaround
aroundthe
thesample
sample
**5%

Approximately95%
95%of
ofthe
theintervals
intervals
Approximately
around
aroundthe
thesample
samplemean
meancan
canbe
be
x 1.96
n
expected
includethe
theactual
actualvalue
valueof
ofthe
the
expected
totoinclude
populationmean,
mean,.
. (When
(Whenthe
thesample
sample
population
meanfalls
fallswithin
withinthe
the95%
95%interval
intervalaround
around
mean
thepopulation
populationmean.)
mean.)
the
x

6-10

meancan
canbe
beexpected
expectednot
nottotoinclude
includethe
the
mean
actualvalue
valueof
ofthe
thepopulation
populationmean.
mean.
actual
(Whenthe
thesample
samplemean
meanfalls
fallsoutside
outsidethe
the
(When
95%interval
intervalaround
aroundthe
thepopulation
population
95%
mean.)
mean.)

6-11

The 95% Confidence Interval for

95%confidence
confidenceinterval
intervalfor
forwhen
whenisisknown
knownand
andsampling
samplingisis
AA95%
donefrom
fromaanormal
normalpopulation,
population,or
oraalarge
largesample
sampleisisused,
used,is:
is:
done

x 1.96

is often called the margin of error or the

The
quantity
1
.
96
The quantity
is often called the margin of error or the
n
samplingerror.
error.
sampling

For example, if: n = 25

= 20
x = 122

A 95% confidence interval:

20
x 1.96
122 1.96
n
25
122 (1.96)(4 )
122 7.84
114.16,129.84

6-12

A (1-)100% Confidence Interval for

We define z as the z value that cuts off a right-tail area of under the standard
2
2
normal curve.
(1-) is called the confidence coefficient. is called the error
probability, and (1-)100% is called the confidence level.

P z z

P z z

P z z z (1 )
2

S tand ard Norm al Dis trib ution

0.4

(1 )

f(z)

0.3
0.2

0.1

0.0
-5

-4

-3

-2

-1

z
2

(1- )100% Confidence Interval:

x z
n
2

6-13

Critical Values of z and Levels of

Confidence

0.99
0.98
0.95
0.90
0.80

0.005
0.010
0.025
0.050
0.100

Stand ard N o rm al Distrib utio n

0.4

2.576
2.326
1.960
1.645
1.282

(1 )

0.3

f(z)

(1 )

0.2

0.1

0.0
-5

-4

-3

-2

-1

z
2

6-14

The Level of Confidence and the

Width of the Confidence Interval

Whensampling
samplingfrom
fromthe
thesame
samepopulation,
population,using
usingaafixed
fixedsample
samplesize,
size,the
the
When
higherthe
theconfidence
confidencelevel,
level,the
thewider
widerthe
theconfidence
confidenceinterval.
interval.
higher
St an d ar d N or m al Di s tri b uti o n

0.4

0.4

0.3

0.3

f(z)

f(z)

St an d ar d N or m al Di s tri b uti o n

0.2

0.1

0.2

0.1

0.0

0.0
-5

-4

-3

-2

-1

80% Confidence Interval:

x 128
.
n

-5

-4

-3

-2

-1

95% Confidence Interval:

x 196
.
n

The Sample Size and the Width of the

Confidence Interval

6-15

Whensampling
samplingfrom
fromthe
thesame
samepopulation,
population,using
usingaafixed
fixedconfidence
confidence
When
level,the
thelarger
largerthe
thesample
samplesize,
size,n,
n,the
thenarrower
narrowerthe
theconfidence
confidence
level,
interval.
interval.
S am p lin g D is trib utio n o f th e M e an

S a m p lin g D is trib utio n o f th e M e an

0 .4

0 .9
0 .8
0 .7

0 .3

f(x)

f(x)

