Chapter 7:

Confidence Interval Estimation for the Mean of a Population That Is Normally Distributed:
Population Variance Known

Confidence interval =
x± ( z α / 2⋅σ
√n )

Margin of error (ME) = ( z α / 2⋅σ

√n )
The width, w, is equal to twice the margin of error:

W= 2*ME

The upper confidence limit (UCL) is given by

=x+
( z α / 2⋅σ
√n )
The lower confidence limit (LCL) is given by

=x-
( z α / 2⋅σ
√n )
 Confidence level 90% 95% 98% 99%
α
0.100 0.05 0.02 0.01
α/2
1.645 1.96 2.33 2.58

Example 7.3 Time at the Grocery Store (Confidence Interval)

Suppose that shopping times for customers at a local mall are normally distributed with known population standard
deviation of 20 minutes. A random sample of 64 shoppers in the local grocery store had a mean time of 75 minutes.
Find the standard error, and the upper and lower confidence limits of a 95% confidence interval for the population
mean, m.

Confidence interval =

x± ( z α / 2∗σ
√n )
95%
Upper=75+1.96*20/8=79.9
Lower= 75-1.96*20/8=70.1
99%
Upper= 75+2.58*20/8=81.45
Lower= 75-2.58*20/8=68.55

95%= (70.1-----------79.9)
99%= (68.55---------81.45)

99%

Confidence interval =
x± ( z α / 2∗σ
√n )
 95% UCL: 75 + (1.96 * (20/8)) = 75+4.9 =79.9

99%= 75+ (2.58* (20/8))= 75+6.45=81.45

95% = LCL: 75 – (1.96 * (20/8))= 75- 4.9= 70.1

99%= 75- (2.58* (20/8))= 75-6.45= 68.55

95%: (70.1--------79.9)
99%: (68.55……..81.45)
90%?????????

If the confidence level (1 – α) is decreased, the margin of error is also reduced.

Margin of error (ME) = ( z α / 2∗σ

√n )
= 4.9
The width, w, is equal to twice the margin of error:

W= 2*ME= 2*4.9= 9.8

The upper confidence limit (UCL) is given by

=x+
( z α / 2⋅σ
√n )
The lower confidence limit (LCL) is given by

=x-
( z α / 2⋅σ
√n )
Reducing Margin of Error (ME): what are the ways to reduce (ME)

Margin of error (ME) = ( z α / 2∗σ

√n )
1. Increasing the sample’s size.
2. Reducing the standard deviation
3. If the confidence level (1 – α) is decreased, the margin of error is also reduced.

Can the margin of error (and, consequently, the width) of a confidence interval be reduced? Consider the factors that
affect the margin of error: the population standard deviation, the sample size n, and the confidence level. Keeping all
other factors constant, the more that the population standard deviation, s, can be reduced, the smaller the margin of
error. Corporations strive to reduce variability in product measurements. When possible, this should be the first step
to decrease width. However, sometimes the population standard deviation cannot be reduced. Another way to reduce
the margin of error is to increase the sample size. This will reduce the standard deviation of the sampling
distribution of the sample mean and, hence, the margin of error. That is, keeping all other factors constant, an
increase in the sample size n will decrease the margin of error. Finally, keeping all other factors constant, if the
confidence level (1 – α) is decreased, the margin of error is also reduced. For example, a 95% confidence interval is
shorter than a 99% confidence interval based on the same information
Exercises:

The number of television sets produced from an assembly line each day is known to have a
standard deviation of 17.4 sets per day. The production line averaged 452.3 sets per day for 20
randomly selected days. Which of the following represents a 95% confidence interval for the
population mean number of sets per hour? 1.96

Upper = 452.3+1.96*3.89=459.92
Lower= 452.3-1.96*3.89=444.67

Margin of error= 1.96*3.89=7.6244

UCL:

(452.3 + (1.96*(17.4/4.47)) = 452.3 + (1.96*3.89)

452.3 +7.62= 459.92

LCL: (452.3- (1.96* (17.4/4.47))= 452.3- (1.96*3.89)

452.3-7.62= 444.68

ME:
The number of beverage cans produced each hour from a vending machine is normally distributed
with a standard deviation of 8.6. For a random sample of 12 hours, the average number of beverage
cans produced was 326.0. Assume a 99% confidence interval for the population mean number of
beverage cans produced per hour. Calculate the margin of error of the 99% confidence interval.

99%
0.01
2.58

Margin of error (ME) = ( z α / 2∗σ

√n )
= 2.58 * (8.6/3.46)= 2.58*2.48= 6.39

Width= 2* ME=12.78