Chapter

8
Sampling Distributions and Estimation
Part 2
Sample Size Determination for a Mean

Sample Size Determination for a Proportion

C.I. for the Difference of Two Means m1-m2 (Optional) C.I. for the Difference of Two Proportions p1-p2 (Optional) Confidence Interval for a Population Variance s2(Optional)

Sample Size Determination for a Mean

Sample Size to Estimate m
To estimate a population mean with a precision of + E (allowable error), you would need a sample of size 2 z s n= E

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Sample Size Determination for a Mean

How to Estimate s?
Method 1: Take a Preliminary Sample Take a small preliminary sample and use the sample s in place of s in the sample size formula. Method 2: Assume Uniform Population Estimate rough upper and lower limits a and b and set s = [(b-a)/12].

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Sample Size Determination for a Mean

How to Estimate s?
Method 3: Assume Normal Population Estimate rough upper and lower limits a and b and set s = (b-a)/4. This assumes normality with most of the data with m + 2s so the range is 4s. Method 4: Poisson Arrivals In the special case when m is a Poisson arrival rate, then s = m

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Sample Size Determination for a Mean

Using LearningStats
There is a sample size calculator in LearningStats for E = 1 and E = .05.

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2007 The McGraw-Hill Companies, Inc. All rights reserved.

Sample Size Determination for a Mean

Using MegaStat
There is a sample size calculator in MegaStat. The Preview button lets you change the setup and see results immediately.
2007 The McGraw-Hill Companies, Inc. All rights reserved.

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Sample Size Determination for a Mean

Caution 1: Units of Measure
When estimating a mean, the allowable error E is expressed in the same units as X and s. Using z in the sample size formula for a mean is not conservative. The sample size formulas for a mean tend to underestimate the required sample size. These formulas are only minimum guidelines.
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Caution 2: Using z

Caution 3: Larger n is Better

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Sample Size Determination for a Proportion

To estimate a population proportion with a precision of + E (allowable error), you would need a sample of size z n= E
2

p(1-p)

Since p is a number between 0 and 1, the allowable error E is also between 0 and 1.

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Sample Size Determination for a Proportion

How to Estimate p?
Method 1: Take a Preliminary Sample Take a small preliminary sample and use the sample p in place of p in the sample size formula. Method 2: Use a Prior Sample or Historical Data How often are such samples available? p might be different enough to make it a questionable assumption. Method 3: Assume that p = .50 This conservative method ensures the desired precision. However, the sample may end up being larger than necessary.
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Sample Size Determination for a Proportion

Using LearningStats
The sample size calculator in LearningStats makes these calculations easy. Here are some calculations for p = .5 and E = 0.02.

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2007 The McGraw-Hill Companies, Inc. All rights reserved.

Sample Size Determination for a Proportion

Caution 1: Units of Measure
For a proportion, E is always between 0 and 1. For example, a 2% error is E = 0.02. For a finite population, to ensure that the sample size never exceeds the population size, use the following adjustment: n' =

Caution 2: Finite Population

nN n + (N-1)
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Confidence Interval for the Difference of Two Means, m1 m2

If the confidence interval for the difference of two means includes zero, we could conclude that there is no significant difference in means. The procedure for constructing a confidence interval for m1 m2 depends on our assumption about the unknown variances. (x1 x2) + t (n1 1)s12 + (n2 2)s22 n1 + n2 - 2 1 1 + n1 n2

Assuming equal variances:

with n = (n1 1) + (n2 1) degrees of freedom

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Confidence Interval for the Difference of Two Means, m1 m2

Assuming unequal variances:
(x1 x2) + t with n' = s22 s12 + n1 n2 (Welchs formula for degrees of freedom)

[s12/n1 + s22/n2]2 (s12/n1)2 + (s22/n2)2 n1 1 n2 1

Or you can use a conservative quick rule for the degrees of freedom: n* = min (n1 1, n2 1).
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Confidence Interval for the Difference of Two Proportions, p1 p2

If both samples are large (i.e., np > 5 and n(1-p) > 5, then a confidence interval for the difference of two sample proportions is given by (p1 p2) + z

p1(1 - p1) + p2(1 - p2) n1 n2

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Confidence Interval for a Population Variance, s2

Chi-Square Distribution
If the population is normal, then the sample variance s2 follows the chi-square distribution (c2) with degrees of freedom n = n 1. Lower (c2L) and upper (c2U) tail percentiles for the chi-square distribution can be found using Appendix E. Using the sample variance s2, the confidence interval is (n 1)s2 (n 1)s2 2 < s < 2 cU c2L
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Confidence Interval for a Population Variance, s2

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2007 The McGraw-Hill Companies, Inc. All rights reserved.

Confidence Interval for a Population Variance, s2

Confidence Interval for s
To obtain a confidence interval for the standard deviation, just take the square root of the interval bounds. (n 1)s2 (n 1)s2 < s < 2 cU c 2L

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Confidence Interval for a Population Variance, s2

Using MINITAB
MINITAB gives confidence intervals for the mean, median, and standard deviation.

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Confidence Interval for a Population Variance, s2

Using LearningStats
Here is an example for n = 39. Because the sample size is large, the distribution is somewhat bell-shaped.

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2007 The McGraw-Hill Companies, Inc. All rights reserved.

Confidence Interval for a Population Variance, s2

Caution: Assumption of Normality
The methods described for confidence interval estimation of the variance and standard deviation depend on the population having a normal distribution. If the population does not have a normal distribution, then the confidence interval should not be considered accurate.

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Applied Statistics in Business and Economics

End of Part 2 of Chapter 8