0 .6
0 .2

0 .5
0 .4
0 .3

0 .1

0 .2
0 .1

0 .0

0 .0

95% Confidence Interval: n = 20

95% Confidence Interval: n = 40

6-16

Example 6-1

Comcast,the
thecomputer
computerservices
servicescompany,
company,isisplanning
planningtotoinvest
investheavily
heavilyinin
Comcast,
onlinetelevision
televisionservices.
services. As
Aspart
partof
ofthe
thedecision,
decision,the
thecompany
companywants
wantstoto
online
estimatethe
theaverage
averagenumber
numberof
ofonline
onlineshows
showsaafamily
familyof
offour
fourwould
wouldwatch
watchper
per
estimate
day. AArandom
randomsample
sampleof
ofnn==100
100families
familiesisisobtained,
obtained,and
andininthis
thissample
samplethe
the
day.
averagenumber
numberof
ofshows
showsviewed
viewedper
perday
dayisis6.5
6.5and
andthe
thepopulation
populationstandard
standard
average
deviationisisknown
knowntotobe
be3.2.
3.2. Construct
Constructaa95%
95%confidence
confidenceinterval
intervalfor
forthe
the
deviation
averagenumber
numberof
ofonline
onlinetelevision
televisionshows
showswatched
watchedby
bythe
theentire
entirepopulation
populationof
of
average
familiesof
of4.4.
families

Example 6-1 (continued) - Using the

Template

Thus, Concast can be 95% confident that the average family of 4 within its population
Of subscribers will watch an average daily number of online TV shows between
5.87 and 7.13 shows.

6-17

Example 6-1 (continued) - Using

Minitab

NOTE: In order to get the results on the left side of the screen you will
have to click on the OPTIONS button and type in 95 for the Confidence Level.
Also, make sure that you select not equal in the Alternative box.

6-18

6-19

6-3 Confidence Interval or Interval Estimate for

When Is Unknown - The t Distribution
If the population standard deviation, , is not known, replace
with the sample standard deviation, s. If the population is
normal, the resulting statistic: t X s
n

has a t distribution with (n - 1) degrees of freedom.

Thet tisisaafamily
familyofofbell-shaped
bell-shapedand
andsymmetric
symmetric
The
distributions,one
onefor
foreach
eachnumber
numberofofdegree
degreeofof
distributions,
freedom.
freedom.
Theexpected
expectedvalue
valueofoft tisis0.0.
The
Fordfdf>>2,2,the
thevariance
varianceofof t tisisdf/(df-2).
df/(df-2). This
Thisisis
For
greaterthan
than1,1,but
butapproaches
approaches11asasthe
thenumber
number
greater
degreesofoffreedom
freedomincreases.
increases. The
Thet tisisflatter
flatter
ofofdegrees
andhas
hasfatter
fattertails
tailsthan
thandoes
doesthe
thestandard
standard
and
normal.
normal.
Thet tdistribution
distributionapproaches
approachesaastandard
standardnormal
normal
The
thenumber
numberofofdegrees
degreesofoffreedom
freedomincreases
increases
asasthe

Standard normal
t, df = 20
t, df = 10

6-20

The t Distribution Template

6-3 Confidence Intervals for when

is Unknown- The t Distribution
(1-)100%
)100%confidence
confidenceinterval
intervalfor
forwhen
whenisisnot
notknown
known
AA(1(assumingaanormally
normallydistributed
distributedpopulation)
population)isisgiven
givenby:
by:
(assuming

s
x t
n

wheret isisthe
thevalue
valueof
ofthe
thettdistribution
distributionwith
withn-1
n-1degrees
degreesof
of
where
2

freedomthat
thatcuts
cutsoff
offaatail
tailarea
areaof
of 2 to
toits
itsright.
right.
freedom

6-21

6-22

The t Distribution
t0.005
-----63.657
9.925
5.841
4.604
4.032
3.707
3.499
3.355
3.250
3.169
3.106
3.055
3.012
2.977
2.947
2.921
2.898
2.878
2.861
2.845
2.831
2.819
2.807
2.797
2.787
2.779
2.771
2.763
2.756
2.750
2.704
2.660
2.617
2.576

t D is trib utio n: d f = 1 0
0 .4

0 .3

Area = 0.10
0 .2

Area = 0.10

t0.010
-----31.821
6.965
4.541
3.747
3.365
3.143
2.998
2.896
2.821
2.764
2.718
2.681
2.650
2.624
2.602
2.583
2.567
2.552
2.539
2.528
2.518
2.508
2.500
2.492
2.485
2.479
2.473
2.467
2.462
2.457
2.423
2.390
2.358
2.326

