INFERENCES BASED ON A SINGLE SAMPLE: ESTIMATION WITH CONFIDENC

Parameters: Any numerical value describing population is called parameters

Statistics: A numerical value describing a sample is called statistics.
Sampling Error: The difference between parameter and statistics.
Using inferential statistics we eliminate sampling error.
Confidence Coecient: Condence coecient is the probability that a randomly selected condence interval will
enclose the parameter. The condence coecient measures the proportion of samples that produce a condence
interval containing the population parameter.

A good condence interval is as narrow as possible and has a condence coecient near to 1. The narrower the
interval, the more exactly we have located the parameter. The larger the condence coecient, the more the
condence we have that a particular interval enclose the parameter.

The confidence interval for any population mean or proportion is dened as

Point Estimator Bound (Margin of error)
Point Estimator Table Value*SE (Estimator) x z 2 * n.

Using the equation above, the (1)100% condence interval (CI) for is obtained as

For example, if =0 .05, then z/ 2 = z0.05/ 2 = z0.025 =1 .96 (from Normal Table).

EXAMPLE 1: Unoccupied seats on flights cause airlines to lose revenue. Suppose a large airline wants to estimate its
average number of unoccupied seats per flight over the past year. 225 flight records are randomly selected and
the number of unoccupied seats is noted, with a sample mean of 11.6 seats and a standard deviation of 4.1 seats.
Calculate a 90 percent confidence interval for , the mean number of unoccupied seats per flight during the past year.

Answer: n = 225
x-bar = 11.6
standard deviation, = 4.1
Margin of error, E = s.e.* Z
s.e. = / n = 4.1/225 = 0.2733
Z = 1.645 at 90% confidence
So, E = 0.2733x1.645 = 0.4496 = 0.45 (approx.)

The margin of error is 0.45.

CONCLUSION: We are 90% condent that our estimate of 11.6 is within 0.45 of the true mean number of unoccupied seats.
A 90% condence interval for the mean number of unoccupied seats per flight during the past year,
is (11.6 - 0.45 , 11.6 + 0.45) = (11.15,12.05)

CONCLUSION: We are 90% condent that the true mean number of unoccupied seats () will lie between 11.15 to 12.05.

EXAMPLE 2:
A large company wants to estimate the average amount of money that is owed to it by delinquent customers, .
The company takes a random sample of n=100 of its delinquent accounts. The mean of this sample is $230 and the
standard deviation is $90. Construct a 95% and 99% confidence interval for the population parameter .

A). Construct a 95% condence interval for the population parameter:

B). Construct a 99% condence interval for the population parameter ()

(1.96)/

A). 230 (1.96)90/100

230 17.64

212.36 247.64

B). 230 23.22

206.78 253.22

EXAMPLE 3:

Unoccupied seats on flights cause airlines to lose revenue. A large airline wants to estimate its average number of
unoccupied seats per flight over the past year. To accomplish this, the records of 225 flights are randomly selected, and the
number of unoccupied seats is noted for each of the sampled flights. If you do the calculation by hand: The summary statisti
number of unoccupied seats for the 225 flights was: sample mean 11.6, and standard deviation 4.1 (t* = 1.97).
a. Find the 95% confidence interval for the population mean (make sure you check the conditions before you make your calcu
b. Interpret it IN CONTEXT.
c. Find the margin of error.
d. List two ways the margin of error could be reduced.

a xbar std.error
11.6 0.535733
Condence Interval
11.0642667 12.13573
b We are 95% condent that our estimate of 11,6 is within 0.54 of the true number of unoccupied seats
We are 95% condent that the true mean unoccupied seats ( ) will lie between 11.06 to 12.14.
 c Margin of error, E = s.e.* Z
s.e. = / n = 4.1/225 = 0.2733

d As the sample size increases, the margin of error decreases.

