TUM School of Management

Production and Supply Chain Management

Prof Martin Grunow

Technische Universitt Mnchen

Probability and Statistics

Probability
Model
(Population)

Inference

Statistics

Statistics

Argon Chen
Holly Ott

Quality Engineering & Management Module 4

11

TUM School of Management

Production and Supply Chain Management
Prof Martin Grunow

Technische Universitt Mnchen

Inferential Statistics
If we assume that the population we are dealing with is
normally distributed, we just need to know the two
parameters and of the population
The exact values of the parameters are never known, so we
estimate them using the statistics from samples
A statistic that is chosen to estimate a parameter is called an
estimator for the parameter
Certain criteria are used to select a "good" estimator from
available candidates of estimators for a parameter
2012 from "A First Course in Quality Engineering: Integrating Statistical
and Management Methods of Quality" by K.S. Krishnamoorthi. Reproduced
by permission of Taylor and Francis Group, LLC, a division of Informa plc.
Holly Ott

Quality Engineering & Management Module 4

12

TUM School of Management

Production and Supply Chain Management
Prof Martin Grunow

Technische Universitt Mnchen

Selecting an Estimator
An estimator that, on the average, equals the values of the
parameter is called an unbiased estimator for that parameter.

So, the sample average, X-bar, and the sample median X are
unbiased estimators for , and the sample variance S2 is the
unbiased estimator for 2.
2012 from "A First Course in Quality Engineering: Integrating Statistical
and Management Methods of Quality" by K.S. Krishnamoorthi. Reproduced
by permission of Taylor and Francis Group, LLC, a division of Informa plc.
Holly Ott

Quality Engineering & Management Module 4

13

TUM School of Management

Production and Supply Chain Management
Prof Martin Grunow

Technische Universitt Mnchen

Minimum Variance Unbiased Estimator

The unbiased estimator that has the least amount of variability
among all unbiased estimators for a parameter is called the
Minimum Variance Unbiased estimator (MVUB) for that
parameter.
It is known that, for normal populations, the MVUBs for the
mean and the variance are X-bar and S2, respectively.

2012 from "A First Course in Quality Engineering: Integrating Statistical

and Management Methods of Quality" by K.S. Krishnamoorthi. Reproduced
by permission of Taylor and Francis Group, LLC, a division of Informa plc.
Holly Ott

Quality Engineering & Management Module 4

14

TUM School of Management

Production and Supply Chain Management
Prof Martin Grunow

Technische Universitt Mnchen

The Point Estimate

The value of an estimator observed in a single sample is
called a point estimate
The point estimate, being one observation of a random
variable, is not of much value, especially from small size
samples
So we resort to interval estimation where we create an
interval (using the point estimate) such that the probability the
parameter of interest lies in that interval is (1 )
2012 from "A First Course in Quality Engineering: Integrating Statistical
and Management Methods of Quality" by K.S. Krishnamoorthi. Reproduced
by permission of Taylor and Francis Group, LLC, a division of Informa plc.
Holly Ott

Quality Engineering & Management Module 4

15

TUM School of Management

Production and Supply Chain Management
Prof Martin Grunow

Technische Universitt Mnchen

Coming Up
Lecture 5.1: Confidence Intervals

Holly Ott

Quality Engineering & Management Module 4

16