Thursday, April 23, 2015

Example
Charla is the new statistician at a cola company. She wants to estimate the proportion of the population
who enjoy their latest idea for a flavour enough to make it a successful product. Charla wants to obtain a 99
percent confidence level estimate of the population proportion and she wants the estimate to be within 0.02
of the true proportion.
a. Using only the information given above, how large a sample is required? Each of your answers should
be rounded up to a whole number.
b. A quick preliminary estimate of the proportion obtained by her predecessor was 0.30. Knowing this,
how large a sample is required?

Solution
(a) If no prior estimate of the proportion is available, then we assume it as 0.50.
Given that the proportion is p = 0.5, margin of error E = 0.02. The confidence coefficient is 0.99, so = 0.01.
The critical value of Z is Z/2 = Z0.005 = 2.5758. (From Normal Table)
The minimum sample size required to estimate the proportion is
 2
z
n = p(1 p)
E

2
2.5758
= 0.5(1 0.5)
0.02
= 4146.716
4147.
Thus, the sample of size n = 4147 will ensure that the 0.99% confidence interval for the proportion will have
a margin of error 0.02.
(b) A quick preliminary estimate of the proportion obtained by her predecessor was 0.30.
Given that the proportion is p = 0.3, margin of error E = 0.02. The confidence coefficient is 0.99, so = 0.01.
The critical value of Z is Z/2 = Z0.005 = 2.5758. (From Normal Table)
The minimum sample size required to estimate the proportion is
 2
z
n = p(1 p)
E

2
2.5758
= 0.3(1 0.3)
0.02
= 3483.2415
3483.
Thus, the sample of size n = 3484 will ensure that the 0.99% confidence interval for the proportion will have
a margin of error 0.02.
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