t0.025
-----12.706
4.303
3.182
2.776
2.571
2.447
2.365
2.306
2.262
2.228
2.201
2.179
2.160
2.145
2.131
2.120
2.110
2.101
2.093
2.086
2.080
2.074
2.069
2.064
2.060
2.056
2.052
2.048
2.045
2.042
2.021
2.000
1.980
1.960

f(t)

t0.050
----6.314
2.920
2.353
2.132
2.015
1.943
1.895
1.860
1.833
1.812
1.796
1.782
1.771
1.761
1.753
1.746
1.740
1.734
1.729
1.725
1.721
1.717
1.714
1.711
1.708
1.706
1.703
1.701
1.699
1.697
1.684
1.671
1.658
1.645

0 .1

0 .0
-2.228

Area = 0.025

-1.372

1.372

2.228

t0.100
----3.078
1.886
1.638
1.533
1.476
1.440
1.415
1.397
1.383
1.372
1.363
1.356
1.350
1.345
1.341
1.337
1.333
1.330
1.328
1.325
1.323
1.321
1.319
1.318
1.316
1.315
1.314
1.313
1.311
1.310
1.303
1.296
1.289
1.282

df
--1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
40
60
120

Area = 0.025

Wheneverisisnot
notknown
known(and
(andthe
thepopulation
populationisis
Whenever
assumednormal),
normal),the
thecorrect
correctdistribution
distributiontotouse
useisis
assumed
thet tdistribution
distributionwith
withn-1
n-1degrees
degreesofoffreedom.
freedom.
the
Note,however,
however,that
thatfor
forlarge
largedegrees
degreesof
offreedom,
freedom,
Note,
thet tdistribution
distributionisisapproximated
approximatedwell
wellby
bythe
theZZ
the
distribution.
distribution.

6-23

Example 6-2
stockmarket
marketanalyst
analystwants
wantsto
toestimate
estimatethe
theaverage
averagereturn
returnon
onaacertain
certain
AAstock
stock. AArandom
randomsample
sampleof
of15
15days
daysyields
yieldsan
anaverage
average(annualized)
(annualized)return
returnof
of
stock.
andaastandard
standarddeviation
deviationof
ofss==3.5%.
3.5%. Assuming
Assumingaanormal
normal
x 10.37%and
populationof
ofreturns,
returns,give
giveaa95%
95%confidence
confidenceinterval
intervalfor
forthe
theaverage
averagereturn
return
population
onthis
thisstock.
stock.
on
df
--1
.
.
.
13
14
15
.
.
.

t0.100
----3.078
.
.
.
1.350
1.345
1.341
.
.
.

t0.050
----6.314
.
.
.
1.771
1.761
1.753
.
.
.

t0.025
-----12.706
.
.
.
2.160
2.145
2.131
.
.
.

t0.010
-----31.821
.
.
.
2.650
2.624
2.602
.
.
.

t0.005
-----63.657
.
.
.
3.012
2.977
2.947
.
.
.

The critical value of t for df = (n -1) = (15 -1)

=14 and a right-tail area of 0.025 is:
t 0.025 2.145
The corresponding confidence interval or
s
x

t
interval estimate is:
0 . 025
n
35
.
10.37 2.145
15
10.37 1.94
8.43,12.31

Example 6-2 (continued) - Using the

Template

Thus, the analyst can be 95% confident that the average annualized return
on the stock Is between 8.43% and 12.31%.

6-24

Example 6-2 (continued) - Using

Minitab

NOTE: In order to get the results on the left side of the screen you will
have to click on the OPTIONS button and type in 95 for the Confidence Level.
Also, make sure that you select not equal in the Alternative box.

6-25

6-26

Large Sample Confidence Intervals for

the Population Mean
df
--1
.
.
.
120

t0.100
----3.078
.
.
.
1.289
1.282

t0.050
----6.314
.
.
.
1.658
1.645

t0.025
-----12.706
.
.
.
1.980
1.960

t0.010
-----31.821
.
.
.
2.358
2.326

t0.005
-----63.657
.
.
.
2.617
2.576

Whenever is not known (and the population is

assumed normal), the correct distribution to use is
the t distribution with n-1 degrees of freedom.
Note, however, that for large degrees of freedom,
the t distribution is approximated well by the Z
distribution.

