Business Statistics

For Contemporary Decision Making

9th Edition

Ken Black

Chapter 7
Sampling and
Sampling
Distributions

Copyright2016
Copyright 2016John
JohnWiley
Wiley&&Sons,
Sons,Inc.
Inc. 1
 Learning Objectives

1. Contrast sampling to census and differentiate among different

methods of sampling, which include simple, stratified,
systematic, and cluster random sampling; and convenience,
judgment, quota, and snowball nonrandom sampling, by
assessing the advantages associated with each.

2. Describe the distribution of a sample’s mean using the central

limit theorem, correcting for a finite population if necessary.

3. Describe the distribution of a sample’s proportion using the z

formula for sample proportions.

Copyright 2016 John Wiley & Sons, Inc. 2

 7.1 Sampling

Reasons for Sampling

• The sample can save money.

• The sample can save time.
• For given resources, the sample can broaden the scope of the
study.
• Because the research process is sometimes destructive, the
sample can save product.
• If accessing the population is impossible, the sample is the only
option.

Copyright 2016 John Wiley & Sons, Inc. 3

 7.1 Sampling
Reasons for Taking a Census

• Eliminate the possibility that a randomly selected sample may

not be representative of the population.
• For the safety of the consumer.
• To benchmark data for future studies.

Frame
• List, map, or directory used in the sampling process to represent
the population.
• Also called the working population.

Copyright 2016 John Wiley & Sons, Inc. 4

 7.1 Sampling
Frame
• A frame is overregistered if it contains units that are not in the
target population.
• A frame is underregistered if it does not include some units that
are in the population.

Copyright 2016 John Wiley & Sons, Inc. 5

 7.1 Sampling
Random Versus Nonrandom Sampling

• In random sampling, every unit of the population has the same

chance of being selected.

• In nonrandom sampling, not every unit of the population has

the same chance of being selected.
• Generally NOT an appropriate technique for gathering data for
statistical analysis

Simple Random Sampling

• Each unit in the frame is numbered from 1 to N (the size of the
population.
• A random number table or generator is used to select n items
into the sample.

Copyright 2016 John Wiley & Sons, Inc. 6

 7.1 Sampling
Simple Random Sampling, continued.

Example: From the population frame of companies in Table 7.3,

select a simple random sample of six companies.
• First, the companies were numbered from 1 to 30.

Copyright 2016 John Wiley & Sons, Inc. 7

 7.1 Sampling
Example, continued:
• From the table of random number, two digit numbers are
selected, discarding any that are over 30.
• In the table below, the first two digits are 91, which is unusable.
• The second two digits are 56, also unusable, as is 74, the next
two digits
• The fourth set of two digits are 25, which corresponds with
Occidental Petroleum.

Copyright 2016 John Wiley & Sons, Inc. 8

 7.1 Sampling
Example, continued:
• Continue moving across the rows until six two-digit numbers are
selected.
• Sample will be:
• (25) Occidental Petroleum
• (27) Procter & Gamble
• (01) Alaska Airlines
• (04) Bank of America
• (02) Alcoa
• (29) Sears

Copyright 2016 John Wiley & Sons, Inc. 9

 7.1 Sampling
Stratified Random Sampling
• Population is divided into nonoverlapping subpopulations
(strata).
• Researcher selects a random sample from each.
• Can reduce sampling error, because sample will more closely match
the population.
• More costly than a simple random sample.
• Strata are usually chosen based on available information about the
population.

• Within each group,

there should be
homogeneity.

• Between each group,

there should be
heterogeneity.

Copyright 2016 John Wiley & Sons, Inc. 10

 7.1 Sampling
Stratified Random Sampling, continued.

• Proportionate stratified random sampling occurs when the

percentage of each stratum is proportionate to the percentage
that each stratum is within the whole population.
• Example: suppose voters are being surveyed in Boston and the
sample is being stratified by religion as Catholic, Protestant, Jewish,
and others.
• If Boston’s population is 90% Catholic and if a sample of 1,000 voters
is taken, the sample would require inclusion of 900 Catholics to
achieve proportionate stratification.

• Disproportionate stratified random sampling occurs when

the percentage of each stratum is different from the percentage
that each stratum is within the whole population.

Copyright 2016 John Wiley & Sons, Inc. 11

 7.1 Sampling
 
•Systematic Sampling
• Every kth item is selected to produce a sample of size n from a
population of size N.

Example: A business researcher wanted to sample Texas

manufacturers as part of a management study.
• Wanted to sample 1,000 companies.
• Frame-- most recent edition of the Texas Manufacturers
Register® which listed 26,000 manufacturing companies in
alphabetic order.
• The value of k was 26 (26,000/1,000).
• Use random number table to choose the first element in the
study.

Copyright 2016 John Wiley & Sons, Inc. 12

 7.1 Sampling

Cluster (or Area) Sampling

• Dividing population into nonoverlapping areas.

• Clusters that are internally heterogeneous.
• Example: states, cities
• If clusters are too large, a second set of clusters can be taken
from the initial cluster (two-stage sampling).

