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A detailed discussion on the application of probability and confidence interval in engineering issues

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**Probability and Confidence
**

Intervals

Probability and Confidence Intervals

Learning Intentions

Today we will understand:

** Interpreting the meaning of a
**

confidence interval

** Calculating the confidence interval for the mean with large
**

and small samples

Probability and Confidence Intervals

** An important role of statistics is to use information gathered
**

from a sample to make statements about the population

from which it was chosen

** Using samples as an estimate of the
**

population

** How good of an estimate is that sample
**

providing us with?

**Image accessed: https://www.youtube.com/watch?v=rckB8T8WthM
**

Estimators of a Population

A Point estimate is a single value that best describes the

population of interest

Sample mean is the most common point estimate

** An Interval estimate provides a range of values that best
**

describes the population

**Image accessed: http://metropole.com.au/property-investors-need-know-population-growth/
**

Point Estimate

Single value that best describes the population of interest

Sample mean is most common point estimate

Easy to calculate and easy to understand

Gives no indication of how accurate the estimation really is

**Image accessed: http://www.carclipart.com/free_car_clipart/point.html
**

Interval Estimate

To deal with uncertainty, we can use an interval estimate

Provides a range of values that best describe the population

** To develop an interval estimate we need to learn about
**

confidence levels

**Image accessed: http://blog.thewellnesstrain.com/add-interval-training-to-maximize-time-and-fitness/
**

Confidence Levels

A confidence level is the probability that the interval

estimate will include the population parameter (such as the

mean)

** A parameter is a numerical description of a characteristic of
**

the population

**Image accessed: http://paul7brown.blogspot.com.au/2013/05/check-your-confidence-levels.html
**

*Remember - Standard Normal

Distribution

** Normal distribution with µ = 0 and SD = 1
**

Confidence Levels

Sample means will follow the normal probability distribution

for large sample sizes (n ≥ 30)

** To construct an interval estimate with a 90 % confidence
**

level

** Confidence level corresponds
**

to a z-score from the standard

normal table equal to 1.645

**Image accessed: http://www.mathandstatistics.com/learn-stats/finding-z-critical-values
**

Confidence Intervals

A confidence interval is a range of values used to estimate a

population parameter and is associated with a specific

confidence level

** Construct confidence interval around a sample mean using
**

these equations:

Confidence Intervals

Where:

= the sample mean

**= the z-score, which is the number of standard deviations based on the
**

confidence level

**= the standard error of the mean
**

Confidence Intervals

A confidence interval is a range of values used to estimate a

population parameter and is associated with a specific

confidence level

Associated with specific confidence level

Needs to be described in the context of several samples

**Image accessed: http://www.mathandstatistics.com/learn-stats/finding-z-critical-values
**

Confidence Intervals

Select 10 samples and construct 90 % confidence intervals

around each of the sample means

** Theoretically, 9 of the 10 intervals will contain the true
**

population mean, which remains unknown

This

interval

does not

include µ

Image accessed: http://blog.minitab.com/blog/adventures-in-statistics/understanding-hypothesis-tests%3A-confidence-intervals-and-confidence-levels

Confidence Intervals

Careful not to misinterpret the definition of a confidence

interval

** NOT Correct – “there is a 90 % probability that the true
**

population mean is within the interval”

** CORRECT – “there is a 90 % probability that any given
**

confidence interval from a random sample will contain the

true population mean

Level of Significance

As there is a 90 % probability that any given confidence

interval will contain the true population mean, there is a 10

% chance that it won’t

** This 10 % is known as the level of significance (α) and is
**

represented by the purple shaded area

**Image accessed: http://www.mathandstatistics.com/learn-stats/finding-z-critical-values
**

Level of Significance

Level of significance (α) is the probability of making a type 1

error (next week)

** The probability for the confidence interval is a complement
**

to the significance level

** A (1 – α) confidence interval has a significance level equal to
**

α

**Image accessed: http://www.vwmin.org/significance-level-definition-statistics-and-probability.html
**

When is Unknown

So far our examples have assumed we know - the

population standard deviation

** If is unknown we can substitute s (sample standard
**

deviation) for

n ≥ 30

We use ˆ to show we have approximated the standard

**error of the mean by using s instead of
**

Using Excel

You can calculate confidence intervals in Excel

CONFIDENCE(alpha, standard_dev, size)

Where:

**Alpha = the significance level
**

Standard_dev = standard deviation of the population

Size = sample size

Using Excel

Confidence Intervals for the

Mean with Small Samples

So far we have discussed confidence intervals for the mean

where n ≥ 30

** When is known, we are assuming the population is
**

normally distributed and so we can follow the procedure for

large sample sizes

** When is unknown (more often the case!) we make
**

adjustments

When is Unknown – Small

Samples

Substitute s, sample standard deviation, for

** Because of the small sample size, this substitution forces us
**

to use the t-distribution probability distribution

Continuous probability distribution

Bell-shaped and symmetrical around the mean

** Shape of curve depends on degrees of freedom (d.f) which
**

equals n - 1

T-distribution

Flatter than normal distribution

** As degrees of freedom increase, the shape of t-distribution
**

becomes similar to normal distribution

** With more than 30 d.f. (sample size of 30 or more) the two
**

distributions are practically identical

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