6-27

Large Sample Confidence Intervals for

the Population Mean
A large - sample (1 - )100% confidence interval for :
s
x z
n
2

Example 6-3: An economist wants to estimate the average amount in checking accounts at banks in a given region. A
random sample of 100 accounts gives x-bar = $357.60 and s = $140.00. Give a 95% confidence interval for , the
average amount in any checking account at a bank in the given region.

x z 0.025

s
140.00
357.60 1.96
357.60 27.44 33016,385
.
.04
n
100

Example 6-3(continued) - Using the

Template

6-28

Observe that the

95% confidence
intervals are
approximately the same.

6-4 Large-Sample Confidence Intervals

for the Population Proportion, p

6-29

The estimator of the population proportion, p , is the sample proportion, p . If the

sample size is large, p has an approximately normal distribution, with E( p ) = p and
pq
V( p ) =
, where q = (1 - p). When the population proportion is unknown, use the
n
estimated value, p , to estimate the standard deviation of p .
For estimating p , a sample is considered large enough when both n p an n q are greater
than 5.

6-4 Large-Sample Confidence Intervals

for the Population Proportion, p

A large - sample (1- )100% confidence interval for the population proportion, p :

p q
/2 n

p z

where the sample proportion, p, is equal to the number of successes in the sample, x,
divided by the number of trials (the sample size), n, and q = 1- p.

6-30

6-31

Example 6-4
marketingresearch
researchfirm
firmwants
wantstotoestimate
estimatethe
theshare
sharethat
thatforeign
foreigncompanies
companies
AAmarketing
haveininthe
theAmerican
Americanmarket
marketfor
forcertain
certainproducts.
products. AArandom
randomsample
sampleof
of100
100
have
consumersisisobtained,
obtained,and
andititisisfound
foundthat
that34
34people
peopleininthe
thesample
sampleare
areusers
users
consumers
offoreign-made
foreign-madeproducts;
products;the
therest
restare
areusers
usersof
ofdomestic
domesticproducts.
products. Give
Giveaa
of
95%confidence
confidenceinterval
intervalfor
forthe
theshare
shareof
offoreign
foreignproducts
productsininthis
thismarket.
market.
95%

p z
2

pq
( 0.34 )( 0.66)

0.34 1.96
n
100
0.34 (1.96)( 0.04737 )
0.34 0.0928
0.2472 ,0.4328

Thus,the
thefirm
firmmay
maybe
be95%
95%confident
confidentthat
thatforeign
foreignmanufacturers
manufacturerscontrol
control
Thus,
anywherefrom
from24.72%
24.72%toto43.28%
43.28%of
ofthe
themarket.
market.
anywhere

6-32

Example 6-4 Using the Template

Thus,the
thefirm
firmmay
maybe
be95%
95%confident
confidentthat
thatforeign
foreignmanufacturers
manufacturerscontrol
control
Thus,
anywherefrom
from24.72%
24.72%toto43.28%
43.28%of
ofthe
themarket.
market.
anywhere

6-33

Example 6-4 Using Minitab

NOTE: In order to get the results on the left side of the screen you will
have to click on the OPTIONS button and type in 95 for the Confidence Level.
Also, make sure that you select not equal in the Alternative box. Also select the
Use test and interval based on the normal distribution.

Reducing the Width of Confidence

Intervals - The Value of Information
The width of a confidence interval can be reduced only at the
price of:
a lower level of confidence (see the previous slide), or
a larger sample.
LowerLevel
Levelof
ofConfidence
Confidence
Lower

LargerSample
SampleSize
Size
Larger
Sample Size, n = 200

90% Confidence Interval

p z
2

pq

(0.34)(0.66)
0.34 1645
.
n
100
0.34 (1645
. )(0.04737)
0.34 0.07792
0.2621,0.4197

p z
2

pq

(0.34)(0.66)
0.34 196
.
n
200
0.34 (196
. )(0.03350)
0.34 0.0657
0.2743,0.4057

6-34

6-35

6-5 Confidence Intervals for the Population

Variance: The Chi-Square (2) Distribution

The sample variance, s2, is an unbiased estimator of the population

variance, 2.
Confidence intervals for the population variance are based on the chisquare (2) distribution.

