Chapter 6

Inferences Based on a Single Sample

 Learning Objectives

1. Estimate a population parameter (means,

proportion, or variance) based on a large sample
selected from the population
2. Use the sampling distribution of a statistic to form
a confidence interval for the population parameter
3. Show how to select the proper sample size for
estimating a population parameter
 Statistical Methods

Statistical
Methods

Descriptive Inferential
Statistics Statistics

Hypothesis
Estimation
Testing
Recall that…

STATISTICS
General <--- Specific
Population <--- Sample
Model <--- Data
Identifying and Estimating
the Target Parameter
Concepts of Estimation

The objective of estimation is to estimate the unknown

value of a population parameter, like the mean , on the
basis of a sample statistic calculated from sample data.
e.g., Sehir housing office may want to estimate the mean distance
 from campus to hometown of all students
What do we frequently need to estimate?

An unknown population
mean 

An unknown population
proportion p
 Estimation Methods

Estimation

Point Interval
Estimation Estimation
 Point Estimator

A point estimator of a population parameter is a rule or

formula that tells us how to use the sample data to
calculate a single number that can be used as an estimate
of the target parameter.

X  
s  
s  
2 2

p  
 Point Estimator

1. Provides a single value

• Based on observations from one sample

2. Gives no information about how close the value is to

the unknown population parameter
3. Example: Sample mean x = 3 is the point estimate of
the unknown population mean
Point Estimates
Example: Estimating an unknown population proportion p

^
Example: Estimating an unknown mean 

In an effort to improve drive-through service, a Burger

King records the drive-through service times of 52
randomly selected vehicles.
The sample mean service time =181.3 seconds is the
point estimate of the unknown mean service time 

x
Shortcoming of Point Estimates

Another type of estimate

 Interval Estimator

A point estimate is a single number,

How much uncertainty is associated with a point
estimate of a population parameter?

An interval estimator (or confidence interval) is a formula

that tells us how to use the sample data to calculate an
interval that estimates the target parameter.

Upper
Lower
Confidence Confidence
Point Estimate
Limit Limit
Width of
confidence interval
 Interval Estimator

1. Provides a range of values

• Based on observations from one sample

2. Gives information about closeness to unknown

population parameter
• Stated in terms of probability
– Knowing exact closeness requires knowing
unknown population parameter
Interval Estimator

For example, a business might estimate that a machine uses

10 lbs. of plastic for each unit of a product created. Because
the machine cannot be expected to use precisely 10 lbs. per
unit, a confidence interval can be created to give a range of
possibilities. The company might predict that there is a 95
percent chance that the machine uses on average between
9.85 and 10.5 lbs. of plastic per unit.
By collecting data from customers, past sales numbers and
other sources, a company can statistically estimate the value
of future sales. By using a confidence interval, the company
can determine the range its sales are likely to fall. If the
company is 95 percent confident that sales in the next period
will be between 5 million and 6 million units, there is still a 5
percent chance that they will be above or below that number.
Factors Affecting Confidence Interval Estimates

The width of a confidence interval is determined by:

 The sample size, n
 The variability in the population, usually σ estimated
by s
 The desired level of confidence

The general formula for all confidence intervals is

equal to:
Point Estimate ± (Critical Value)(Standard Error)
Confidence Interval for a
Population Mean:

Normal (z) Statistic

 Estimation Process

Population Random Sample

I am 95%
Mean  confident that 
Mean, , is  x = 50 is between 40 &
unknown
 60.
 
 
Sample 

 


Remember the sampling distribution…

Central Tendency (mean) Population Distribution

x  
 = 10
Dispersion (standard deviation)

x 
n  = 50 x

Sampling Distribution
n=4 n =16
x = 5 x = 2.5

x- = 50 x
Confidence Intervals for a Mean, σ
Unknown
Confidence Intervals for a Mean, σ Known

x  sample mean
z  z - value for a particular confidence level
σ  the population standard deviation
n  the number of observatio ns in the sample

 The width of the interval is determined by the level of

confidence and the size of the standard error of the
mean.
 The standard error is affected by two values:
 Standard deviation
 Number of observations in the sample
 95 % Confidence Interval

If sample measurements yield a value of x that falls

between the two lines on either side of µ, then the
interval x  1.96 x will contain µ.

The area under the

normal curve
between these two
boundaries is exactly
.95. Thus, the
probability that a
randomly selected
interval will contain µ
is equal to .95.
Interval Estimates - Interpretation
-- 95% of the sample means for a specified sample size
will lie within 1.96 standard deviations of the
hypothesized population.
-- Also about 95% of similarly constructed intervals will
contain the parameter being estimated.
Confidence Interval for a Mean,σ Known: Example

The American Management Association surveys middle

managers in the retail industry and wants to estimate their
mean annual income. A random sample of 49 managers
reveals a sample mean of $45,420. The standard deviation
of this population is $2,050.

 What is the best point estimate of the population mean?

 What is a reasonable range of values for the population

mean?

 What do these results mean?

Example

 What is the best point estimate of the population mean?

