Basic Business Statistics

11th Edition

Chapter 7

Sampling and Sampling Distributions

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc. Chap 7-1

 Learning Objectives

In this chapter, you learn:

 To distinguish between different sampling
methods
 The concept of the sampling distribution
 To compute probabilities related to the sample
mean and the sample proportion
 The importance of the Central Limit Theorem

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-2

 Why Sample?

 Selecting a sample is less time-consuming than

selecting every item in the population (census).

 Selecting a sample is less costly than selecting

every item in the population.

 An analysis of a sample is less cumbersome

and more practical than an analysis of the
entire population.

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-3

 A Sampling Process Begins With A
Sampling Frame

 The sampling frame is a listing of items that

make up the population
 Frames are data sources such as population
lists, directories, or maps
 Inaccurate or biased results can result if a
frame excludes certain portions of the
population
 Using different frames to generate data can
lead to dissimilar conclusions

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-4

 Types of Samples

Samples

Non-Probability Probability Samples

Samples

Simple Stratified
Judgment Convenience Random

Systematic Cluster

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-5

 Types of Samples:
Nonprobability Sample

 In a nonprobability sample, items included are

chosen without regard to their probability of
occurrence.
 In convenience sampling, items are selected based
only on the fact that they are easy, inexpensive, or
convenient to sample.
 In a judgment sample, you get the opinions of pre-
selected experts in the subject matter.

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-6

 Types of Samples:
Probability Sample

 In a probability sample, items in the sample

are chosen on the basis of known probabilities.

Probability Samples

Simple
Systematic Stratified Cluster
Random

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-7

 Probability Sample:
Simple Random Sample
 Every individual or item from the frame has an
equal chance of being selected

 Selection may be with replacement (selected

individual is returned to frame for possible
reselection) or without replacement (selected
individual isn’t returned to the frame).

 Samples obtained from table of random

numbers or computer random number
generators.
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-8
 Selecting a Simple Random Sample
Using A Random Number Table
Portion Of A Random Number Table
Sampling Frame For 49280 88924 35779 00283 81163 07275

Population With 850 11100 02340 12860 74697 96644 89439

Items 09893 23997 20048 49420 88872 08401

Item Name Item # The First 5 Items in a simple

Bev R. 001 random sample
Ulan X. 002 Item # 492
. . Item # 808
. . Item # 892 -- does not exist so ignore
. . Item # 435
. . Item # 779
Joann P. 849
Item # 002
Paul F. 850

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-9

 Probability Sample:
Systematic Sample
 Decide on sample size: n
 Divide frame of N individuals into groups of k
individuals: k=N/n
 Randomly select one individual from the 1 st
group
 Select every kth individual thereafter
N = 40 First Group

n=4
k = 10
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-10
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-11
 Probability Sample:
Stratified Sample
 Divide population into two or more subgroups (called strata)
according to some common characteristic
 A simple random sample is selected from each subgroup, with
sample sizes proportional to strata sizes
 Samples from subgroups are combined into one
 This is a common technique when sampling population of voters,
stratifying across racial or socio-economic lines.

Population
Divided
into 4
strata

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-12

 Probability Sample
Cluster Sample
 Population is divided into several “clusters,” each representative of
the population
 A simple random sample of clusters is selected
 All items in the selected clusters can be used, or items can be
chosen from a cluster using another probability sampling technique
 A common application of cluster sampling involves election exit polls,
where certain election districts are selected and sampled.

Population
divided into
16 clusters. Randomly selected
clusters for sample

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-13

 Probability Sample:
Comparing Sampling Methods

 Simple random sample and Systematic sample

 Simple to use

 May not be a good representation of the population’s

underlying characteristics
 Stratified sample
 Ensures representation of individuals across the entire

population
 Cluster sample
 More cost effective

 Less efficient (need larger sample to acquire the same

level of precision)

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-14

 Evaluating Survey Worthiness

 What is the purpose of the survey?

 Is the survey based on a probability sample?
 Coverage error – appropriate frame?
 Nonresponse error – follow up
 Measurement error – good questions elicit good
responses
 Sampling error – always exists

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-15

 Types of Survey Errors
 Coverage error or selection bias
 Exists if some groups are excluded from the frame and have
no chance of being selected
 Non response error or bias
 People who do not respond may be different from those who
do respond
 Sampling error
 Variation from sample to sample will always exist
 Measurement error
 Due to weaknesses in question design, respondent error, and
interviewer’s effects on the respondent (“Hawthorne effect”)

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-16

 Types of Survey Errors
(continued)

Excluded from
 Coverage error frame

Follow up on
 Non response error nonresponses

Random
 Sampling error differences from
sample to sample

 Measurement error Bad or leading

question
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-17
 Sampling Distributions
 A sampling distribution is a distribution of all of the
possible values of a sample statistic for a given size
sample selected from a population.