The chi-square distribution is the probability distribution of the sum of

several independent, squared standard normal random variables.
The mean of the chi-square distribution is equal to the degrees of
freedom parameter, (E[ 2] = df). The variance of a chi-square is equal
to twice the number of degrees of freedom, (V[ 2] = 2df).

6-36

The Chi-Square (2) Distribution

The chi-square random variable cannot be

negative, so it is bound by zero on the left.
The chi-square distribution is skewed to the right.
The chi-square distribution approaches a normal as
the degrees of freedom increase.

C hi-S q uare D is trib utio n: d f=1 0 , d f=3 0 , d f =5 0

0 .1 0

df = 10

0 .0 9
0 .0 8
0 .0 7

f ( 2 )

0 .0 6

df = 30

0 .0 5
0 .0 4

df = 50

0 .0 3
0 .0 2
0 .0 1
0 .0 0
0

50

Insampling
samplingfrom
fromaanormal
normalpopulation,
population, the
therandom
randomvariable:
variable:
In
2
2
(
n

1
)
s
( n 1) s
2
2
2

hasaachi
chi--square
squaredistribution
distributionwith
with(n
(n--1)
1)degrees
degreesof
offreedom.
freedom.
has
2

100

6-37

Values and Probabilities of Chi-Square

Distributions
Area in Right Tail
.995

.990

.975

.950

.900

.100

.050

.025

.010

.005

.900

.950

.975

.990

.995

Area in Left Tail

df
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

.005
0.0000393
0.0100
0.0717
0.207
0.412
0.676
0.989
1.34
1.73
2.16
2.60
3.07
3.57
4.07
4.60
5.14
5.70
6.26
6.84
7.43
8.03
8.64
9.26
9.89
10.52
11.16
11.81
12.46
13.12
13.79

.010

.025

.050

.100

0.000157
0.0201
0.115
0.297
0.554
0.872
1.24
1.65
2.09
2.56
3.05
3.57
4.11
4.66
5.23
5.81
6.41
7.01
7.63
8.26
8.90
9.54
10.20
10.86
11.52
12.20
12.88
13.56
14.26
14.95

0.000982
0.0506
0.216
0.484
0.831
1.24
1.69
2.18
2.70
3.25
3.82
4.40
5.01
5.63
6.26
6.91
7.56
8.23
8.91
9.59
10.28
10.98
11.69
12.40
13.12
13.84
14.57
15.31
16.05
16.79

0.000393
0.103
0.352
0.711
1.15
1.64
2.17
2.73
3.33
3.94
4.57
5.23
5.89
6.57
7.26
7.96
8.67
9.39
10.12
10.85
11.59
12.34
13.09
13.85
14.61
15.38
16.15
16.93
17.71
18.49

0.0158
0.211
0.584
1.06
1.61
2.20
2.83
3.49
4.17
4.87
5.58
6.30
7.04
7.79
8.55
9.31
10.09
10.86
11.65
12.44
13.24
14.04
14.85
15.66
16.47
17.29
18.11
18.94
19.77
20.60

2.71
4.61
6.25
7.78
9.24
10.64
12.02
13.36
14.68
15.99
17.28
18.55
19.81
21.06
22.31
23.54
24.77
25.99
27.20
28.41
29.62
30.81
32.01
33.20
34.38
35.56
36.74
37.92
39.09
40.26

3.84
5.99
7.81
9.49
11.07
12.59
14.07
15.51
16.92
18.31
19.68
21.03
22.36
23.68
25.00
26.30
27.59
28.87
30.14
31.41
32.67
33.92
35.17
36.42
37.65
38.89
40.11
41.34
42.56
43.77

5.02
7.38
9.35
11.14
12.83
14.45
16.01
17.53
19.02
20.48
21.92
23.34
24.74
26.12
27.49
28.85
30.19
31.53
32.85
34.17
35.48
36.78
38.08
39.36
40.65
41.92
43.19
44.46
45.72
46.98