EXAMPLE 4:
What is the condence level for each of the following condence intervals for m ?
x = xbar
1.96(/)

1.645(/)

2.575(/)

1.282(/)

.99(/)

EXAMPLE 5:
Find Z/2 for each of the following:

a. = 0.10 b. = 0.01
c. = 0.05 d. = 0.2 FOLLOW THE SOLUTION WITH THE SAME COLORED CELLS
EXPLANATIONS FOR THE SOLUTIONS ON THE RIGHT
/2 Blues
0.05 0.005
0.025 0.1
greens
0,5 - /2
See Z-Table 0.4500 0.4950 pinks
to nd it 0.4750 0.4000
oranges
Write the row 1.645 2.578
and colums 1.96 1.28

EXAMPLE 6:
A random sample of 70 observations from a normally distributed population possesses a sample mean equal to 26,2
and a standard deviation equal to 4,1.

a Find an approximate 95% condence interval for

b What do you mean when you say that condence coecient is .95?
c Find an approximate 99% condence interval for
d What happens to the width of a condence interval as the value of the condence coecient is
increased while the sample size is held xed?
e Would your condence intervals of parts a and c be valid if the distribution of the original population was not normal? Expla

Answers

a 1- =.95 Z /2 = 0,5/2 25.24 We are 95% condent that the true mean of the population will be between 25,24 and
= 0.05 0.025 27.16
b The Condence coecient of .95 means that in repeated sampling , 95% of all condence
interval constructed will include
c 1- =.99 Z /2 = 0,5/2 24.94
= 0.01 0.005 27.46
d As the condence coecient increases, the width of the condence
interval also increases
e Yes. Since the sample size is 70, the Central Limit Theorem applies.
This ensures the distribution of is normal,
regardless of the original distribution.
TH CONFIDENCE INTERVALS

e interval will Confidence Coecient

e a condence

arrower the

s to estimate its

n of 4.1 seats.
ring the past year.

ber of unoccupied seats.

ween 11.15 to 12.05.

ustomers, .
is $230 and the

ge number of
omly selected, and the
nd: The summary statistics for the
(t* = 1.97).
fore you make your calculations)

noccupied seats
ean equal to 26,2
n was not normal? Explain

ll be between 25,24 and 27,16

 SAME "DELINQUED CUSTOMERS" PROBLEM TO SEE DESCRIPTIVE STATISTICS!

CS
TI
CHAPTER: 5 INFERENCE BASED ON A SINGLE SAMPLE

IS
AT
ST
E
PROBLEM 1: Estimate average amount of money owed by a banks delinquent deptors.

V
TI
Use the data to nd a 95% ondence interval for and interpret the results.

IP
R
SC
x mean x-xmean Squares 2

DE
AMOUNT

E
195 US 233.28 -38.28 1465.3584 8079.6816
II!

