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Chapter 9

One- and Two-Sample Estimation Problems


(Confidence Interval)

Statistics for Managers Using Microsoft Excel, 4e 2004 Prentice-Hall, Inc.

Chap 9-1

Chapter Goals
After completing this chapter, you should be able to:
Distinguish between a point estimate and a confidence interval
estimate
Construct and interpret a confidence interval estimate for a
single and two population mean using both the Z and t
distributions
Form and interpret a confidence interval estimate for a single
and two population proportion and variances
Determine the required sample size to estimate a mean or
proportion within a specified margin of error

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-2

One- and Two-sample Etimation


Content: Confidence Intervals
Single Sample: Estimating Population Mean,
Tolerance Limits
Two Sample: Estimating Difference two means
Paired Observations
Confidence Intervals for the Proportion, p
Confidence Intervals for the Variance, 2
Determining the Required Sample Size
Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-3

Point and Interval Estimates


A point estimate is a single number,
a confidence interval provides additional
information about variability

Lower
Confidence
Limit

Point Estimate

Upper
Confidence
Limit

Width of
confidence interval
Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-4

Point Estimates

We can estimate a
Population Parameter

with a Sample
Statistic
(a Point Estimate)

Mean

Proportion

ps

S2

Variance

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-5

Confidence Intervals
How much uncertainty is associated with a
point estimate of a population parameter?
An interval estimate provides more information
about a population characteristic than does a
point estimate
Such interval estimates are called confidence
intervals

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-6

Confidence Interval Estimate


An interval gives a range of values:
Takes into consideration variation in sample
statistics from sample to sample
Based on observation from 1 sample
Gives information about closeness to
unknown population parameters
Stated in terms of level of confidence
Can never be 100% confident

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-7

Estimation Process

Random Sample
Population
(mean, , is
unknown)

Mean
X = 50

I am 95%
confident that
is between
40 & 60.

Sample

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-8

General Formula
The general formula
for all confidence
intervals is:
Point Estimate = (Critical Value)(Standard Error)
Where

Standard Error
n

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-9

Confidence Level
Confidence Level
Confidence in which the interval
will contain the unknown
population parameter
A percentage (less than 100%)

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-10

Confidence Level, (1-)


(continued)

Suppose confidence level = 95%


Also written (1 - ) = .95
A relative frequency interpretation:
In the long run, 95% of all the confidence
intervals that can be constructed will contain the
unknown true parameter

A specific interval either will contain or will


not contain the true parameter
No probability involved in a specific interval

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-11

Confidence Intervals
Confidence
Intervals
Population
Mean

Known

Population
Proportion

Population
Variance

Unknown

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-12

9.4 Confidence Interval for


( Known)
Assumptions
Population standard deviation is known
Population is normally distributed
If population is not normal, use large sample

Confidence interval estimate:

X Z/2

(where Z is the normal distribution critical value for a probability of


/2 in each tail)
Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-13

Finding the Critical Value, Z


Consider a 95% confidence interval:

Z 1.96

1 .95

.025
2
Z units:
X units:

.025
2

Z= -1.96
Lower
Confidence
Limit

0
Point Estimate

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Z= 1.96
Upper
Confidence
Limit
Chap 9-14

Common Levels of Confidence


Commonly used confidence levels are 90%,
95%, and 99%
Confidence
Level
80%
90%
95%
98%
99%
99.8%
99.9%

Confidence
Coefficient,

Z value

.80
.90
.95
.98
.99
.998
.999

1.28
1.645
1.96
2.33
2.57
3.08
3.27

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-15

Intervals and Level of Confidence


Sampling Distribution of the Mean
/2

Intervals
extend from

XZ
n

/2

x1
x2

to

XZ
n
Confidence Intervals
Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

(1-)x100%
of intervals
constructed
contain ;
()x100% do
not.
Chap 9-16

Example
A sample of 11 circuits from a large normal
population has a mean resistance of 2.20
ohms. We know from past testing that the
population standard deviation is .35 ohms.
Determine a 95% confidence interval for the
true mean resistance of the population.

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-17

Example
(continued)

A sample of 11 circuits from a large normal


population has a mean resistance of 2.20
ohms. We know from past testing that the
population standard deviation is .35 ohms.

