Sampling distribution of a statistic: A probability distribution of all the possible statistics of the samples is a distribution of the statistics.

This distribution is called sampling distribution of the statistic.

Standard Error:

The standard deviation of the distribution of a sample statistic is known as the standard error of the statistic.

If X is normally distributed with mean and standard deviation then the sampling distribution of the sample mean is given by

The sampling distribution has a mean equal to the population mean symbolically Q x ! Q and the sampling distribution has a standard deviation equal to the population standard deviation divided by the square root of the sample size W symbolically W x ! n

Standardizing the sample mean:

x  Qx x  Q Z! ! W Wx n

1.

In a sample of 25 observations from a normal distribution with mean 98.6 and standard deviation 17.2
p(92 x 102)

92  98.6 e x  Q e 102  98.6 p 17.2 W 17.2 25 25 n

2. Mr. X, an auditor for large credit card company, knows that, on average, the monthly balance of any given customer is $112 and the standard deviation is $56. If Mr. X audits 50 randomly selected accounts, what is the probability that the sample average monthly balance is a) below $100 b) between $100 and $130?

Statistical Inference

The purpose of statistical inference is to obtain information about a population from information contained in a sample.

In point estimation we use the data from the sample to compute a value of a sample statistic that serves as an estimate of a population parameter.

Population with mean Q=?

A simple random sample of n elements is selected from the population.

The value of is used to make inferences about the value of Q.

The sample data provide a value for the sample mean .

Criteria of a good estimator:

`

Before using a sample statistic as a point estimator, it is necessary to check whether the sample statistic has the following properties associated with good point estimators. Unbiasedness Efficiency Consistency

Sufficiency

Unbiasedness If the expected value of the sample statistic is equal to the population parameter being estimated, the sample statistic is said to be an unbiased estimator of the population parameter.

Efficiency Given the choice of two unbiased estimators of the same population parameter, we would prefer to use the point estimator with the smaller standard deviation, since it tends to provide estimates closer to the population parameter. The point estimator with the smaller standard deviation is said to have greater relative efficiency than the other.

Consistency

A point estimator is consistent if the values of the point estimator tend to become closer to the population parameter as the sample size becomes larger.

Sufficiency An estimator is sufficient if it makes so much use of the information in the sample that no other estimator could extract from the sample additional information about the population parameter being estimated.

n of the populatio n mean . The sample variance s 2 !

The sample mean

x x!

is the point estmator

(x  x) 2

n 1 of the populatio n variance 2 .

is the point estimator

x The sample proportio n p ! is the point estimator n of the populatio n proporti on P of the populatio n proporti on P

1.The Pizza Distribution Authority (PDA) has developed quite a business by delivering pizza orders promptly. PDA guarantees that its pizzas will be delivered in 30 min or less from the time the order was placed, and if the delivery is late, the pizza is free. The time that it takes to delivery each pizza order that is on time is recorded in the Official Pizza Time Book (OPTB) and the delivery time for those pizzas that are delivered late is recorded as 30 min in the OPTB. 12 random entries from the OPTB are listed. 15.3 29.5 30.0 10.1 30.0 19.6 10.8 12.2 14.8 30.0 22.1 18.3 a) Find the mean for the sample b) From what population was this sample drawn? c) Can this sample be used to estimate the average time that it takes for PDA to deliver a pizza?

2. The National Bank of Lincoln trying to determine the number of tellers available during the lunch rush hours on Fridays. The bank has collected data on the the number of people who entered the bank during the last 3 months on Friday from 11 A.M to 1 P.M. Using the data below, find the point estimates of the mean and standard deviation of the population from which the sample was drawn. 242 275 289 342 385 279 245 269 305 294 328

Interval Estimation:
`

Interval estimate describes a range of values within which a population parameter is likely to lie.

1.

For a population with a known variance of 185, a sample of 64 individuals leads to 217 as an estimate of the mean. a) find the standard error of the mean b) establish an interval estimate that should include the population mean 68.3 percent of the time.

2. Because the owner of the Bards Nook, a recently opened restaurant, has had difficulty estimating the quantity of food to be prepared each evening, he decided to determine the mean number of customers served each night. He selected a sample of 30 nights, which resulted in a mean of 71. The population standard deviation has been established as 3.76. a) Given an interval estimate that has a 68.3% probability of including the population. b) Given an interval estimate that has a 99.7% probability of including the population.

Confidence level: The probability that we associate with an interval estimate. Confidence interval: It is the range of the estimate we are making.

Calculating Interval estimates of the Mean from large samples:

1.

When population standard deviation is known:-

W 95% Confidence limits are : x s 1.96 W x ! x s 1.96. n W 99% Confidence limits are : x s 2.58 W x ! x s 2.58. n W 90% Confidence limits are : x s 1.64 W x ! x s 1.64. n

2. When population standard deviation is unknown:-

! x s1.96. W 95% Confidence limits are: x s1.96 W n x 99% Confidence limits are: x s 2.58 W ! x s 2.58. W n x W 90% Confidence limits are: x s1.64 W ! x s1.64. n x (x - x)2 is an unbiased estimator of where W ! s ! n 1 population standard deviation W .

When the population size is finite: Standard error of the sample mean is given by

W Wx ! n

N n N 1

1.

From a population of 540, a sample of 60 individuals is taken. From this sample, the mean is found to be 6.2 and the standard deviation 1.368. a) Find the estimated S.E of the mean b) Construct a 96% confidence interval for the mean.

2. In an automotive safety test conducted by the North Carolina Highway safety research center, the average tire pressure in a sample of 62 tires was found to be 24 pounds per square inch (psi) and the standard deviation was 2.1 psi. a) what is the estimated population standard deviation for this population? ( There are about a million cars registered in North Carolina) b) Calculate the estimated S.E of the mean. c) Construct a 95% confidence interval for the population mean.

3. The Alaska Cable Television Authority (ACTA) conducted a test to determine the amount of time people spend watching television per week. The ACTA surveyed 84 subscribers and found the average number of hours watched per week to be 11.6 hours and the standard deviation to be 1.8 hours. a) what is the estimated standard deviation for this population? ( There are about 95,000 people with cable television in Alaska) b) calculate the estimated S.E of the mean. c) Construct a 98% confidence interval for the population mean.

Calculating interval estimates of the proportion from large samples: Let X be no. of successes then population proportion no. of successes is given by

X P! N
The sample proportion no.of successes is

x p! n

95% Confidence limits are : pq p s 1.96 S.E(p) ! p s 1.96. 99% Confidence limits are : pq p s 2.58 S.E(p) ! p s 2.58. 90% Confidence limits are : pq p s 1.64 S.E(p) ! p s 1.64. n n n

1.When a sample of 70 retail executives was surveyed regarding the poor November performance of the retail industry, 66% believed that decreased sales due to unreasonably warm temperatures, resulting in consumers delaying purchase of cold-weather items. a) estimate the S.E of the proportion of retail executives who blame warm weather for low sales. b) find the confidence limits for this proportion given a 95% confidence level.

2. The owner of the Home Loan company randomly surveyed 150 of the companys 3000 accounts and determined that 60% were in excellent standing. a) find a 95% confidence interval for the proportion in excellent standing. b) Based on part (a), what kind of interval estimate might you give for the absolute number of accounts that meet the requirement of excellence keeping the same 95% confidence level.