Chapter 4 Estimation Theory

Sampling distribution of a statistic:
A probability distribution of all the possible

statistics of the samples is a distribution of
the statistics. This distribution is called
sampling distribution of the statistic.
X: The number of spots showing on any one
throw.
x:1,2,3,4,5,6
Then the probability distribution of X is:

X 1 2 3 4 5 6
P(X) 1/6 1/6 1/6 1/6 1/6 1/6
2.92
) 6 / 1 ( ) 5 . 3 6 ( ... ) 6 / 1 ( ) 5 . 3 2 ( ) 6 / 1 ( 3.5) - (1
) ( ) - (x , variance Population
3.5
6(1/6) ... 3(1/6) 2(1/6) 1(1/6)
x.p(x) Mean, Population
2 2 2
2 2
=
+ + + =
=
=
+ + + + =
=
x p o
Drawing Samples of Size 2 from

a Population
All Samples of Size 2 from a Population
Sampling
Distribution of X
1.46
) 36 / 1 ( ) 5 . 3 6 ( ... ) 36 / 1 ( ) 5 . 3 5 . 1 ( ) 36 / 1 ( 3.5) - (1.0
) ( ) - (x , on distributi sampling the of Variance
3.5
6(1/36) ... 2(1/36) (1/36) 5 . 1 1.0(1/36)
) x .p( x on, distributi sampling the of Mean
2 2 2
2 2
=
+ + + =
=
=
+ + + + =
=
x p
x
o
Sampling Distribution in Inference

Standard Error:

The standard deviation of the distribution
of a sample statistic is known as the
standard error of the statistic.
If X is normally distributed with mean and
standard deviation then the sampling
distribution of the sample mean is given by

n
x
o
o

=
=
ly symbolical
size sample the of root square by the divided deviation standard population
the to equal deviation standard a has on distributi sampling the and
ly symbolical mean population the to equal mean a has on distributi sampling The
x
Standardizing the sample mean:

n
x x
Z
x
x
o

o

=
=
1. In a sample of 25 observations from a normal
distribution with mean 98.6 and standard
deviation 17.2

) 102 92 ( < < x p
(
(
(
25
2 . 17
6 . 98 102
25
2 . 17
6 . 98 92
n
x
p
o

2. Mr. X, an auditor for large credit card
company, knows that, on average, the
monthly balance of any given customer is
$112 and the standard deviation is $56. If
Mr. X audits 50 randomly selected
accounts, what is the probability that the
sample average monthly balance is
a) below $100
b) between $100 and $130?
Statistical Inference

The purpose of statistical inference is to
obtain information about a population from
information contained in a sample.

Point Estimation
In point estimation we use the data from the
sample to compute a value of a sample
statistic that serves as an estimate of a
population parameter.

Population
with mean
= ?
A simple random sample
of n elements is selected
from the population.
The sample data
provide a value for
the sample mean . x
The value of is used to
make inferences about
the value of .
x
Criteria of a good estimator:
Before using a sample statistic as a point estimator, it is
necessary to check whether the sample statistic has the
following properties associated with good point
estimators.
Unbiasedness
Efficiency
Consistency
Sufficiency
Unbiasedness
If the expected value of the sample
statistic is equal to the population
parameter being estimated, the sample
statistic is said to be an unbiased
estimator of the population parameter.

Efficiency
Given the choice of two unbiased estimators
of the same population parameter, we would
prefer to use the point estimator with the smaller
standard deviation, since it tends to provide
estimates closer to the population parameter.
The point estimator with the smaller standard
deviation is said to have greater relative
efficiency than the other.

Consistency

A point estimator is consistent if the values of
the point estimator tend to become closer to the
population parameter as the sample size
becomes larger.

Sufficiency
An estimator is sufficient if it makes so
much use of the information in the sample
that no other estimator could extract from
the sample additional information about
the population parameter being estimated.
Point Estimates:

P proportion population the of estimator point the is
n
p proportion sample The
. variance population the of estimator point the is
1
) (
s variance sample The
. mean population the of estmator point the x mean sample The
2
2
2
x
n
x x
is
n
x
=

=
=
1. The Pizza Distribution Authority (PDA) has developed

quite a business by delivering pizza orders promptly.
PDA guarantees that its pizzas will be delivered in 30
min or less from the time the order was placed, and if the
delivery is late, the pizza is free. The time that it takes to
delivery each pizza order that is on time is recorded in
the Official Pizza Time Book (OPTB) and the delivery
time for those pizzas that are delivered late is recorded
as 30 min in the OPTB. 12 random entries from the
OPTB are listed.
15.3 29.5 30.0 10.1 30.0 19.6
10.8 12.2 14.8 30.0 22.1 18.3
a) Find the mean for the sample
b) From what population was this sample drawn?
c) Can this sample be used to estimate the average time
that it takes for PDA to deliver a pizza?
2. The National Bank of Lincoln trying to determine
the number of tellers available during the lunch
rush hours on Fridays. The bank has collected
data on the the number of people who entered
the bank during the last 3 months on Friday from
11 A.M to 1 P.M. Using the data below, find the
point estimates of the mean and standard
deviation of the population from which the
sample was drawn.
242 275 289 342 385 279 245 269
305 294 328
Interval Estimation:

Interval estimate describes a range of values
within which a population parameter is likely
to lie.

