Statistical Inference: Estimation for

Single Populations

8-1
 Learning
Learning Objectives
Objectives
• Know the difference between point and interval
estimation.
• Estimate a population mean from a sample mean
for large sample sizes.
• Estimate a population mean from a sample mean
for small sample sizes.
• Estimate a population proportion from a sample
proportion.
• Estimate the population variance from a sample
variance.
• Estimate the minimum sample size necessary to
achieve given statistical goals.
8-2
 Statistical
Statistical Estimation
Estimation

• Point estimate -- the single value of a statistic

calculated from a sample

• Interval Estimate -- a range of values calculated

from a sample statistic(s) and standardized
statistics, such as the Z.
– Selection of the standardized statistic is
determined by the sampling distribution.
– Selection of critical values of the standardized
statistic is determined by the desired level of
confidence.
8-3
Confidence
Confidence Interval
Interval to Estimate µ
to Estimate
when
when nn is
is Large
Large

• Point estimate X=
∑ X
n

σ
• Interval X±Z
n
Estimate
or
σ σ
X−Z ≤µ≤ X+Z
n n
8-4
Distribution
Distribution of
of Sample
Sample Means
Means
for
for (1-α)%
(1-α)% Confidence
Confidence

α α
2 2
1−α

µ X

Z
− Zα 0 Z α
2 2

8-5
Distribution
Distribution of
of Sample
Sample Means
Means
for
for (1-α)%
(1-α)% Confidence
Confidence

α α
2 α α 2
.5− .5−
2 2
µ X

Z
− Zα 0 Zα
2 2

8-6
Distribution
Distribution of
of Sample
Sample Means
Means
for
for (1-α)%
(1-α)% Confidence
Confidence

α α
2 1−α 1−α 2
2 2
µ X

Z
− Zα 0 Z α
2 2

8-7
 Probability
Probability Interpretation
Interpretation
of
of the
the Level
Level of
of Confidence
Confidence

σ σ
Pr ob[ X − Z α ≤ µ ≤ X + Zα ] = 1− α
2 n 2 n

8-8
Distribution
Distribution of
of Sample
Sample Means
Means
for
for 95%
95% Confidence
Confidence

.025 .025
95%
.4750 .4750

µ X

Z
-1.96 0 1.96

8-9
95%
95% Confidence
Confidence Interval for µ
Interval for
X = 4.26, σ = 11
. , and n = 60.

σ σ
X −Z ≤µ≤ X +Z
n n
11. 11
.
4.26 − 196
. ≤ µ ≤ 4.26 + 196
.
60 60
4.26 − 0.28 ≤ µ ≤ 4.26 + 0.28
3.98 ≤ µ ≤ 4.54
8-10
95%
95% Confidence
Confidence Intervals for µ
Intervals for

95%

µ X

X
X

X
X
X
X

8-11
95%
95% Confidence
Confidence Intervals for µµ
Intervals for
Is our interval,
95%
3.98 ≤ µ ≤ 4.54,
in the red?
µ X

X
X

X
X
X
X

8-12
 Demonstration
Demonstration Problem
Problem 8.1
8.1
X = 10.455, σ = 7.7, and n = 44.
90% confidence ⇒ Z = 1645
.
σ σ
X −Z ≤µ≤ X +Z
n n
7.7 7.7
10.455 − 1.645 ≤ µ ≤ 10.455 + 1.645
44 44
10.455 − 1.91 ≤ µ ≤ 10.455 + 1.91
8.545 ≤ µ ≤ 12.365

Pr ob[8.545 ≤ µ ≤ 12.365] = 0.90

8-13
 Demonstration
Demonstration Problem
Problem 8.2
8.2
X = 34.3, σ = 8, N = 800 and n = 50.
98% confidence ⇒ Z = 2.33

σ N −n σ N −n
X −Z ≤µ≤ X +Z
n N −1 n N −1
8 800 − 50 8 800 − 50
34.3 − 2.33 ≤ µ ≤ 34.3 + 2.33
50 800 − 1 50 800 − 1
34.3 − 2.554 ≤ µ ≤ 34.3 + 2.554
. ≤ µ ≤ 36.85
3175
8-14
Confidence
Confidence Interval
Interval to Estimate µ
to Estimate
when
when nn is Large and σ is
is Large is Unknown
Unknown

S
X ± Zα 2
n
or
S S
X − Zα ≤ µ ≤ X + Zα
2
n n
2

8-15
Z
Z Values
Values for
for Some
Some ofof the
the More
More
Common
Common Levels
Levels of
of Confidence
Confidence

Confidence
Z Value
Level

90% 1.645

95% 1.96

98% 2.33

99% 2.575

8-16
 Estimating
Estimating the
the Mean
Mean of
of aa Normal
Normal
Population:
Population: Small nn and Unknown σ
and Unknown
• The population has a normal distribution.
• The value of the population standard
deviation is unknown.
• The sample size is small, n < 30.
• Z distribution is not appropriate for these
conditions
• t distribution is appropriate