 For example, suppose you sample 50 students from your

college regarding their mean GPA. If you obtained many
different samples of 50, you will compute a different
mean for each sample. We are interested in the
distribution of all potential mean GPA we might calculate
for any given sample of 50 students.

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-18

 Developing a
Sampling Distribution

 Assume there is a population …

A C D
 Population size N=4 B
 Random variable, X,
is age of individuals
 Values of X: 18, 20,
22, 24 (years)

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-19

 Developing a
Sampling Distribution
(continued)

Summary Measures for the Population Distribution:

μ
 X i P(x)
N .3
18  20  22  24 .2
 21
4 .1
0
σ
 (X  μ) i
2

2.236
18 20 22 24 x
N A B C D
Uniform Distribution

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-20

 Developing a
Sampling Distribution
(continued)
Now consider all possible samples of size n=2

16 Sample
1st 2nd Observation
Obs Means
18 20 22 24
1st 2nd Observation
18 18,18 18,20 18,22 18,24 Obs 18 20 22 24
20 20,18 20,20 20,22 20,24 18 18 19 20 21
22 22,18 22,20 22,22 22,24
20 19 20 21 22
24 24,18 24,20 24,22 24,24
16 possible samples 22 20 21 22 23
(sampling with
replacement)
24 21 22 23 24

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-21

 Developing a
Sampling Distribution
(continued)

Sampling Distribution of All Sample Means

16 Sample Means Sample Means

Distribution
1st 2nd Observation _
Obs 18 20 22 24 P(X)
.3
18 18 19 20 21
.2
20 19 20 21 22
.1
22 20 21 22 23
0 _
24 21 22 23 24 18 19 20 21 22 23 24 X
(no longer uniform)
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-22
 Developing a
Sampling Distribution
(continued)

Summary Measures of this Sampling Distribution:

μX 
 X
i 18  19  19    24
 21
N 16

σX 
 ( X i  μ X
) 2

(18 - 21)2  (19 - 21)2    (24 - 21)2

 1.58
16

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-23

 Comparing the Population Distribution
to the Sample Means Distribution
Population Sample Means Distribution
N=4 n=2
μ 21 σ 2.236 μX 21 σ X 1.58
_
P(X) P(X)
.3 .3
.2 .2

.1 .1
0 X 0 18 19 20 21 22 23 24
_
18 20 22 24 X
A B C D
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-24
 Sample Mean Sampling Distribution:
Standard Error of the Mean

 Different samples of the same size from the same

population will yield different sample means
 A measure of the variability in the mean from sample to
sample is given by the Standard Error of the Mean:
(This assumes that sampling is with replacement or
sampling is without replacement from an infinite population)

σ
σX 
n
 Note that the standard error of the mean decreases as the
sample size increases
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-25
 Sample Mean Sampling Distribution:
If the Population is Normal

 If a population is normal with mean μ and

standard deviation σ, the sampling distribution
of X is also normally distributed with

σ
μ X μ and σX 
n

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-26

 Z-value for Sampling Distribution
of the Mean
 Z-value for the sampling distribution of X :

( X  μX ) ( X  μ)
Z 
σX σ
n
where: X = sample mean
μ = population mean
σ = population standard deviation
n = sample size

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-27

 Sampling Distribution Properties

Normal Population


μx μ Distribution

μ x
(i.e. x is unbiased ) Normal Sampling
Distribution
(has the same mean)

μx
x
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-28
 Sampling Distribution Properties
(continued)

As n increases, Larger
σ decreases
x
sample size

Smaller
sample size

μ x
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-29
 Determining An Interval Including A
Fixed Proportion of the Sample Means

Find a symmetrically distributed interval around µ

that will include 95% of the sample means when µ
= 368, σ = 15, and n = 25.
 Since the interval contains 95% of the sample means
5% of the sample means will be outside the interval
 Since the interval is symmetric 2.5% will be above
the upper limit and 2.5% will be below the lower limit.
 From the standardized normal table, the Z score with
2.5% (0.0250) below it is -1.96 and the Z score with
2.5% (0.0250) above it is 1.96.

