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Chapter 9

Statistical Inference:
Estimation for Single
Populations

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 Learning Objectives

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Upon completion of this chapter, you will be able to:

 Understand the concept of estimation and types of estimators

 Use z-statistic for estimating population mean
 Understand the concept of confidence interval for estimating
population mean μ when σ is unknown
 Estimate population mean using the t statistic test (small sample
case)
 Understand the concept of confidence interval estimation for
population proportion
 Understand the concept of sample size for estimating population
mean μ
 Understand the concept of sample size for estimating the population
proportion p

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 Statistical Inference

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Statistical inference is the branch of statistics which deals
with uncertainty in decision making and provides a basis
for making scientific decisions.

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Types of Estimates

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 We can make two types of estimates about the population.
They are referred to as point estimates and interval
estimates.
 A point estimate is the sample statistic that is used to
estimate the population parameter.
 An interval estimate is the range of values within which a
researcher or an employee can say with some confidence
that the population parameter falls. This range is called
confidence interval.

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Using the Z Statistic for Estimating Population

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Mean
 The z statistic can be used for estimating the population
parameter on the basis of the sample statistic.
 Confidence interval for estimating population mean μ

 The confidence interval with the associated probability can be

calculated as below:

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Figure 9.1: z scores for confidence interval in relation to
alpha

In estimation, any confidence level can be applied; however,

the most widely used levels are 90 %, 95%, and 99%.

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Figure 9.2: Distribution of sample means for 99% confidence
interval

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Example 9.1: A researcher has taken a random sample of size 70 from
a population with a sample mean of 35 and a population standard
deviation of 4.62. Construct a 90% confidence interval to estimate the
population mean.

This result implies that the researcher is 90% confident that the
population mean will lie between 34.091 and 35.909. The point
estimate is 35.

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Using MS Excel and Minitab for Confidence

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Interval Construction

 Solved Examples\Excel\Ex 9.1.xls

 Solved Examples\Minitab\Ex 9.1.MPJ

When the sample size is less than 5% of the population, the

finite correction factor does not significantly increase the
accuracy of the solution.

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Confidence interval for estimating population mean μ,
when σ is unknown and sample size is large (n ≥30)

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Example 9.3: In order to estimate the customer loyalty for
a particular product, a researcher poses the following
question to a sample of 100 customers: How many years
have you been continuously using this product? This
sample yielded a mean period of 8 years with a sample
standard deviation of 2 years. Construct a 95% confidence
interval for estimating the population mean.

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Example 9.3 (Solution)

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This result implies that the researcher is 95% confident that the
population mean (average years after purchase in the
population) will lie between 7.608 years and 8.392 years.

Solved Examples\Excel\Ex 9.3.xls

Solved Examples\Minitab\Ex 9.3.MPJ

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Estimating Population Mean Using the t

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Statistic (Small–Sample Case)

In the case of small sample size (n < 30), the z formula

discussed earlier is not applicable. The problem can be solved by
using the t statistic.

Figure 9.10 : Comparison of standard normal curve with two t

distributions having degrees of freedom 10 and 20, respectively

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The t Distribution

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 The t distribution, developed by William Gosset is a family
of similar probability distributions with a specific t
distribution depending on a parameter known as the
degrees of freedom.

 As sample size n increases, t distribution values tend to

approach standard normal curve.

 The difference between tabular values of t and z becomes

negligible as sample size increases.This is a reason why
many researchers use the z distribution for large samples.

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The t Distribution (Contd.)

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Figure 9.11 : Comparison of standard normal curve
with two t curves with sample size n = 10 and n = 22
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Degrees of Freedom

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 The number of degrees of freedom indicates the number of values that are
free to vary in a random sample. The degrees of freedom can be understood
as the number of independent observations for a source of variation minus
the number of independent parameters estimated in computing the
variation.

 Confidence interval to estimate population parameter μ, when population

standard deviation σ is unknown and the population is normally distributed.

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Example 9.4: The personnel department of an organization wants to
apply cost-cutting measures for improving efficiency. As the first step,
the personnel department wants to curtail telephone expenses incurred
by employees. For this, personnel department has taken a random
sample of 10 employees and gathered the following data about
telephone expenses (in thousand rupees) in the previous year:10, 12,
24, 23, 11, 14, 15, 34, 16, 23. Construct a 95% confidence interval to
estimate the average telephone expenses of the employees in the
population.

Solution:

Solved Examples\Minitab\Ex 9.4.MPJ

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 Confidence Interval Estimation for Population

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Proportion
Confidence interval to estimate the population proportion p

Example 9.5: A research company conducted a survey on 300

randomly selected tax payers. It found that out of 300 tax
payers, 180 tax payers have filled the “SARAL” form correctly.
Construct a 95% confidence interval to estimate the percentage
of tax payers who have filled the form correctly in the
population.

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Using Minitab to Construct Confidence Interval

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Estimation for Population Proportion

Solved Examples\Minitab\Ex 9.5.MPJ

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Sample Size Estimation

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Sample Size for Estimating Population Mean μ
The z formula for sample mean is

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Example 9.6: A population has a standard deviation of 4.2
and sampling error of 2.4.Determine the sample size to
estimate the mean of the population with 95% confidence
level?

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Sample Size for Estimating Population

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Proportion p

The z formula for sample proportion is

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Example 9.7: A consumer electronics company wants to
determine the job satisfaction levels of its employees. For this,
they ask a simple question, are you satisfied with your job? It
was estimated before the study that no more than 30% of the
employees would answer yes. What should be the sample size
for this company to estimate population proportion to ensure
95% confidence in result, and to be within 0.04 of the true
population proportion?

Solution : Here, p = 0.3; q = 0.7; E = 0.04

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