• Advantages: convenience, cost

• Disadvantages: may be less efficient than simple random
sampling if the elements of the cluster are similar

Copyright 2016 John Wiley & Sons, Inc. 13

 7.1 Sampling

Nonrandom Sampling
• Any method that does not involve a random selection process.

Convenience Sampling
• Selected for the convenience of the researcher.

Judgment Sampling
• Chosen by the judgement of the researcher.
• Since the probability of an element being selected cannot be
determined, cannot determine sampling error.
• Can be biased due to systematic errors in judgment.

Copyright 2016 John Wiley & Sons, Inc. 14

 7.1 Sampling
Quota Sampling
• Population subclasses, such as age or gender, are used as strata.
• Can be useful if no frame is available for the population.
• Can be less costly.
• But nonrandom, and thus probabilities cannot be calculated.

Snowball Sampling
• Survey subjects are selected based on referral from other survey
respondents.

Copyright 2016 John Wiley & Sons, Inc. 15

 7.1 Sampling
Sampling Error
• Occurs when the sample is not representative of the population.

Nonsampling Error
• All other errors other than sampling error.
• Missing data
• Recording errors
• Measurement errors
• Input processing errors
• Analysis errors
• Response errors
• And many more!

Copyright 2016 John Wiley & Sons, Inc. 16

  
7.2 Sampling Distribution of
Suppose that a small, finite population contains only N = 8 numbers:
54 55 59 63 64 68 69 70

• Distribution of the population data:

• Suppose that all possible samples of size n = 2 are taken from

this population.

Copyright 2016 John Wiley & Sons, Inc. 17

  
7.2 Sampling Distribution of
Population:
54 55 59 63 64 68 69 70

All possible samples of n = 2:

• Then take the means of all of the samples.

Copyright 2016 John Wiley & Sons, Inc. 18

  
7.2 Sampling Distribution of
Means of the samples:

Distribution of the means of the samples:

Copyright 2016 John Wiley & Sons, Inc. 19

  
7.2 Sampling Distribution of
• Distribution of the mean of the samples looks different from the
original distribution

• Similarly, the histogram of a Poisson distribution and its samples are

different.

Copyright 2016 John Wiley & Sons, Inc. 20

  
7.2 Sampling Distribution of
  Central Limit Theorem
•The
• If random samples of size n are repeatedly drawn from a
population that has a mean of μ and a standard deviation of σ,
the sample means,, are approximately normally distributed for
sufficiently large sample sizes (n ≥ 30), regardless of the shape of
the population distribution. If the population is normally
distributed, the sample means are normally distributed for any
size sample.

• It can be shown that the mean of the sample means is the

population mean:

• The standard deviation of the sample means (the standard

error of the mean) is:

Copyright 2016 John Wiley & Sons, Inc. 21

  
7.2 Sampling Distribution of

Copyright 2016 John Wiley & Sons, Inc. 22

  
7.2 Sampling Distribution of
••  If the sample size is greater than 30 or the population is normally
distributed, the sample means are normally distributed, and z
scores can be used to evaluate individual values.

Example: Suppose the population mean expenditure per customer at a tire

store is $125 and the population standard deviation is $30. If a random
sample of 40 customers is taken, what is the probability that the sample
mean expenditure is more than $133?

• Because the sample size is greater than 30, the central limit theorem can
be used and the sample means are normally distributed.

Copyright 2016 John Wiley & Sons, Inc. 23

  
7.2 Sampling Distribution of
Example, continued:
• From the z distribution table, z = 1.69 gives a probability of .4545
• .5 - .4545 = .0455

• 4.55% of the time, a random sample of 40 customers from this

population would yield a sample mean expenditure of $133 or more
when the population mean is $125.

Copyright 2016 John Wiley & Sons, Inc. 24

  
7.2 Sampling Distribution of
 
•Sampling from a Finite Population
• In cases of a finite population, a statistical adjustment must be made to
the z formula for sample means.

• A rough rule of thumb is to use the finite population correction factor

when n/N ≥ .05.
• The correction factor reduces the size of the standard error of the mean,
because when the sample is large relative to the population, the sample
mean is less likely to vary from the population mean.

Copyright 2016 John Wiley & Sons, Inc. 25

  
7.3 Sampling Distribution of
•The  sample proportion is computed by dividing the frequency with
which a given characteristic occurs in the sample by the number of
items in the sample.

where x = the number of items in a sample that have the characteristic.

• The central limit theorem applies to sample proportions in that the
normal distribution approximates the shape of the distribution of
sample proportions if n ⋅ p > 5 and n ⋅ q > 5 (p is the population
proportion and q = 1 − p).
• The mean of sample proportions is p (the population proportion).
• The standard error of the proportion is
• The z formula is

Copyright 2016 John Wiley & Sons, Inc. 26

  
7.3 Sampling Distribution of
 
•Example: Suppose 60% of the electrical contractors in a region use a
particular brand of wire. What is the probability of taking a random
sample of size 120 from these electrical contractors and finding that .
50 or less use that brand of wire?

• The z distribution table gives a value of .4875.

• .5 - .4875 = .0125

• There is only a 1.25% chance of

finding that 50% or less of a sample
of 120 contractors use a given brand
of wire if the population proportion is .
60.

Copyright 2016 John Wiley & Sons, Inc. 27