Solution:

X Za / 2

2.20 1.96 (.35/ 11)


2.20 .2068
(1.9932 , 2.4068)
Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-18

Interpretation
We are 95% confident that the true mean
resistance is between 1.9932 and 2.4068
ohms
Although the true mean may or may not be
in this interval, 95% of intervals formed in
this manner will contain the true mean

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-19

Confidence Interval for ( Unknown)


If the population standard deviation is
unknown, we can substitute the sample
standard deviation, S
This introduces extra uncertainty, since
S is variable from sample to sample
So we use the t distribution instead of the
normal distribution
Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-20

Confidence Interval for ( Unknown)


(continued)

Assumptions
Population standard deviation is unknown
Population is normally distributed
If population is not normal, use large sample

Use Students t Distribution


Confidence Interval Estimate:

X t/2, n -1

S
n

(where t is the critical value of the t distribution with n-1 d.f. and an area of
/2 in each tail)

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-21

Example
A random sample of n = 25 has X = 50 and
S = 8. Form a 95% confidence interval for
d.f. = n 1 = 24, so

t /2 , n1 t.025,24 2.0639

The confidence interval is

X t /2, n-1

S
8
50 (2.0639)
n
25

(46.698 , 53.302)

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-22

9.8 Two Samples: Confidence Interval


for 1-2 (1 and 2 Known)
Assumptions
Two population standard deviations 1, 2 are known
Population is normally distributed
If population is not normal, use large sample

Confidence interval estimate:


(X1 X 2 ) Z

/2 n1 n 2
2
1

2
2

(where Z is the normal distribution critical value for a probability of /2


in each tail)

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-23

Example 9.9
An experiment was conducted in which two types of engines, A and
B, were compared. Gas millage was measured. Fixty experiments
were conducted using engine type A and 75 experiments were done
for engine type B. The gasoline udes and other conditions were held
constant. The average gas milage for A was 36 miles per gallon and
the average for B was 42 miles per gallon. F,ind a 96% confidence
interval B-A . Assume that the population standard deviations are 6
for engine A and 8 for engine B.
XBbar-XAbar = 42-36=6. Using =0.04, z0.02 = 2.05 from Table A.3.
The 96% confidence interval is

64 36
6 2.05

3.43 B - A 8.57
75 50
Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-24

Two Samples: Confidence Interval for


1-2 (1 = 2 but unknown)
If the variances are unknown but assume that 1 = 2 ,
we use an estimation of 2 , pooled sample variance, sp.

(n1 1) s1 (n2 1) s2
2

sp

n1 n2 2

Confidence interval for 1-2

(X1 X 2 ) t/2 s p

1 1

n1 n 2

Where sp is pooled std.dev., t/2 is t-value with v = n1+n2 2 degrees of freedom.


Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-25

Example 9.10
12 monthly samples collected at downstream station had a sample mean
x1bar = 3.11 and a std.dev. s1 = 0.771
10 monthly samples collected at upstream station had a sample mean x2bar
= 2.04 and a std.dev. s2 = 0.448
Find a 90% confidence interval for the difference between the population
means for the two locations, assuming that the populations are
approximately normally distributed with equal variances.
Cofidence interval 1-2:
x1bar - x2bar = 3.11-2.04 = 1.07 and t0.05=1.725 for v=12+10-2=20
2
2
2
2
(
11
)(
0
.
771
)

(
9
)(
0
.
448
)
(
n

1
)
s

(
n

1
)
s
2
1
1
2
2
sp

0.417
n1 n2 2
12 10 2

1.07 (1.725))0.646)

1 1

12 10

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

0.593< 1-2 <1.547

Chap 9-26

Two Samples: Confidence Interval for


1-2 (1 2 but unknown)

s1

(X1 X 2 ) t/2

s2

n1

n2

Where the t-value with

( s1 / n1 s2 / n2 )
2

[( s1 / n1 ) /(n1 1)] [( s2 / n2 ) /(n2 1)]


2

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-27

9.9 Paired observations: Confidence


Interval for D=1-2
If d and sd are the mean and standard deviation of the
normal distributed differences of n random pairs of
measurements, confidence interval for D=1-2

d t/2
Where

sd
n

d x x
i
1i
2i

See Example 9.12


Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-28

Confidence Intervals
Confidence
Intervals
Population
Mean

Population
Proportion

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Population
Variance

Chap 9-29

9.10 Single Sample: Confidence


Intervals for Proportion, p
An interval estimate for the population
proportion ( p ) can be calculated by
adding an allowance for uncertainty to
the sample proportion ( ps )

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-30

Confidence Intervals for the


Population Proportion, p
(continued)

Recall that the distribution of the sample


proportion is approximately normal if the
sample size is large, with standard deviation

p(1 p)
p
n
We will estimate this with sample data:

ps(1 ps )
n
Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-31

Confidence Interval Endpoints


Upper and lower confidence limits for the population
proportion are calculated with the formula

ps Za/2

ps (1 ps )
n

where
Z is the standard normal value for the level of confidence desired
ps is the sample proportion
n is the sample size
Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-32