 Our best estimate of the unknown population mean is

the corresponding sample statistic.

 The sample mean of $45,420 is the point estimate of

the unknown population mean.
Example

 What is a reasonable range of values for the

population mean?

 Suppose the association decides to use the 95 percent

level of confidence.
How to Obtain a z-value for a Given Confidence
Level

The 95 percent confidence refers

to the middle 95 percent of the
observations. Therefore, the
remaining 5 percent are equally
divided between the two tails.
Or if we use
cumulative
table…

1-0.025=0.975
Example

The 95 percent confidence interval estimate is:

Confidence Interval for a Mean –Interpretation

What is the interpretation of the confidence

limits $45,846 and $45,994?

If we select many samples of 49 managers,

and for each sample we compute the mean
and then construct a 95 percent confidence
interval, we could expect about 95 percent
of these confidence intervals to contain
the population mean. Conversely, about 5
percent of the intervals would not contain the
population mean annual income, µ.
Example:
Suppose there are 69 U.S. and imported juice brands in
the U.S. market. We have collected 2 different samples
of 25 brands and gathered information about the price
of a 6-pack, the calories, and the percent of fruit
content for each brand. Further, suppose that we
know the population standard deviation (  ) of price
is $1.45. Here are the samples’ information:
Sample A: Mean=$5.20, Std.Dev.=$1.41=S
Sample B: Mean=$5.59, Std.Dev.=$1.27=S

Perform 95% confidence interval estimates of

population mean price using the two samples.
Interpretation of the results from
From sample “A”
We are 95% confident that the true mean price is between
$4.63 and $5.77.
We are 99% confident that the true mean price is between
$4.45 and $5.95.

From sample “B”

We are 95% confident that the true mean price is between
$5.02 and $6.16.
We are 99% confident that the true mean price is between
$4.84 and $6.36.

After the fact, I am informing you know that the population

mean was $4.96. Which one of the results hold?
Although the true mean may or may not be in this interval, 95% of
intervals formed in this manner will contain the true mean.
Some facts
There is no proper test
Confidence Intervals for a Mean, σ
Unknown
Confidence Intervals for a Mean, σ Unknown
In most sampling situations the population standard
deviation (σ) is not known. For example:
The Dean of the Business College wants to estimate the
mean number of hours full-time students work at paying
jobs each week. He selects a sample of 30 students,
contacts each student, and asks them how many hours
they worked last week.
The Director of Student Loans wants to know the mean
amount owed on student loans at the time of his/her
graduation. The director selects a sample of 20 graduating
students and contacts each to find the information.
Conditions Required for a Valid Large-Sample
Confidence Interval for µ
1. When the sample size n is large (i.e., n ≥ 30). Due to
the Central Limit Theorem, this condition guarantees
that the sampling distribution of x is approximately
normal. So standard deviation of sampling distribution,
s, will be a good estimator of .
Confidence Interval for a Population
Mean:

Student’s t-Statistic
Using the t-Distribution: Confidence Intervals
for a Mean, σ Unknown
It is, like the z distribution, a continuous distribution.
It is, like the z distribution, bell-shaped and symmetrical.
There is not one t distribution, but rather a family of t
distributions. All t distributions have a mean of 0, but their
standard deviations differ according to the sample size, n.
The t distribution is more spread out and flatter at the center
than the standard normal distribution.
As the sample size increases, however, the t distribution
approaches the standard normal distribution.
Comparing the z and t Distributions When n is
Small, 95% Confidence Level
 Degrees of Freedom

The actual amount of variability in the sampling distribution

of t depends on the sample size n. A convenient way of
expressing this dependence is to say that the t-statistic has
(n – 1) degrees of freedom (df).
 Student’s t Distribution

Standard
Normal

Bell-Shaped
Symmetric t (df = 13)
‘Fatter’ Tails
t (df = 5)

z
t
0
Using the t-Distribution: Confidence Intervals
for a Mean, σ Unknown

in which the sample standard deviation, s, replaces the

population standard deviation, .
t - Table
Using the t-Distribution; Confidence Intervals
for a Mean, σ Unknown: Example

A tire manufacturer wishes to

investigate the tread life of its
tires. A sample of 10 tires
driven 50,000 miles revealed a
sample mean of 0.32 inch of
tread remaining with a standard Given in the problem:
deviation of 0.09 inch. n = 10
x = 0.32
-Construct a 95 percent s = 0.09
confidence interval for the
population mean. Compute the confidence interval using
the t-distribution (since s is unknown).
-Would it be reasonable for the s
manufacturer to conclude that x±t
n
after 50,000 miles the population
mean amount of tread remaining
is 0.30 inches?
Using the Student’s t-Distribution Table
 Example

You’re a time study analyst in manufacturing. You’ve

recorded the following task times (min.):
3.6, 4.2, 4.0, 3.5, 3.8, 3.1. What is the 90% confidence
interval estimate of the population mean task time?
Solution

x = 3.7
s = 0.38987
• n = 6, df = n – 1 = 6 – 1 = 5
• t.05 = 2.015
Summary