243 9.72 94.4784

RM
TE

132 -101.28 10257.6384

ID
M

133 -100.28 10056.0784

IN

209 -24.28 589.5184

AT
TH

400 166.72 27795.5584

E
LIK

142 -91.28 8332.0384

DO

312 78.72 6196.8384

TO
Y

221 -12.28 150.7984

TR
T

289 55.72 3104.7184

NO
DO

221 -12.28 150.7984

162 -71.28 5080.8384
134 -99.28 9856.5184
275 41.72 1740.5584
355 121.72 14815.7584
293 59.72 3566.4784
242 8.72 76.0384
458 224.72 50499.0784
378 144.72 20943.8784
148 -85.28 7272.6784
278 44.72 1999.8784
222 -11.28 127.2384
236 2.72 7.3984
178 -55.28 3055.8784
202 -31.28 978.4384
222 -11.28 127.2384
334 100.72 10144.5184
208 -25.28 639.0784
194 -39.28 1542.9184
135 -98.28 9658.9584
363 129.72 16827.2784
221 -12.28 150.7984
449 215.72 46535.1184
265 31.72 1006.1584
146 -87.28 7617.7984
215 -18.28 334.1584
113 -120.28 14467.2784
229 -4.28 18.3184
221 -12.28 150.7984
243 9.72 94.4784
512 278.72 77684.8384
193 -40.28 1622.4784
134 -99.28 9856.5184
138 -95.28 9078.2784
209 -24.28 589.5184
207 -26.28 690.6384
206 -27.28 744.1984
310 76.72 5885.9584
293 59.72 3566.4784
310 76.72 5885.9584
237 3.72 13.8384
135 -98.28 9658.9584
252 18.72 350.4384
365 131.72 17350.1584
371 137.72 18966.7984
238 4.72 22.2784
232 -1.28 1.6384
271 37.72 1422.7984
121 -112.28 12606.7984
134 -99.28 9856.5184
203 -30.28 916.8784
178 -55.28 3055.8784
180 -53.28 2838.7584
148 -85.28 7272.6784
162 -71.28 5080.8384
160 -73.28 5369.9584
86 -147.28 21691.3984
234 0.72 0.5184
244 10.72 114.9184
266 32.72 1070.5984
119 -114.28 13059.9184
259 25.72 661.5184
108 -125.28 15695.0784
289 55.72 3104.7184
328 94.72 8971.8784
331 97.72 9549.1984
330 96.72 9354.7584
227 -6.28 39.4384
162 -71.28 5080.8384
354 120.72 14573.3184
304 70.72 5001.3184
141 -92.28 8515.5984
158 -75.28 5667.0784
240 6.72 45.1584
82 -151.28 22885.6384
17 -216.28 46777.0384
357 123.72 15306.6384
187 -46.28 2141.8384
364 130.72 17087.7184
268 34.72 1205.4784
368 134.72 18149.4784
274 40.72 1658.1184
278 44.72 1999.8784
190 -43.28 1873.1584
344 110.72 12258.9184
157 -76.28 5818.6384
219 -14.28 203.9184
77 -156.28 24423.4384
171 -62.28 3878.7984
280 46.72 2182.7584
807968.16
instead of one by one calculation of necessary
statistics use data analysis descriptive statistics
in these kind of data lists.

90

n>= 30 Normal Distribution s~

1.96/=
x1.96/


215.64 250.92 We Estimate that mean amount
233.28 17.64 of delinquency for all accounts
to fall within this interval
OR USE Data/Data Analysis
Descriptive Statistics

Mean 233.28
Standard Error 9.033988347
Median 222
Mode 221
Standard Deviation 90.3398834705
Sample Variance 8161.2945454546
Kurtosis 0.2548102344
Skewness 0.4767998287
Range 495
Minimum 17
Maximum 512
Sum 23328
Count 100
Condence Level(95.0%) 17.9253928186
PROBLEM 2 SAME "UNOCCUPIED" PROBLEM TO SEE DESCRIPTIVE STATISTICS!
Unoccupied seats on flights cause airlines to lose revenue.
A large airline wants to estimate its average number of
NOSHOWS
12

2

unoccupied seats per flight over the past year. To do this 11 11.15 12.05
225 flights are randomly selected, and the number of 19 11.6 0.45
unoccupied seats is noted for each of the sampled flights. 6
(data is in airnoshow worksheet) 10 Interpretation:
Decriptive statistics for the data are displayed below. 8 At the 90% condence level, we estim
11 unoccupied seats per flight to be bet
Descriptive Statistics 13 (if you use minitab, these values will
10
Mean 11.5955555556 2
Standard Error 0.2735058818 20
Median 12 13
Mode 10 9
Standard Deviation 4.1025882268 10
Sample Variance 16.8312301587 13
Kurtosis 0.2430943946 7
Skewness -0.2936457933 18
Range 23 16
Minimum 0 12
Maximum 23 9
Sum 2609 12
Count 225 1
Condence Level(90.0%) 0.451745442 10
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6


% condence level, we estimate the mean number of

ed seats per flight to be between 11.15 and 12.05 during the sampled year.
e minitab, these values will be shown on the right of the minitab table.)
Confidence Interval for a Population Mean: Student's t statistics
Issues:
The shape of the sampling distributions of the sample mean x bar (and the z-statistics) now depends on the
shape of the population that is sampled. We can no longer assume that the sampling distribution of xbar is
approximately normal because the Central Limit Theorem ensures normality only for samples that are
suciently large.