8-17
 The
The tt Distribution
Distribution
• Developed by British statistician, William
Gosset
• 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 formula t = X − µ
S
n
8-18
Comparison
Comparison of
of Selected
Selected tt Distributions
Distributions
to
to the
the Standard
Standard Normal
Normal
Standard Normal
t (d.f. = 25)
t (d.f. = 5)
t (d.f. = 1)

-3 -2 -1 0 1 2 3

8-19
 Table
Table of
of Critical
Critical Values
Values of
of tt

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 α
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
0 tα
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

8-20
Confidence
Confidence Intervals for µ of
Intervals for of aa Normal
Normal
Population:
Population: Small
Small nn and Unknown σ
and Unknown
S
X ±t
n
or
S S
X −t ≤µ ≤ X +t
n n
df = n − 1
8-21
Solution for Demonstration Problem 8.3
X = 2 .1 4 , S = 1.2 9 , n = 1 4 , d f = n − 1 = 1 3
α 1 − .9 9
= = 0 .0 0 5
2 2
t .0 0 5 ,1 3 = 3.0 1 2
S S
X −t ≤ µ ≤ X +t
n n
1 . 29 1 . 29
2 . 14 − 3 . 012 ≤ µ ≤ 2 . 14 + 3 . 012
14 14
2 . 14 − 1 . 04 ≤ µ ≤ 2 . 14 + 1 . 04
1 . 10 ≤ µ ≤ 3 . 18
8-22
Solution
Solution for
for Demonstration
Demonstration Problem
Problem 8.3
8.3
S S
X −t ≤ µ ≤ X +t
n n
1.2 9 1.2 9
2 .1 4 − 3.0 1 2 ≤ µ ≤ 2 .1 4 + 3.0 1 2
14 14
2 .1 4 − 1.0 4 ≤ µ ≤ 2 .1 4 + 1.0 4
1.1 0 ≤ µ ≤ 3.1 8

. ≤ µ ≤ 318
Pr ob[110 . ] = 0.99

8-23
Confidence
Confidence Interval
Interval to
to Estimate
Estimate
the
the Population
Population Proportion
Proportion

pq 
pq
p − Z α ≤ P ≤ p + Z α
2 n 2 n
where:
p = sample proportion
q = 1 - p
P = population proportion
n = sample size
8-24
Solution
Solution for
for Demonstration
Demonstration Problem
Problem 8.5
8.5
X 34
n = 212 , X = 34 , p = = = 0.16
n 212
q = 1 - p = 1 − 0.16 = 0.84
90% Confidence ⇒ Z = 1.645


pq 
pq
p − Z ≤ P ≤ p + Z
n n
( 0.16 )( 0.84 ) ( 0.16 )( 0.84 )
0.16 − 1.645 ≤ P ≤ 0.16 − 1.645
212 212
0.16 − 0.04 ≤ P ≤ 0.16 + 0.04
0.12 ≤ P ≤ 0.20

Pr ob[ 0.12 ≤ P ≤ 0.20] = 0.90 8-25

 Population
Population Variance
Variance
• Variance is an inverse measure of the group’s
homogeneity.
• Variance is an important indicator of total quality
in standardized products and services. Managers
improve processes to reduce variance.
• Variance is a measure of financial risk. Variance of
rates of return help managers assess financial and
capital investment alternatives.
• Variability is a reality in global markets.
Productivity, wages, and costs of living vary
between regions and nations.

8-26
Estimating
Estimating the
the Population
Population Variance
Variance
• Population Parameter σ2
• Estimator of σ2
∑ (X − X )
2

2
S =
n−1
• χ2 formula for Single Variance

χ =
2(n −1)S
2

σ
2

degrees of freedom = n - 1
8-27
 Confidence Interval for
Confidence Interval for σ 22

( n − 1) S 2
( n − 1) S 2

≤σ ≤
2

χ χ
2 2
α α
1−
2 2

df = n − 1
α = 1 − level of confidence
8-28
 Selected χ
Selected χ Distributions
22 Distributions

df = 3

df = 5

df = 10

8-29
 χχ22 Table
Table

df 0.975 0.950 0.100 0.050 0.025

1 9.82068E-04 3.93219E-03 2.70554 3.84146 5.02390 df = 5
2 0.0506357 0.102586 4.60518 5.99148 7.37778
3 0.2157949 0.351846 6.25139 7.81472 9.34840
4 0.484419 0.710724
5 0.831209 1.145477
7.77943
9.23635
9.48773
11.07048
11.14326
12.83249
0.10
6 1.237342 1.63538 10.6446 12.5916 14.4494
7 1.689864 2.16735 12.0170 14.0671 16.0128
8 2.179725 2.73263 13.3616 15.5073 17.5345
9 2.700389 3.32512 14.6837 16.9190 19.0228
10 3.24696 3.94030 15.9872 18.3070 20.4832 0 5 10 15 20

