Chapter 8

Statistical Inference:


Estimation for Single Populations
This chapter broadly Focus on below points
The difference between point and interval
estimation.
Estimation of a population mean from a sample
mean when o is known.
Estimation of a population mean from a sample
mean when o is unknown.
Estimating the Population Mean
A point estimate is a static taken from a sample that is
used to estimate a population parameter
Interval estimate - a range of values within which
the analyst can declare, with some confidence, the
population lies
Confidence Interval to Estimate when o is Known
Point estimate





Interval Estimate
n
x
x
E
=
n
z x
n
z x
or
n
z x
o

o
o
+ s s

Distribution of Sample Means for 95% Confidence

.4750 .4750
X
95%
.025 .025
Z
1.96 -1.96 0
Estimating the Population Mean
For a 95% confidence interval
= .05
/2 = .025

Value of /2 or z
.025
look at the standard normal
distribution table under
.5000 - .0250 = .4750
From Table A5 look up .4750, and read 1.96 as the
z value from the row and column
Estimating the Population Mean
is used to locate the Z value in constructing the
confidence interval
The confidence interval yields a range within
which the researcher feel with some confidence
the population mean is located
Z score the number of standard deviations a
value (x) is above or below the mean of a set of
numbers when the data are normally distributed
95% Confidence Intervals for

X
95%
X
X
X
X
X
X
96 . 1 , 85 , 46 , 510
2 /
= = = =
o
o z n x
78 . 519 22 . 500
78 . 9 510 78 . 9 510
85
46
96 . 1 510
85
46
96 . 1 510
2 / 2 /
s s
+ s s
+ s s
+ s s

o
o o
n
z x
n
z x
95% Confidence Interval for
Demonstration Problem 8.1
A survey was taken of U.S. companies that do
business with firms in India. One of the questions
on the survey was: Approximately how many years
has your company been trading with firms in India?
A random sample of 44 responses to this question yielded
a mean of 10.455 years. Suppose the population standard
deviation for this question is 7.7 years. Using this
information, construct a 90% confidence interval for the
mean number of years that a company has been trading
in India for the population of U.S. companies trading with
firms in India.
365 . 12 545 . 8
91 . 1 455 . 10 91 . 1 455 . 10
44
7 . 7
645 . 1 455 . 10
44
7 . 7
645 . 1 455 . 10
s s
+ s s
+ s s
+ s s

o
n
z x
n
z x
645 . 1 confidence % 90
. 44 , 7 . 7 , 455 . 10
=
= = =
z
n x o
Demonstration Problem 8.1
Demonstration Problem 8.2
A study is conducted in a company that employs
800 engineers. A random sample of 50 engineers
reveals that the average sample age is 34.3 years.
Historically, the population standard deviation of
the age of the companys engineers is
approximately 8 years. Construct a 98%
confidence interval to estimate the average age of
all the engineers in this company.
85 . 36 75 . 31
554 . 2 3 . 34 554 . 2 3 . 34
1 800
50 800
50
8
33 . 2 3 . 34
1 800
50 800
50
8
33 . 2 3 . 34
1 1
s s
+ s s

+ s s

+ s s

o
N
n N
n
z x
N
n N
n
z x
33 . 2 confidence % 98
. 50 and , 800 = , 8 , 3 . 34
=
= = =
z
n N x o
Demonstration Problem 8.2
Estimating the Mean of a Normal Population:
Unknown o
The population has a normal distribution.
The value of the population Standard Deviation is
unknown, then sample Std Dev must be used in
the estimation process.
z distribution is not appropriate for these
conditions when the Population Std Dev is
unknown, t distribution is appropriate, and you
use the Sample Std Dev in the t formula
t Distribution
A family of distributions - a unique distribution for each
value of its parameter, degrees of freedom (d.f.)
Symmetric, Unimodal, Mean = 0, Flatter than a z
t distribution is used instead of the z distribution for
doing inferential statistics on the population mean when
the population Std Dev is unknown and the population
is normally distributed
With the t distribution,use the Sample Std Dev
n
s
x
t

=
t Distribution
A family of distributions - a unique distribution for
each value of its parameter using degrees of freedom
(d.f.)
Symmetric, Unimodal, Mean = 0, Flatter than a z
t formula
t Distribution Characteristics
t distribution flatter in middle and have more
area in their tails than the normal distribution
t distribution approach the normal curve as n becomes
larger
t distribution is to be used when the population variance
or population Std Dev is unknown, regardless of the size
of the sample
Reading the t Distribution
t table uses the area in the tail of the distribution
Emphasis in the t table is on , and each tail of the
distribution contains /2 of the area under the curve
when confidence intervals are constructed
t values are located at the intersection of the df
value and the selected /2 value
1
1 , 2 / 1 , 2 /
1 , 2 /
=
+ s s

n df
n
s
t x
n
s
t x
or
n
s
t x
n n
n
o o
o

Confidence Intervals for of a Normal Population:

Unknown o
Table of Critical Values of t
to
o
0
With df = 24 and o = 0.05,
t
o
= 1.711.
df
t0.100 t0.050 t0.025 t0.010 t0.005
1 3.078 6.314 12.706 31.821 63.656
2 1.886 2.920 4.303 6.965 9.925
3 1.638 2.353 3.182 4.541 5.841
4 1.533 2.132 2.776 3.747 4.604
5 1.476 2.015 2.571 3.365 4.032
23 1.319 1.714 2.069 2.500 2.807
24 1.318 1.711 2.064 2.492 2.797
25 1.316 1.708 2.060 2.485 2.787
29 1.311 1.699 2.045 2.462 2.756
30 1.310 1.697 2.042 2.457 2.750
40 1.303 1.684 2.021 2.423 2.704
60 1.296 1.671 2.000 2.390 2.660
120 1.289 1.658 1.980 2.358 2.617
1.282 1.645 1.960 2.327 2.576

1 =
+ s s

n df
n
s
t x
n
s
t x
or
n
s
t x

Confidence Intervals for of a Normal Population:

Unknown o
Demonstration Problem 8.3
The owner of a large equipment rental company wants to make a
rather quick estimate of the average number of days a piece of ditch
digging equipment is rented out per person per time. The company
has records of all rentals, but the amount of time required to
conduct an audit of all accounts would be prohibitive. The owner
decides to take a random sample of rental invoices. Fourteen
different rentals of ditch diggers are selected randomly from the files,
yielding the following data. She uses these data to construct a 99%
confidence interval to estimate the average number of days that a
ditch digger is rented and assumes that the number of days per
rental is normally distributed in the population.

3 1 3 2 5 1 2 1 4 2 1 3 1 1
18 . 3 10 . 1
04 . 1 14 . 2 04 . 1 14 . 2
14
29 . 1
012 . 3 14 . 2
14
29 . 1
012 . 3 14 . 2
s s
+ s s
+ s s
+ s s

n
s
t x
n
s
t x
012 . 3
005 . 0
2
99 . 1
2
13 1 , 14 , 29 . 1 , 14 . 2
13 , 005 .
=
=

=
= = = = =
t
n df n s x
o
Solution for Demonstration Problem 8.3
MINITAB Solution for Demonstration Problem 8.3
Comp Time: Excel Normal View
size sample =
proportion population =

- 1 =

proportion sample =

2 2
n
p
p q
p
where
n
q p
z p p
n
q p
z p
o o
+ s s
Confidence Interval to Estimate the Population
Proportion
Estimating the population proportion often
must be made
Demonstration Problem 8.5
A clothing company produces mens jeans. The jeans are
made and sold with either a regular cut or a boot cut. In
an effort to estimate the proportion of their mens jeans
market in Oklahoma City that prefers boot-cut jeans, the
analyst takes a random sample of 212 jeans sales from
the companys two Oklahoma City retail outlets. Only 34
of the sales were for boot-cut jeans. Construct a 90%
confidence interval to estimate the proportion of the
population in Oklahoma City who prefer boot-cut jeans.
20 . 0 12 . 0
04 . 0 16 . 0 04 . 0 16 . 0
212
) 84 . 0 )( 16 . 0 (
645 . 1 16 . 0
212
) 84 . 0 )( 16 . 0 (
645 . 1 16 . 0

s s
+ s s
+ s s
+ s s
p
p
p
n
q p
z p p
n
q p
z p
645 . 1 % 90
84 . 0 16 . 0 1

- 1 =

16 . 0
212
34

, 34 , 212
=
= =
= = = = =
z Conf idence
p q
n
x
p x n
Solution for Demonstration Problem 8.5
1
) (
2
2

=
n
x x
s
1 - freedom of degrees
) 1 (
2
2
2
n
s n
=

=
o
_
Estimating the Population Variance
Population Parameter o
2

Estimator of o
2




_
2
formula for Single Variance
( ) ( )
confidence of level 1
1
1 1
2
2
1
2
2
2
2
2
=
=

s s

o
_
o
_ o o
n df
s n s n
Confidence Interval for o
2

Two Table Values of _
2

0 2 4 6 8 10 12 14 16 18 20
df = 7
.05
.05
.95
2.16735 14.0671
df 0.950 0.050
1 3.93219E-03 3.84146
2 0.102586 5.99148
3 0.351846 7.81472
4 0.710724 9.48773
5 1.145477 11.07048
6 1.63538 12.5916
7 2.16735 14.0671
8 2.73263 15.5073
9 3.32512 16.9190
10 3.94030 18.3070
20 10.8508 31.4104
21 11.5913 32.6706
22 12.3380 33.9245
23 13.0905 35.1725
24 13.8484 36.4150
25 14.6114 37.6525
90% Confidence Interval for o
2