6.63
9.21
11.34
13.28
15.09
16.81
18.48
20.09
21.67
23.21
24.72
26.22
27.69
29.14
30.58
32.00
33.41
34.81
36.19
37.57
38.93
40.29
41.64
42.98
44.31
45.64
46.96
48.28
49.59
50.89

7.88
10.60
12.84
14.86
16.75
18.55
20.28
21.95
23.59
25.19
26.76
28.30
29.82
31.32
32.80
34.27
35.72
37.16
38.58
40.00
41.40
42.80
44.18
45.56
46.93
48.29
49.65
50.99
52.34
53.67

Template with Values and Probabilities

of Chi-Square Distributions

6-38

Confidence Interval for the Population

Variance

6-39

A (1-)100% confidence interval for the population variance * (where the

population is assumed normal) is:

( n 1) s , ( n 1) s

2
2

where is the value of the chi-square distribution with n - 1 degrees of freedom

2
2

is the value of the distribution that

that cuts off an area
to its right and
1
2
2

cuts off an area of 2 to its left (equivalently, an area of

to its right).
2

Note: Because
Becausethe
thechi-square
chi-squaredistribution
distributionisisskewed,
skewed,the
theconfidence
confidenceinterval
intervalfor
forthe
the
* *Note:
populationvariance
varianceisisnot
notsymmetric
symmetric
population

6-40

Example 6-5
Inan
anautomated
automatedprocess,
process,aamachine
machinefills
fillscans
cansof
ofcoffee.
coffee. IfIfthe
theaverage
averageamount
amount
In
filledisisdifferent
differentfrom
fromwhat
whatititshould
shouldbe,
be,the
themachine
machinemay
maybe
beadjusted
adjustedtoto
filled
correctthe
themean.
mean. IfIfthe
thevariance
varianceof
ofthe
thefilling
fillingprocess
processisistoo
toohigh,
high,however,
however,the
the
correct
machineisisout
outof
ofcontrol
controland
andneeds
needstotobe
berepaired.
repaired. Therefore,
Therefore,from
fromtime
timetoto
machine
timeregular
regularchecks
checksof
ofthe
thevariance
varianceof
ofthe
thefilling
fillingprocess
processare
aremade.
made. This
Thisisis
time
doneby
byrandomly
randomlysampling
samplingfilled
filledcans,
cans,measuring
measuringtheir
theiramounts,
amounts,and
and
done
computingthe
thesample
samplevariance.
variance. AArandom
randomsample
sampleof
of30
30cans
cansgives
givesan
anestimate
estimate
computing
2
18,540.Give
Giveaa95%
95%confidence
confidenceinterval
intervalfor
forthe
thepopulation
populationvariance,
variance,2.2.
ss2 ==18,540.

( n 1) s2 2 ( n 1) s2 2 ( 30 1)18540 ( 30 1)18540
11765,33604
,33604
( n 12 2) s , ,( n 212 ) s ( 30 1)18540 , ,( 30 1)18540 11765
457
.
16
.
0

457
.
16.0
1

1 2
2

2
2

6-41

Example 6-5 (continued)

Area in Right Tail

.
.
.
28
29
30

.995
.
.
.
12.46
13.12
13.79

.990
.
.
.
13.56
14.26
14.95

.975

.950

.
.
.
15.31
16.05
16.79

.900

.
.
.
16.93
17.71
18.49

.
.
.
18.94
19.77
20.60

.100

.050

.
.
.
37.92
39.09
40.26

.
.
.
41.34
42.56
43.77

Chi-Square Distribution: df = 29
0.06
0.05

0.95

0.04

f(2 )

df

0.03
0.02

0.025

0.01

0.025

0.00
0

10

20

20.975 16.05

30

40

50

60

20.025 4572
.

70

.025
.
.
.
44.46
45.72
46.98

.010
.
.
.
48.28
49.59
50.89

.005
.
.
.
50.99
52.34
53.67

6-42

Example 6-5 Using the Template

Observe that the template gives slightly different value.

This is due to the fact that the computer is using more decimal
Places in its computations.