The population standart deviation is almost unknown. Although it is still true that xbar = /
n
the sample standard deviation s may provide a poor approximation for when the sample size is small.
Solutions:
Instead of using the standard normal statistic which requires knowledge of a good approximation to
we dene and use t statistics in which
sample standard deviation, s, replaces the po
standard deviation.
Degrees of Freedom (df)
Some estimates are based on more information than others.
For example, an estimate of the variance based on a sample size of 100 is based on more
information than an estimate of the variance based on a sample size of 5. The degrees of freedom
(df) of an estimate is the number of independent pieces of information on which the estimate is based.

The actual amount of variability in the sampling distribution of t depends on the sample size n.
A convenient way of expressing the dependence is to say that the t-statistic has (n-1) degrees of freedom (df).

EXAMPLE 1
Consider the pharmaceutical company that desires an estimate of the mean increase in blood pressure of patients
who take a new drug. The blood pressure increases (points) for the n=6 patients who take a new drug.
The blood pressure increases (points) or the n=6 patients in the human testing phase are shown in the table below.
Use this information and construct a 95% condence interval for the mean increase in blood pressure
associated with the new drug for all patients in the population.

n=6 patien 1.7 3.0 0.8 3.4 2.7 2.1

recall below formula and subsitute t for z and s for .
 sd (n-1) = 5, and t /2 = t 0,025 t= 2,571 (from table 5. t distribution)

1.28587396 3.280126 We can be condent that the mean increase in blood pressure
associated with taking this new drug is between 1,286 and 3,28 points.

EXAMPLE 2
Suppose a manufacturer of printers for personal computers wishes to estimate the mean number of
characters printed before the printhead fails. The printer manifacturer test n = 15 randomly selected
printheads and records the number of characters printed until failure for each. These 15 measurements
(in millions characters) are listed in below table.

a. Form a 99% condence interval for the mean number of characters printed before printheads fails
Interpret the results.

Number of characters (in millions) Column1 Column2

for n=15 printhead tests
1 1.13 Mean 1.239 Mean
2 1.36 Standard Error 0.050 Standard Error
3 1.2 Median 1.25 Median
4 1.55 Mode #N/A Mode
5 1.32 Standard Deviat 0.193 Standard Deviation
6 1.33 Sample Varianc 0.037312381 Sample Variance
7 1.43 Kurtosis 0.0636359475 Kurtosis
8 0.85 Skewness -0.491257803 Skewness
9 1.18 Range 0.7 Range
10 0.92 Minimum 0.85 Minimum
11 1.07 Maximum 1.55 Maximum
12 1.22 Sum 18.58 Sum
13 1.25 Count 15 Count
14 1.48 Condence Leve0.1484693282 Condence Level(99.0%)
15 1.29

sd = n-1 15 99%= 2.977

ta/2=0.005

Mean (millions) (millions)

1.239 0.148 1.090 1.387
manifacturer can be 99% condent that
mean life of his printheads at least 1 million characters.
now depends on the
distribution of xbar is
samples that are

n
mple size is small.

proximation to
use t statistics in which
ard deviation, s, replaces the population

s of freedom
estimate is based.

degrees of freedom (df).

in blood pressure of patients

take a new drug.
are shown in the table below.
in blood pressure
Row1

Mean 2.283333
Standard Error 0.387657
Median 2.4
Mode #N/A
Standard Devia 0.949561
Sample Varianc 0.901667
 Kurtosis -0.38918
Skewness -0.57308
Range 2.6
286 and 3,28 points. Minimum 0.8
Maximum 3.4
Sum 13.7
Count 6

ean number of
domly selected
15 measurements

printheads fails

Standard Error

Standard Deviation
Sample Variance

Condence Level(99.0%)
Large Sample Confidence Interval for a Population Proportion
Estimating a Population Proportion
EXAMPLE 1
A food-products company conducted a market study by randomly sampling and interviewing 1,000 consumers
to determine which brand of breakfast cereal they prefer. Suppose 313 consumers were found to prefer the
company's brand. How would you estimate the true fraction of all customers who prefer the company's
cereal brand?
p-hat = # of consumers sampled who prefer company's brand / # of consumers sampled
p-hat =313/1000 = ,313
FORMULA p = x / n Where:
POPULATION PROPORTION x is the number of items youre interested in, and
n is the total number of items in the population.
CALCULATING P-HAT The actual calculation of p-hat is not challenging. To do it, you need two numbers. One
is the sample size (n) and the other is the number of occurrences of the event or parameter in question (X).
The equation for p-hat is p-hat = X/n. In words: You nd p-hat by dividing the number of occurrences
of the desired event by the sample size.