007146 . 001101 .
16735 . 2
0022125 ). 1 8 (
0671 . 14
0022125 ). 1 8 (
) 1 ( ) 1 (
________ __________ __________ __________
16735 . 2
0671 . 14
10 . , 7 1 , 8 , 0022125 .
2
2
2
2
1
2
2
2
2
2
2
95 .
2
2
1 .
1
2
2
1
2
05 .
2
2
1 .
2
2
2
s s

s s

s s

= = =
= = =
= = = = =

o
o
_
o
_
_ _ _
_ _ _
o
o o
o
o
s n s n
n df n s
Demonstration Problem 8.6
The U.S. Bureau of Labor Statistics publishes data on the hourly
compensation costs for production workers in manufacturing for
various countries. The latest figures published for Greece show that
the average hourly wage for a production worker in manufacturing is
$16.10. Suppose the business council of Greece wants to know how
consistent this figure is. They randomly select 25 production workers
in manufacturing from across the country and determine that the
standard deviation of hourly wages for such workers is $1.12. Use this
information to develop a 95% confidence interval to estimate the
population variance for the hourly wages of production workers in
manufacturing in Greece. Assume that the hourly wages for
production workers across the country in manufacturing are normally
distributed.
( ) ( )
( ) ( )
4277 . 2 7648 . 0
4011 . 12
) 2544 . 1 ( 1 25
3641 . 39
) 2544 . 1 ( 1 25
1 1
2
2
2
2
1
2
2
2
2
2
s s

s s

s s

o
o
_
o
_ o o
s n s n
4011 . 12
3641 . 39
05 . , 24 1 , 25 , 2544 . 1
2
975 .
2
2
05 .
1
2
2
1
2
025 .
2
2
05 .
2
2
2
= = =
= = =
= = = = =

_ _ _
_ _ _
o
o
o n df n s
Solution for Demonstration Problem 8.6
Determining Sample Size when Estimating
It may be necessary to estimate the sample size when
working on a project
In studies where is being estimated, the size of the
sample can be determined by using the z formula for
sample means to solve for n
Difference between and is the error of
estimation
Error of Estimation = ( - )
x
x
Determining Sample Size when Estimating
z formula


Error of Estimation (tolerable error)


Estimated Sample Size

Estimated o
n
x
z
o

=
= x E
|
|
.
|

\
|
= =
E
z
E
z
n
o
o
o o
2
2
2
2 2
2
o ~
1
4
range
44 or 30 . 43
1
2
) 4 (
2
) 645 . 1 (
2
2
2 2
2
=
=
=
E
z
n
o
o
645 . 1 confidence % 90
4 , 1
=
= =
z
E o
Sample Size When Estimating : Example
Demonstration Problem 8.7
Suppose you want to estimate the average age of all
Boeing 737-300 airplanes now in active domestic U.S.
service. You want to be 95% confident, and you want
your estimate to be within one year of the actual figure.
The 737-300 was first placed in service about 24 years
ago, but you believe that no active 737-300s in the U.S.
domestic fleet are more than 20 years old. How large of
a sample should you take?
38 or 52 . 37
2
2
) 25 . 6 (
2
) 96 . 1 (
2
2
2 2
=
=
=
E
z
n
o
( ) 25 . 6 25
4
1
4
1
:
96 . 1 confidence % 95
25 , 2
=
|
.
|

\
|
=
=
= =
range estimated
z
range E
o
Solution for Demonstration Problem 8.7
Determining Sample Size when Estimating p
z formula



Error of Estimation (tolerable error)



Estimated Sample Size
n
q p
p p
Z

=

p p E =

E
pq z
n
2
2
=
Demonstration Problem 8.8
Hewitt Associates conducted a national survey to
determine the extent to which employers are promoting
health and fitness among their employees. One of the
questions asked was, Does your company offer on-site
exercise classes? Suppose it was estimated before the
study that no more than 40% of the companies would
answer Yes. How large a sample would Hewitt Associates
have to take in estimating the population proportion to
ensure a 98% confidence in the results and to be within
.03 of the true population proportion?
448 , 1 or 7 . 447 , 1
) 003 (.
) 60 . 0 )( 40 . 0 ( ) 33 . 2 (
2
2
2
2
=
=
=
E
pq z
n
60 . 0 1
40 . 0
33 . 2 % 98
03 . 0
= =
=
=
=
P Q
P estimated
Z Conf idence
E
Solution for Demonstration Problem 8.8