20 9.59077 10.8508 28.4120 31.4104 34.1696

9.23635
21 10.28291 11.5913 29.6151 32.6706 35.4789
22 10.9823 12.3380 30.8133 33.9245 36.7807
23 11.6885 13.0905 32.0069 35.1725 38.0756
24 12.4011 13.8484 33.1962 36.4150 39.3641
25 13.1197 14.6114 34.3816 37.6525 40.6465

70 48.7575 51.7393 85.5270 90.5313 95.0231

80 57.1532 60.3915 96.5782 101.8795 106.6285
90 65.6466 69.1260 107.5650 113.1452 118.1359
100 74.2219 77.9294 118.4980 124.3421 129.5613
8-30
 Two Table Values of χ
Two Table Values of χ 22

df = 7 df
1
0.950
3.93219E-03
0.050
3.84146
2 0.102586 5.99148
3 0.351846 7.81472
4 0.710724 9.48773
5 1.145477 11.07048
.05 6 1.63538 12.5916
7 2.16735 14.0671
8 2.73263 15.5073
.95 9 3.32512 16.9190
10 3.94030 18.3070

20 10.8508 31.4104
21 11.5913 32.6706
.05 22 12.3380 33.9245
23 13.0905 35.1725
24 13.8484 36.4150
0 2 4 6 8 10 12 14 16 18 20 25 14.6114 37.6525

2.16735 14.0671

8-31
90% Confidence Interval for σ
90% Confidence Interval for σ 22

= .0022125, n = 8, df = n − 1 = 7 , α = .10
2
S
χ χ χ
2 2 2
α = .1 = .05
= 14.0671
2 2

χ χ χ
2 2 2

1−
α = 1−
.1 = .95
= 2.16735
2 2

( n − 1) S 2 ( n − 1) S 2
≤σ ≤
2

χ χ
2 2
α α
1−
2 2

( 8 − 1).0022125 ( 8 − 1).0022125
≤σ ≤
2

14.0671 2.16735
.001101 ≤ σ ≤ .007146
2

Pr ob[ 0.001101 ≤ σ ≤ 0.007146] = 0.90

2
8-32
Solution for Demonstration Problem 8.6
= 570,025, n = 25, df = n − 1 = 24 , α = .05
2
S
χ χ χ
2 2 2
α = . 05 = . 025
= 39.3641
2 2

χ χ χ
2 2 2

1−
α = 1−
. 05 = . 975
= 12.4011
2 2

( n − 1) S 2 ( n − 1) S 2
≤σ ≤
2

χ χ
2 2
α α
1−
2 2

( 25 − 1) (570,025) ( 25 − 1) (570,025)
≤σ ≤
2

39.3641 12.4011
347 ,540 ≤ σ ≤ 1,103,176
2

8-33
 Determining
Determining Sample
Sample Size
Size
when Estimating µµ
when Estimating
• Z formula X −µ
Z=
σ
n

• Error of Estimation E = X − µ
(tolerable error)
Z α2 σ ⎛ Z α2 σ ⎞
2
• Estimated Sample Size 2 2

n= =⎜ ⎟
⎝ E ⎠
2
E
• Estimated σ 1
σ≈ range
4
8-34
Sample Size When Estimating µ: Example
E = 1, σ = 4
90% confidence ⇒ Z = 1.645

Zασ
2 2

n= 2
2
E
2 2

=
(1645
. ) ( 4 )
2
1
= 43.30 or 44

8-35
Solution for Demonstration Problem 8.7
E = 2 , range = 25
95% confidence ⇒ Z = 1.96
1 ⎛ 1⎞
estimated σ : range = ⎜ ⎟ ( 25) = 6.25
4 ⎝ 4⎠

Zσ
2 2

n= 2
E
2 2

=
(196
. ) ( 6.25)
2
2
= 37 .52 or 38
8-36
 Determining
Determining Sample
Sample Size
Size
when
when Estimating
Estimating PP
•Z p − P
Z=
formula P ⋅Q
n

• Error of Estimation (tolerable

error) E = p − P
• Estimated Sample
Z
2
Size PQ
n=
E
2

8-37
Solution for Demonstration Problem 8.8
E = 0.03
98% Confidence ⇒ Z = 2.33
estimated P = 0.40
Q = 1 − P = 0.60

n=
Z PQ
2
E
( 0.40)( 0.60)
2

=
( 2.33)
(.003) 2

= 1,447.7 or 1,448
8-38
 Determining Sample Size when
Estimating P with No Prior Information
P PQ 400 Z = 1.96
350 E = 0.05
0.5 0.25
300
0.4 0.24 250
n 200
0.3 0.21
150
0.2 0.16 100
50
0.1 0.09
0
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
P
1
Z
2

n= 4
E
2

8-39
Solution for Demonstration Problem 8.9
E = 0.05
90% Confidence ⇒ Z = 1.645
with no prior estimate of P , use P = 0.50
Q = 1 − P = 0.50
2

n=
Z PQ
2
E
( 0.50)( 0.50)
2

=
(1645
. )
(.05) 2

= 270.6 or 271
8-40