FORMULA
CONFIDENCE INTERVAL

Thus, if 313 or 1000 consumers prefer the company's cereal brand, a 95%
condence interval for the population of all customers who prefer the company brand is

((.313.687)/1000)
.313 1.96* (.284, .342)

The company can be 95% condent that the interval from 28.4% to 34.2% contains the true
percentage of all customers who prefer its brand.

EXAMPLE 2
Suppose that Bureau of Economic and Business Research at the University randomly samples
484 consumers and nds that 257 are optimistic about the state of the economy. Use 90%
condence interval to estimate the proportion of all consumers in Florida who are optimistic
about the state of the economy.

Point estimate of the proportion of Florida consumers, who are optimistic about the economy:
p = x/n 257/484 0.531 we rst check to be sure that the sample size is
suciently large that normal distribution provides
np-hat 257.004 a reasonable approximation for the sampling distribution
nq-hat 227 of p-hat.

((.531.469)/484)
.313 1,645* (.494, .568)
ADJUSTED CONFIDENCE INTERVAL If number of success is less than 15
EXAMPLE 3
According to True Odds: How Risk Affects your Everyday Life (Walsh, 1997), the probability of
being victim of a violent crime is less then .01. Suppose that in a random sample of 200 Americans,
3 victim of a violent crime. Estimate the true proportion of Americans, who were
victims of a violent crime using a 95% condence interval.

p almost 0 and 3 number of success is less than 15. We doupt whether the sample size 200 is large enough to
apply large sample method. Alternatively we wil apply the adjustment explained on the left box.

(3+2)/(200+4) =5/204

(((.025.975)/204@))
0.025 1.96*

0.025 .021 (0.004, 0.046)

if you solve it large sample condence interval:
0.015
((.015.985)/200)
.015.017 (-.002, .032)
.015 1,96*
wing 1,000 consumers
found to prefer the
r the company's

mers sampled

d two numbers. One

eter in question (X).
of occurrences

ng distribution
Americans,

200 is large enough to

Determining the Sample Size
We Estimated a Population Mean and know we will learn how to determine sample size.

In "Confidence Interval" Example 2 we estimated the mean overdue amount for all delinquent accounts in a large credit c
A sample of 100 delinquent accounts produced the 95% condence interval:
mean was 230 So, 95% condence means 2 standard deviations above and below the mean.

Mean was $35,28 wide when 100 accounts were sampled.

Suppose we estimate to within $5 wit 95% condence- that is
we want to narrow the width of the condence interval from $35,28
to $10. How much will be the sample size have to be increased to
accomplish this? This
2x =5 2(/ is
or
())=5
Sample size (n) needs approximation for to solve the problem :
Extr

Standart deviation for 100 initial sample was 90$.

17.64 17.64 35.28
2(/())= 2(/())=
2(90/())=5

= (2*90)/5 =36
Thus, 1296 account will have to be sampled randomly
to estimate the mean overdue amount to within n = 36 ^2 = 1296
$5 with 95% condence.
Determining the sample size
In order to estimate with a sampling error and with
100(1-)% condence, the requird sample size is
found as follows:

Z/2(/())=

The solution for n is given by the equation

n=(("Z/2" )
2
2/2)
PROBLEM:The manufacturer of ocial NFL footballs uses a machine to inflate its new balls
to a pressure of 13,5 pounds. When the machine is properly calibrated, the mean inflation pressure
is 13,5 pounds, but uncontrollable factors cause the pressures of individual footballs to vary
randomly from about 13,3 to 13,7 pounds. For quality control purposes, the manufacturer wishes to
estimate the mean inflation pressure to within 0,025 pound of its true value with a 99% condence
interval. What sample size should be used?

