CONFIDENCE INTERVAL

Confidence Intervals for a Mean

Point Estimations
Usually, we do not know the population mean and standard deviation. Our goal is to estimate these numbers. The standard way to accomplish this is to use the sample mean and standard deviation as a best guess for the true population mean and standard deviation. We call this "best guess" a point estimate. A Point Estimate is a statistic that gives a plausible estimate for the value in question. Example: x is a point estimate for Q s is a point estimate for W

A point estimate is unbiased if its mean represents the value that it is estimating.

Confidence Intervals
We are not only interested in finding the point estimate for the mean, but also determining how accurate the point estimate is. The Central Limit Theorem plays a key role here. We assume that the sample standard deviation is close to the population standard deviation (which will almost always be true for large samples). Then the Central Limit Theorem tells us that the standard deviation of the sampling distribution is

We will be interested in finding an interval around x such that there is a large probability that the actual mean falls inside of this interval. This interval is called a confidence interval and the large probability is called the confidence level.

Example Suppose that we check for clarity in 50 locations in Lake Tahoe and discover that the average depth of clarity of the lake is 14 feet. Suppose that we know that the standard

deviation for the entire lake's depth is 2 feet. What can we conclude about the average clarity of the lake with a 95% confidence level?

Solution We can use x to provide a point estimate for Q . How accurate is x as a point estimate? We construct a 95% confidence interval for Q as follows. We draw the picture and realize that we need to use the table to find the z-score associated to the probability of .025 (there is .025 to the left and .025 to the right).

We arrive at z = -1.96. Now we solve for x:

x - 14 -1.96 =
2/ Hence =

x - 14
0.28

x - 14 = -0.55
We say that 0.55 is the margin of error.

We have that a 95% confidence interval for the mean clarity is

(13.45,14.55)
In other words there is a 95% chance that the mean clarity is between 13.45 and 14.55.

In general if zc is the z value associated with c% then a c% confidence interval for the mean is

Confidence Interval for a Mean When the Population Standard Deviation is Unknown

When the population is normal or if the sample size is large, then the sampling distribution will also be normal, but the use of s to replace W is not that accurate. The smaller the sample size the worse the approximation will be. Hence we can expect that some adjustment will be made based on the sample size. The adjustment we make is that we do not use the normal curve for this approximation. Instead, we use the Student t distribution that is based on the sample size. We proceed as before, but we change the table that we use. This distribution looks like the normal distribution, but as the sample size decreases it spreads out. For large n it nearly matches the normal curve. We say that the distribution has n - 1 degrees of freedom.

Example Suppose that we conduct a survey of 19 millionaires to find out what percent of their income the average millionaire donates to charity. We discover that the mean percent is 15 with a standard deviation of 5 percent. Find a 95% confidence interval for the mean percent. Assume that the distribution of all charity percents is approximately normal.

Solution We use the formula:

(Notice the t instead of the z and s instead of s) We get

15

tc 5 /

Since n = 19, there are 18 degrees of freedom. Using the table in the back of the book, we have that

tc = 2.10
Hence the margin of error is

2.10 (5) /

2.4

We can conclude with 95% confidence that the millionaires donate between 12.6% and 17.4% of their income to

SAMPLE SIZE CALCULATION

To calculate a sample size you need to know: 1. The confidence level required (90%, 95%, 99%) 2. The desired width of the confidence interval 3. The variability of the characteristic (e.g., mean) The QI Macros Sample Size Calculator is designed to work with both variable (measured) and attribute (counted) data. To open the Sample Size Calculator click on the QI Macros menu, then Anova and Analysis Tools and then Sample Size Calculator. you should see the following:

The defaults are set to standard parameters but can be changed:

y y y y

90% confidence level +0.05 confidence interval (1/2 of desired width) Variable data with standard deviation of (0.167) Attribute data with percent defects of 50%

The Population is also an input area as evidenced by its yellow shading. Confidence Level In sampling, you want to know how well a sample reflects the total population. The 95% confidence level means you can be 95% certain that the sample reflects the population within the confidence interval. Step 1 - Select a confidence level (Typically 95%) Confidence Interval The confidence interval represents the range of values which includes the true value of the population parameter being measured. Step 2 - Set the confidence interval (e.g., + .05)

Step 3 - Attribute data - Set percent defects to 0.5 If 95 out of 100 are good and only 5 are bad, then you wouldn't need a very large sample to estimate the population. If 50 are bad and 50 are good, you'd need a much larger sample to achieve the desired confidence level. Since you don't know beforehand how many are good or bad, you have to set the attribute field to (50% or 0.5). Step 3 - Variable Data - Enter Standard Deviation If you know the standard deviation of your data (from past studies), then you can use the standard deviation. If you know the specification tolerance, then you can use (maximum value - minimum value)/6 as your standard deviation. (The default is 1/6=.167). Step 4 - Enter the total population (if known)

Using the default values (95%, +.05, Stdev=0.167), you would get:

Step 5- Read the Sample Size Use the sample size calculated for your type of data: Attribute or Variable. Variable Sample Size: If we are using variable data the sample size would be 43. Attribute Sample Size: What if you were using attribute data, (e.g., counting the number of defective coins in a vat at the Denver Mint)? Here you'd need 384 coins to be 95% confident that the coins fell within the 5% interval.

Attribute Example
What if you knew there were 1000 coins in the vat (population known)?

You only need 278 to be confident. What if you changed the confidence interval to be +0.1)?

You only need 88 to be 95% confident.

Variable Example
A sample must be selected to estimate the mean length of a part in a population. Almost all production falls between 2.009 and 2.027 inches. Estimated standard deviation = (2.027-2.009)/6 = .003 And you want to be 95% confident that the sample is within +/-0.001 of the true mean. Enter the data as shown below:

You need 35 samples.