Example
A random sample of 100 people
shows that 25 are left-handed.
Form a 95% confidence interval for the
true proportion of left-handers

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-33

Example
(continued)

A random sample of 100 people shows


that 25 are left-handed. Form a 95%
confidence interval for the true proportion
of left-handers.
ps Z ps(1 ps )/n
25/100 1.96 .25(.75)/1 00

.25 1.96 (.0433)


(0.1651 , 0.3349)
Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-34

Interpretation
We are 95% confident that the true
percentage of left-handers in the population
is between
16.51% and 33.49%.
Although this range may or may not contain
the true proportion, 95% of intervals formed
from samples of size 100 in this manner will
contain the true proportion.

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-35

9.11 Two Samples: Confidence


Interval for p1-p2 in large-sample)
If Ps1 and Ps2 are the proportions of success in random
samples of size n1 and n2, confidence interval of p1-p2 is

s1

p s2 Z

p s1 (1 p s1 )
n1

p s2 (1 p s2 )
n2

See Example 9.16

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-36

9.12 Single Sample: Confidence


Interval for Variance, 2
If S2 is the variance of a random sample of size n taken
from a normal population, confidence interval for 2

(n 1) S
(n 1) S
2

2
2
/ 2
1 / 2
2

where:
2

/ 2

12 / 2

and
are chi-square values with v = n 1 degrees
of freedom, leaving areas of /2 and 1-/2,respectively, to right.

See Example 9.17


Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-37

9.13 Two Samples:Confidence


Interval for the ratio of two Variance
If S12 and S22 are the variance of independent samples of
size n1 and n2 from a normal population, confidence interval
for 12 /12 is

2
2
2
S

S
1
1
1 1 f
/2 (v 2, v 1)
2
2
2
S f

S
2 /2(v1, v 2)
2
2
where:

/2

(v1,v 2) is f-value v1 = n1 1 and v2 = n2 1 degrees of freedom,

leaving areas of /2 to the to right.

See Example 9.18


Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-38

Determining Sample Size


Determining
Sample Size
For the
Mean

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

For the
Proportion

Chap 9-39

Sampling Error
The required sample size can be found to reach a
desired margin of error (e) with a specified level of
confidence (1 - )
The margin of error is also called sampling error
the amount of imprecision in the estimate of the
population parameter
the amount added and subtracted to the point estimate to
form the confidence interval

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-40

Determining Sample Size


Determining
Sample Size
For the
Mean

XZ
n
Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Sampling error
(margin of error)

eZ
n
Chap 9-41

Determining Sample Size


(continued)

Determining
Sample Size
For the
Mean

eZ
n

Now solve
for n to get

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Z
n
2
e

Chap 9-42

Determining Sample Size


(continued)

To determine the required sample size for the


mean, you must know:
The desired level of confidence (1 - ), which
determines the critical Z value
The acceptable sampling error (margin of error), e
The standard deviation,

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-43

Required Sample Size Example


If = 45, what sample size is needed to
estimate the mean within 5 with 90%
confidence?
2

Z
(1.645) (45)
n

219.19
2
2
e
5
So the required sample size is n = 220
(Always round up)

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-44

If is unknown
If unknown, can be estimated when
using the required sample size formula
Use a value for that is expected to be
at least as large as the true
Select a pilot sample and estimate with
the sample standard deviation, S

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-45

Determining Sample Size


Determining
Sample Size

For the
Proportion

ps(1 ps )
ps Z
n

p(1 p)
eZ
n
Sampling error
(margin of error)

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-46

Determining Sample Size


(continued)

Determining
Sample Size

For the
Proportion

p(1 p)
eZ
n

Now solve
for n to get

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Z 2 p (1 p)
n
2
e
Chap 9-47

Determining Sample Size


(continued)

To determine the required sample size for the


proportion, you must know:
The desired level of confidence (1 - ), which
determines the critical Z value
The acceptable sampling error (margin of error), e
The true proportion of successes, p
p can be estimated with a pilot sample, if
necessary (or conservatively use p = .50)
Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-48

Required Sample Size Example


How large a sample would be necessary
to estimate the true proportion defective in
a large population within 3%, with 95%
confidence?
(Assume a pilot sample yields ps = .12)

Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-49

Required Sample Size Example


(continued)

Solution:
For 95% confidence, use Z = 1.96
e = .03
ps = .12, so use this to estimate p

Z p (1 p) (1.96) (.12)(1 .12)


n

450.74
2
2
e
(.03)
2

So use n = 451
Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.

Chap 9-50

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