Quantitative Methods 2010

8 Practice Problems In Interval Estimation

QM 2010 - Kingston

Problem 1
A study was done on excess baggage checked in on 64 Kingfisher flights, and the average excess was found to be 22.5 kg. From previous studies, the population standard deviation of excess baggage is known to be 4.5 kg. What is the 95 % CI on the average excess baggage found above? What is the 99% CI on the same?
QM 2010 - Kingston 2

Solution To Problem 1
Given: x = 22.5 kg, n = 64 = 4.5 kg The standard error of the mean of samples of size 64 is: 4.5 4.5
x
n 64 8 0.56

For 95% CI, we use 1.96 CI is: 22.5 1.96(0.56) = 21.4024 and 23.5976 For 99% CI we use 2.58 CI is: 22.5 2.58(0.56) = 21.0552 and 23.9448
QM 2010 - Kingston 3

Problem 2
A random sample of one hundred customers at Haiko supermarket were asked to rate a new Orange drink on a 1-to-10 scale. The average rating of the sample was 8.3, and the sample variance was 1.8. What is the 90% CI on the sample mean?

QM 2010 - Kingston

Solution to Problem 2
Given: x =8.3 s2 = 1.8 n = 100 Since only sample variance is known, we use
sx s 1.3412 0.1341 10 n 100 1.8

For 90% CI we use 1.64 CI is: 8.3 1.64(0.1342) = 8.08 and 8.52

QM 2010 - Kingston

Problem 3
Total 350 customers tried out a new dishwashing detergent put out by Godrej. They were asked to rate it on a 1-to-10 scale. From the records, 50 responses were selected at random, and the mean was found to be 7.65 with a standard deviation of 1.36. What is the 90% CI on the sample mean?

QM 2010 - Kingston

Solution To Problem 3
Given: x = 7.65 s = 1.36 n = 50 N = 350 Since only sample variance is known, we use
sx s 1.36 0.1757 n 50 7.7404 1.36

Also since n/N > 0.05, we will have to use finitepopulation-correction.

sx s n N n 350 50 0.1757 0.1757(0.9271) 0.1629 N 1 350 1

CI for 90% is: 7.65 1.64(0.1629) = 7.3828 and 7.9172

QM 2010 - Kingston 7

Problem 4
A bank studied a random sample of 20 cases of credit card fraud reported by customers and found that the average loss to the customer was Rs.27,000 with a standard deviation of Rs.6,000. What is the 90% CI on the sample mean.

QM 2010 - Kingston

Solution To Problem 4
Given: x = 27000 s = 6000 n = 20 CL = 90% s 6000 6000 We calculate
sx n 20 4.4721 1341 .65

Since the sample size is < 30, we have to use the t- distribution. From t- table for 19 df and 2-tail probability of 0.10, the t-value is 1.729 So 90% CI is: 27000 1.729(1341.65) = 24680.29 and 29319.71
QM 2010 - Kingston 9

Problem 5
The Dean of a business school surveyed 150 students of the graduating class and found that 42% were unable to look up Normal table correctly. Construct a 99% confidence interval for the true proportion of students who cannot look up Normal table correctly.

QM 2010 - Kingston

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Solution To Problem 5
Given: n = 150 p = 0.42 CL = 99% p q = 0.42 (0.58 ) = 0.0403 Then 150
n

For 99% confidence, z = 2.58 --- from Normal table. pq p z CI is: = 0.42 2.58(0.043) n = 0.316 and 0.524
QM 2010 - Kingston 11

End Of Practice Problems On Interval Estimation

QM 2010 - Kingston

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