1. For a population with a known variance
of 185, a sample of 64 individuals leads
to 217 as an estimate of the mean.
a) find the standard error of the mean
b) establish an interval estimate that
should include the population mean 68.3
percent of the time.
2. Because the owner of the Bards Nook, a
recently opened restaurant, has had difficulty
estimating the quantity of food to be prepared
each evening, he decided to determine the
mean number of customers served each night.
He selected a sample of 30 nights, which
resulted in a mean of 71. The population
standard deviation has been established as
3.76.
a) Given an interval estimate that has a 68.3%
probability of including the population.
b) Given an interval estimate that has a 99.7%
probability of including the population.

Confidence level:
The probability that we associate with an
interval estimate.

Confidence interval:
It is the range of the estimate we are
making.
Calculating Interval estimates of the Mean from
large samples:

1. When population standard deviation is known:-

n
x
n
x
n
x
o
o
o
o
o
o
. 64 . 1 1.64 x : are limits Confidence 90%
x
x
x
=
=
=
2. When population standard deviation is unknown:-

. deviation standard population
of estimator unbiased an is
1
2
) x - (x
s
where
. 64 . 1
x
1.64 x : are limits Confidence 90%
. 58 . 2
x
. 96 . 1
x

o
o
o
o
o
o
o
o
= =
=
=
=
n
n
x
n
x
n
x
When the population size is finite:

Standard error of the sample mean is given by

1
=
N
n N
n
x
o
o
1. From a population of 540, a sample of 60
individuals is taken. From this sample,
the mean is found to be 6.2 and the
standard deviation 1.368.
a) Find the estimated S.E of the mean
b) Construct a 96% confidence interval
for the mean.
2. In an automotive safety test conducted by the
North Carolina Highway safety research center,
the average tire pressure in a sample of 62 tires
was found to be 24 pounds per square inch (psi)
and the standard deviation was 2.1 psi.
a) what is the estimated population standard
deviation for this population?
( There are about a million cars registered in North
Carolina)
b) Calculate the estimated S.E of the mean.
c) Construct a 95% confidence interval for the
population mean.

3. The Alaska Cable Television Authority (ACTA)
conducted a test to determine the amount of
time people spend watching television per week.
The ACTA surveyed 84 subscribers and found
the average number of hours watched per week
to be 11.6 hours and the standard deviation to
be 1.8 hours.
a) what is the estimated standard deviation for
this population? ( There are about 95,000
people with cable television in Alaska)
b) calculate the estimated S.E of the mean.
c) Construct a 98% confidence interval for the
population mean.
Calculating interval estimates of the proportion
from large samples:
Let X be no. of successes
then population proportion no. of successes is
given by

The sample proportion no.of successes is

N
X
P =
n
x
p =
n
pq
p
n
pq
p
n
pq
p
. 64 . 1 S.E(p) 1.64 p
: are limits Confidence 90%
. 58 . 2 S.E(p) 58 . 2 p
. 96 . 1 S.E(p) 1.96 p
=
=
=
1.When a sample of 70 retail executives was
surveyed regarding the poor November
performance of the retail industry, 66%
believed that decreased sales due to
unreasonably warm temperatures,
resulting in consumers delaying purchase
of cold-weather items.
a) estimate the S.E of the proportion of
retail executives who blame warm weather
for low sales.
b) find the confidence limits for this
proportion given a 95% confidence level.
2. The owner of the Home Loan company
randomly surveyed 150 of the companys
3000 accounts and determined that 60%
were in excellent standing.
a) find a 95% confidence interval for the
proportion in excellent standing.
b) Based on part (a), what kind of interval
estimate might you give for the absolute
number of accounts that meet the
requirement of excellence keeping the
same 95% confidence level.

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Chapter 4 Estimation Theory

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Sampling distribution of a statistic:

A probability distribution of all the possible

Drawing Samples of Size 2 from

Sampling Distribution in Inference

1. The Pizza Distribution Authority (PDA) has developed

1.96 x : are limits Confidence 95%

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