Statistics for Management Decisions

MG913
Lecture 6
Sampling Distributions
And
Confidence intervals
By
Dr. Mahmoud H. Moussa
Lecturer of Mathematical Statistics
Cairo University
Remember: Parameter and Statistics

Population Sample
parameters Statistics
Mean 𝜇 𝑋ത
Proportion 𝑃 𝑝Ƹ
Standard 𝜎 𝑆
deviation
Remember: Normal Distribution
𝑋~𝑁 𝜇, 𝜎 2 :This is means that the random variable 𝑋 has a population
distributed as normal with true mean 𝜇 and variance 𝜎 2 (standard
deviation 𝜎).
𝑍~𝑁 0,1 : This is means that the random variable 𝑍 has a population
distributed as normal with true mean 0 and variance 1 (standard
deviation 1).
𝑋−𝜇
To transform Classical normal to Standard Normal: 𝑍 =
𝜎
Sampling Distribution for sample Means
A sampling distribution for sample means is a distribution using the
means computed from all possible random samples of a specific size
taken from a population.
If the samples are randomly selected with replacement, the sample
means, for the most part, will be somewhat different from the
population mean m. These differences are caused by sampling error.
Sampling error: is the difference between the sample measure and the corresponding
population measure due to the fact that the sample is not a perfect representation of
the population.
Sampling Distribution for sample Means

𝜎
𝜇𝑋ത = 𝜇 and 𝜎𝑋ത =
𝑛
Illustrative Example:
Suppose a professor gave an 8-point quiz to a small class of four
students. The results of the quiz were 2, 6, 4, and 8. For the sake of
discussion, assume that the four students constitute the population.
• The mean of the population:
σ𝑋 2 + 6 + 4 + 8
𝜇= = =5
𝑁 4
• The standard deviation of the population

σ 𝑋−𝜇 2 2−5 2 + 6−5 2 + 4−5 2 + 8−5 2

𝜎= = = 2.236
𝑁 4
• Now, if all samples of size 2 are taken with replacement and the mean
of each sample is found, the distribution is as shown.

𝜎
𝜇𝑋ത = 𝜇 𝜎𝑋ത =
𝑛
The histogram appears to be approximately normal.
Central Limit Theorem:

𝜎2 ത 𝑋
𝑋−𝜇 ഥ ത
𝑋−𝜇
ത
𝑋~𝑁 𝜇, and 𝑍= = 𝜎
𝑛 𝜎𝑋
ഥ
𝑛
It’s important to remember two things when you use the central limit
theorem:
1. When the original variable is normally distributed, the distribution of the
sample means will be normally distributed, for any sample size n.
2. When the distribution of the original variable might not be normal, a sample
size of 30 or more is needed to use a normal distribution to approximate the
distribution of the sample means. The larger the sample, the better the
approximation will be.
Example 1:
A. C. Neilsen reported that children between the ages of 2 and 5 watch an average
of 25 hours of television per week. Assume the variable is normally distributed and
the standard deviation is 3 hours. If 20 children between the ages of 2 and 5 are
randomly selected, find the probability that the mean of the number of hours they
watch television will be greater than 26.3 hours.
Solution: Given 𝝁 = 𝟐𝟓, 𝝈 = 𝟑, 𝒏 = 𝟐𝟎
ത
𝑋−𝜇 𝟐𝟔.𝟑−𝟐𝟓
ഥ > 𝟐𝟔. 𝟑 = 𝑷
Required 𝑷 𝑿 𝜎 > 𝟑
𝑛 𝟐𝟎
= 𝑷 𝒁 > 𝟏. 𝟗𝟒 = 𝟏 − 𝑷 𝒁 ≤ 𝟏. 𝟗𝟒 = 𝟏 − 𝟎. 𝟗𝟕𝟑𝟖
= 𝟎. 𝟎𝟐𝟔𝟐 or 𝟐. 𝟔𝟐%
Estimation of the parameters:
Estimation

Point Interval
Estimation Estimation
But if there are some error E=5 in estimation so, it is
If 𝜇 is unknown and better to say
𝑋ത − 𝐸 ≤ 𝜇 ≤ 𝑋ത + 𝐸
say 𝑋ത = 50 50 − 5 ≤ 𝜇 ≤ 50 + 5
Then 45 ≤ 𝜇 ≤ 55
𝜇ො = 𝑋ത = 50 And the probability that this will occurring is 95%
(Confidence degree)
Point Estimation 𝑃 45 ≤ 𝜇 ≤ 55 = 0.95
Which is the confidence interval
Confidence Interval:
❑A confidence interval is a specific interval estimate of a parameter
determined by using data obtained from a sample and by using the
specific confidence level of the estimate.
❑Three common confidence intervals are used: the 90, the 95, and the
99% confidence intervals.
Example 2:
A researcher wishes to estimate the number of days it takes an automobile dealer
to sell a Chevrolet Aveo. A sample of 50 cars had a mean time on the dealer’s lot of
54 days. Assume the population standard deviation to be 6.0 days. Find the best
point estimate of the population mean and the 95% confidence interval of the
population mean.
Example 3:
A survey of 30 emergency room patients found that the average waiting time for
treatment was 174.3 minutes. Assuming that the population standard deviation is
46.5 minutes, find the best point estimate of the population mean and the 99%
confidence of the population mean.
Sample Size Required for a Certain Error:
Example 4:
Confidence Intervals for the Mean When 𝝈 Is Unknown

• Where 𝑡𝛼 are critical values obtained from t distribution.

2
• T distribution is similar to the Z distribution (standard normal) but
differs in some points.
Example 5: How to calculate 𝑡𝛼
2
Example 6:
Example 7:
Reference:
Bluman, Allan G. Elementary statistics : a step by step approach / Allan
Bluman. — 8th ed.