6-43

Example 6-5 Using Minitab

6-44

6-6 Sample-Size Determination

Beforedetermining
determiningthe
thenecessary
necessarysample
samplesize,
size,three
threequestions
questionsmust
must
Before
beanswered:
answered:
be

Howclose
closedo
doyou
youwant
wantyour
yoursample
sampleestimate
estimatetotobe
betotothe
theunknown
unknownparameter?
parameter? (What
(Whatisisthe
the
How
desiredbound,
bound,B?)
B?)
desired
Whatdo
doyou
youwant
wantthe
thedesired
desiredconfidence
confidencelevel
level(1-)
(1-)totobe
beso
sothat
thatthe
thedistance
distancebetween
betweenyour
your
What
estimateand
andthe
theparameter
parameterisisless
lessthan
thanororequal
equaltotoB?
B?
estimate
Whatisisyour
yourestimate
estimateofofthe
thevariance
variance(or
(orstandard
standarddeviation)
deviation)ofofthe
thepopulation
populationininquestion?
question?
What

Forexample:
example: AA(1(1-))Confidence
ConfidenceInterval
Intervalfor
for:: xxzz
For

2
nn
2
Bound, B

6-45

Sample Size and Standard Error

Thesample
samplesize
sizedetermines
determinesthe
thebound
boundof
ofaastatistic,
statistic,since
sincethe
thestandard
standard
The
errorof
ofaastatistic
statisticshrinks
shrinksas
asthe
thesample
samplesize
sizeincreases:
increases:
error
Sample size = 2n
Standard error
of statistic
Sample size = n
Standard error
of statistic

Minimum Sample Size: Mean and

Proportion
Minimum required sample size in estimating the population
mean, :
2
2
z
n 2 2
B
Bound of estimate:

B = z
n
2
Minimum required sample size in estimating the population
proportion, p
2
z pq
n 2 2
B

6-46

6-47

Example 6-6
marketingresearch
researchfirm
firmwants
wantstotoconduct
conductaasurvey
surveytotoestimate
estimatethe
theaverage
average
AAmarketing
amountspent
spenton
onentertainment
entertainmentby
byeach
eachperson
personvisiting
visitingaapopular
popularresort.
resort. The
The
amount
peoplewho
whoplan
planthe
thesurvey
surveywould
wouldlike
liketotodetermine
determinethe
theaverage
averageamount
amountspent
spentby
by
people
allpeople
peoplevisiting
visitingthe
theresort
resorttotowithin
within$120,
$120,with
with95%
95%confidence.
confidence. From
Frompast
past
all
operationof
ofthe
theresort,
resort,an
anestimate
estimateof
ofthe
thepopulation
populationstandard
standarddeviation
deviationisis
operation
$400. What
Whatisisthe
theminimum
minimumrequired
requiredsample
samplesize?
size?
ss==$400.

zz
2

nn B
B
2

.96)) ((400
400))
((11.96

120
120
2

42.684
.68443
43
42

Sample-Size for Proportion:

Example 6-7

6-48

Themanufacturers
manufacturersof
ofaasports
sportscar
carwant
wanttotoestimate
estimatethe
theproportion
proportionof
ofpeople
peopleininaa
The
givenincome
incomebracket
bracketwho
whoare
areinterested
interestedininthe
themodel.
model. The
Thecompany
companywants
wantstoto
given
knowthe
thepopulation
populationproportion,
proportion,p,p,totowithin
within0.01
0.01with
with99%
99%confidence.
confidence. Current
Current
know
companyrecords
recordsindicate
indicatethat
thatthe
theproportion
proportionppmay
maybe
bearound
around0.25.
0.25. What
Whatisisthe
the
company
minimumrequired
requiredsample
samplesize
sizefor
forthis
thissurvey?
survey?
minimum
22 pq
z
zpq

2
nn 2B22
B

2
2 ( 0.25)( 0.75)
2
.
576
2.576 (0.25)( 0.75)

2
010
.
010
.

124.42125
125
124.42

6-7 The Templates Optimizing

Population Mean Estimates

6-49

6-7 The Templates Optimizing Population

Proportion Estimates

6-50