Business

Research Methods

William G. Zikmund

Chapter 17:
Determination of Sample Size
 What does Statistics Mean?
• Descriptive statistics
– Number of people
– Trends in employment
– Data
• Inferential statistics
– Make an inference about a population from a sample
 Population Parameter
• Variables in a population
• Measured characteristics of a population
• Greek lower-case letters as notation
 Sample Statistics
• Variables in a sample
• Measures computed from data
• English letters for notation
 Making Data Usable
• Frequency distributions
• Proportions
• Central tendency
– Mean
– Median
– Mode
• Measures of dispersion
Frequency Distribution of Deposits

Frequency (number of
people making deposits
Amount in each range)

less than $3,000 499

$3,000 - $4,999 530
$5,000 - $9,999 562
$10,000 - $14,999 718
$15,000 or more 811
3,120
Percentage Distribution of Amounts of
Deposits

Amount Percent

less than $3,000 16

$3,000 - $4,999 17
$5,000 - $9,999 18
$10,000 - $14,999 23
$15,000 or more 26
100
Probability Distribution of Amounts of
Deposits

Amount Probability

less than $3,000 .16

$3,000 - $4,999 .17
$5,000 - $9,999 .18
$10,000 - $14,999 .23
$15,000 or more .26
1.00
 Measures of Central Tendency
• Mean - arithmetic average
– µ, Population; , sample
X
• Median - midpoint of the distribution
• Mode - the value that occurs most often
Population Mean

Xi
N
Sample Mean

Xi
X
n
Number of Sales Calls Per Day by
Salespersons
Number of
Salesperson Sales calls

Mike 4
Patty 3
Billie 2
Bob 5
John 3
Frank 3
Chuck 1
Samantha 5
26
Sales for Products A and B,
Both Average 200
Product A Product B
196 150
198 160
199 176
199 181
200 192
200 200
200 201
201 202
201 213
201 224
202 240
202 261
 Measures of Dispersion
• The range
• Standard deviation
 Measures of Dispersion
or Spread
• Range
• Mean absolute deviation
• Variance
• Standard deviation
 The Range
as a Measure of Spread
• The range is the distance between the smallest
and the largest value in the set.

• Range = largest value – smallest value

 Deviation Scores

• The differences between each observation value and the

mean:
d x x
i i
 Low Dispersion Verses High
Dispersion
5
Low Dispersion
4
Frequency

150 160 170 180 190 200 210

Value on Variable
 Low Dispersion Verses High
Dispersion
5

4
High dispersion
Frequency

150 160 170 180 190 200 210

Value on Variable
 The Variance

Population
2

Sample
2
S
 Variance
• The variance is given in squared units
• The standard deviation is the square root of variance:
Sample Standard Deviation

S Xi X
n 1
2
Population Standard Deviation

2
Sample Standard Deviation

2
S S
Sample Standard Deviation

S Xi X
n 1
2
 The Normal Distribution
• Normal curve
• Bell shaped
• Almost all of its values are within plus or minus 3 standard
deviations
• I.Q. is an example
Normal Distribution

MEAN
 Standardized Normal Distribution

• Symetrical about its mean

• Mean identifies highest point
• Infinite number of cases - a continuous distribution
• Area under curve has a probability density = 1.0
• Mean of zero, standard deviation of 1
 Standard Normal Curve
• The curve is bell-shaped or symmetrical
• About 68% of the observations will fall within 1 standard
deviation of the mean
• About 95% of the observations will fall within
approximately 2 (1.96) standard deviations of the mean
• Almost all of the observations will fall within 3 standard
deviations of the mean
Linear Transformation of Any Normal Variable Into a
Standardized Normal Variable

s s

µ µ X

Sometimes the Sometimes the

scale is stretched scale is shrunk

x
z
-2 -1 0 1 2
Distribution Mean Standard
Deviation
Population

Sample S
X

Sampling
X
SX
 Parameter Estimates
• Point estimates
• Confidence interval estimates
Confidence Interval

X a small sampling error

X E
Random Sampling Error and
Sample Size are Related
 Sample Size
• Variance (standard deviation)
• Magnitude of error
• Confidence level
Sample Size Formula

2
zs
n
E
Sample Size Formula - Example

Suppose a survey researcher, studying

expenditures on lipstick, wishes to have a
95 percent confident level (Z) and a
range of error (E) of less than $2.00. The
estimate of the standard deviation is
$29.00.
Sample Size Formula - Example

2 2
zs 1.96 29.00
n
E 2.00
2
56.84 2
28.42 808
2.00
Sample Size Formula - Example

Suppose, in the same example as the one

before, the range of error (E) is
acceptable at $4.00, sample size is
reduced.
Sample Size Formula - Example

2 2
zs 1.96 29.00
n
E 4.00
2
56.84 2
14.21 202
4.00
 Calculating Sample Size
99% Confidence

2 2
é(2.57)(29) ù é(2.57)(29) ù
n=ê ú n=ê ú
ë 2 û ë 4 û
2 2
é74.53 ù =ê é74.53 ù
=ê ú ú
ë 2 û ë 4 û
= [37.265] = [18.6325]
2 2

=1389 = 347
Standard Error of the Proportion

sp pq
n

or

p (1 p )
n
Sample Size for a Proportion

Z pq
2

n
E 2
 z2pq
n= 2
E
Where:
n = Number of items in samples

Z2 = The square of the confidence interval

in standard error units.

p = Estimated proportion of success

q = (1-p) or estimated the proportion of failures

E2 = The square of the maximum allowance for error

between the true proportion and sample proportion
or zsp squared.
 Calculating Sample Size
at the 95% Confidence Level

p = .6 (1. 96 )2(. 6)(. 4 )

n=
q = .4 ( . 035 )2
(3. 8416)(.24)
=
001225
. 922
=
. 001225
= 753