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-30

 Determining An Interval Including A
Fixed Proportion of the Sample Means
(continued)

 Calculating the lower limit of the interval

σ 15
X L μ  Z 368  ( 1.96) 362.12
n 25
 Calculating the upper limit of the interval
σ 15
X U μ  Z 368  (1.96) 373.88
n 25
 95% of all sample means of sample size 25 are
between 362.12 and 373.88

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-31

 Sample Mean Sampling Distribution:
If the Population is not Normal

 We can apply the Central Limit Theorem:

 Even if the population is not normal,
 …sample means from the population will be
approximately normal as long as the sample size is
large enough.

Properties of the sampling distribution:

σ
μ x μ and σx 
n
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-32
 Central Limit Theorem

the sampling
As the n↑
distribution
sample
becomes
size gets
almost normal
large
regardless of
enough…
shape of
population

x
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-33
 Sample Mean Sampling Distribution:
If the Population is not Normal
(continued)

Population Distribution
Sampling distribution
properties:
Central Tendency
μ x μ
μ x
Variation Sampling Distribution
σ (becomes normal as n increases)
σx  Larger
n Smaller
sample size
sample
size

μx x
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-34
 How Large is Large Enough?

 For most distributions, n > 30 will give a

sampling distribution that is nearly normal
 For fairly symmetric distributions, n > 15
 For normal population distributions, the
sampling distribution of the mean is always
normally distributed

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-35

 Example

 Suppose a population has mean μ = 8 and

standard deviation σ = 3. Suppose a random
sample of size n = 36 is selected.

 What is the probability that the sample mean is

between 7.8 and 8.2?

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-36

 Example
(continued)

Solution:
 Even if the population is not normally
distributed, the central limit theorem can be
used (n > 30)
 … so the sampling distribution of x is
approximately normal
 … with mean μx = 8
σ 3
 …and standard deviation σ x  n  36 0.5
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-37
 Example
(continued)
Solution (continued):
 
 7.8 - 8 X -μ 8.2 - 8 
P(7.8  X  8.2)  P   
 3 σ 3 
 36 n 36 
 P(-0.4  Z  0.4)  0.3108

Population Sampling Standard Normal

Distribution Distribution Distribution .1554
??? +.1554
? ??
? ? Sample Standardize
? ? ?
?
7.8 8.2 -0.4 0.4
μ 8 X μX 8 x μz 0 Z

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-38

 Population Proportions
π = the proportion of the population having
some characteristic
 Sample proportion ( p ) provides an estimate
of π:
X number of items in the sample having the characteristic of interest
p 
n sample size

 0≤ p≤1
 p is approximately distributed as a normal distribution
when n is large
(assuming sampling with replacement from a finite population or
without replacement from an infinite population)
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-39
 Sampling Distribution of p
 Approximated by a
Sampling Distribution
normal distribution if: P( ps)
.3

nπ 5 .2
.1
and 0
0 .2 .4 .6 8 1 p
n(1  π ) 5
where π (1 π )
μp π and σp 
n
(where π = population proportion)
Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-40
 Z-Value for Proportions
Standardize p to a Z value with the formula:

p  p 
Z 
σp  (1  )
n

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-41

 Example

 If the true proportion of voters who support

Proposition A is π = 0.4, what is the probability
that a sample of size 200 yields a sample
proportion between 0.40 and 0.45?

 i.e.: if π = 0.4 and n = 200, what is

P(0.40 ≤ p ≤ 0.45) ?

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-42

 Example
(continued)
 if π = 0.4 and n = 200, what is
P(0.40 ≤ p ≤ 0.45) ?

 (1  ) 0.4(1  0.4)

Find σ p : σ p   0.03464
n 200

Convert to  0.40  0.40 0.45  0.40 

P(0.40 p 0.45) P Z  
standardized  0.03464 0.03464 
normal: P(0 Z 1.44)

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-43

 Example
(continued)
 if π = 0.4 and n = 200, what is
P(0.40 ≤ p ≤ 0.45) ?

Use standardized normal table: P(0 ≤ Z ≤ 1.44) = 0.4251

Standardized
Sampling Distribution Normal Distribution

0.4251

Standardize

0.40 0.45 0 1.44

p Z

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-44

 Chapter Summary
 Discussed probability and nonprobability samples
 Described four common probability samples
 Examined survey worthiness and types of survey errors
 Introduced sampling distributions
 Described the sampling distribution of the mean
 For normal populations

Using the Central Limit Theorem
 Described the sampling distribution of a proportion
 Calculated probabilities using sampling distributions

Basic Business Statistics, 11e © 2009 Prentice-Hall, Inc.. Chap 7-45