SOLUTION:We desire a 99% condence interval that estimates with a sampling error of SE=0,025 pound.
For a 99% condence interval, we have Z/2 = Z 0,05 = 2.575
Range of observations 13,7 - 13,3 =,4 A conservative estimate based on chebychev's rule is
=R/4 =.1.
n=(("Z/2" ) n=((("2" n=106,09
)
2 2/ 2
575)2(.1)2)/
(0,025)2))
(
counts in a large credit cooperation.

ence- that is
rval from $35,28
e increased to
This sheet
is for
Extra Info
he problem :
Finite Population Correction for Simple Random Sampling

We learned "In Large Sample Confidence Interval" . In some sampling situations we use finite population correction.
In some sampling situations, the sample size n may represent 5% or perhaps 10% of the total number of sampling units
in the population. When the sample size large relative to the number of measurementsin the population, the standad
errors of the estimators of or p (p cap, estimator of p) should be multiplied by a finite population correction factor.

Simple Random Sampling with Finite Population of Size N

Estimation of population mean
Estimated Standard Error
PROBLEM: A speciality manufacturer wants to purchase remnants of the
The foil, all of which is the same thickness is stored on 1462 rolls, each co
amount of foil. To obtain an estimate of the total number of square feet o
rolls, the manufacturer randomlu sampled 100 rolls and measured the nu
feet on each roll. The sample mean was 47,4, and the sample standard de

a.Find an approximate 95% condence interval for the mean amout of foi
N b. Estimate the total square feet of foil on all rolls by multiplying the con
Interpret the result.
Rule of Thumb for Finite
Population Correction Function: SOLUTION: Each roll of foil is a sampling unit, and there are N=1462 units
Use this correction when n/N >0,05 The sample size is n = 100. Because n/N = 100/1462 = 0,68 and exc
we need to apply nite population correction factor. We have n=100,x bar=
a.
47,4 2
N 12,4/
(100)

b. For nite population of size N the sum of all measurements in the pop
total
24_(=1)^
lower limitN(45,01) =1462(45,01)= 6580
=
Upper limiN(49.79)=1462(49.79) = 7279

Consequently, the manufacturer estimates the total amount of foil to be i

65805 square feet to 72793 square feet with 95% condence.
population correction.
mber of sampling units This sheet
is for Extra
pulation, the standad Info
on correction factor.

ts to purchase remnants of the aluminum foil.

s stored on 1462 rolls, each containing a varying
e total number of square feet of foil on all the
100 rolls and measured the number of square
4, and the sample standard deviation was 12.4.

rval for the mean amout of foil on the 1462 rolls.

ll rolls by multiplying the condence interval, part a by 1462.

nit, and there are N=1462 units in the population.

n/N = 100/1462 = 0,68 and exceeds 0,05
on factor. We have n=100,x bar=47,4, s=12,4

47,4 2,39 or (45.01, 49.79)

f all measurements in the population called a population

N(45,01) =1462(45,01)= 65804,6

N(49.79)=1462(49.79) = 72793,0

the total amount of foil to be in the interval of

h 95% condence.
NOSHOWS
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11
19
12
7
14
10
11
13
18
4
17
14
4
13
1
12
11
12
9
10
11
9
17
12
16
11
12
7
14
16
10
5
11
17
17
12
9
6
16
10
10
19
12
11
6
9
16
9
3
10
13
9
10
10
16
16
16
7
13
15
17
13
13
8
15
11
16
12
6
14
14
9
9
8
10
12
12
12
13
5
10
9
11
8
15
9
9
18
11
6
15
11
10
8
13
9
19
17
8
10
10
9
10
14
6
9
4
12
19
16
17
15
17
14
14
11
6
13
16
12
12
11
8
13
7
18
9
12
9
14
18
11
10
14
14
13
12
14
17
6
AMOUNT
195
243
132
133
209
400
142
312
221
289
221
162
134
275
355
293
242
458
378
148
278
222
236
178
202
222
334
208
194
135
363
221
449
265
146
215
113
229
221
243
512
193
134
138
209
207
206
310
293
310
237
135
252
365
371
238
232
271
121
134
203
178
180
148
162
160
86
234
244
266
119
259
108
289
328
331
330
227
162
354
304
141
158
240
82
17
357
187
364
268
368
274
278
190
344
157
219
77
171
280