Quantitative Methods 2010

7 Click to edit Master subtitle style Estimation

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Overview

Point and interval estimation Confidence intervals Interval estimates of means and proportions Interval estimates using t-distribution Sample size calculations

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Motivation
x1 x3 x2 x4

Where is likely to be?

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Point and Interval Estimates

Point estimate

A single number (calculated from a sample) to estimate an unknown population parameter. Shortcoming is that the estimate is either right or wrong . If wrong, how much wrong? Needs to be accompanied by an estimate of error. range of stated- length within which QM 2010 Kingston 44

Interval estimate
A 4/29/12

Estimator and Estimates

Estimator

An sample statistic that is used to estimate a population parameter

Eg: Sample average is an estimator for population mean

Estimate

A specific calculated value of a statistic

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Eg: If I want to know the mean weight of IBSM students, and take a sample of 30 students, and compute the average weight QM 2010 - Kingston 55 as 62 kg, then 62 kg is an estimate of the

What Is A Good Estimator

Unbiasedness

Mean of Estimators distribution must equal the parameter it is to estimate

Estimator 1 (Bad) Estimator 2 (Good)

Value of parameter to be estimated

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What Is A Good Estimator

Efficiency

Smaller the standard error of the estimate, more efficient the estimator
Estimator 2 Efficient Estimator 1

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What Is A Good Estimator

Consistency

As sample size increases, the value of the statistic gets closer and closer to the parameter.

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What Is A Good Estimator

Sufficiency

No other estimator can extract more information from a given sample.

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Point Estimates

For population mean ,

it is sample mean
2 2 i

For population variance 2 it is sample variance s = ( x x) For population proportion pn 1

It is sample proportion

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Interval Estimates

When we compute an we can ask how far could be? For that we need to know std error of x We generate intervals around x of a certain number of standard errors, and declare that some (hopefully high) percent of such intervals will contain That percentage is the probability associated with such intervals, and is known as level of confidence.
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Graphical Interpretation Of Intervals

x1 x3 x2 x4 x1 1 68% Confidence around Level 1 x2 around 68% intervals will x3 1 cover around x4 1 around Notice that larger the interval, greater the confidence level 2 x1 95.5% Confidence around Level 2 x2 around x 95.5% intervals will cover 2 3 around 4/29/12 QM 2010 - Kingston 1212 2 x4

Most Commonly Used Confidence Levels

90% 1.64 standard errors 95% 1.96 standard errors 99% 2.58 standard errors

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(Population std dev known, sample A supplier ofsize wiper blades did lifecar large)
tests on a random sample of 100 blades from his production line. The sample mean was 21 months. From previous studies he knew that the population standard deviation was 6 months.

Example For Confidence Interval

What is the 95% confidence interval on the sample mean

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Solution For Wiper Blade Example

Given: x
x

= 21 = 6

n = 100

The standard error of the mean of 6 6 = = 100 == 0.6 = samples of size 100 10 n For 95% confidence, we use 1.96 So confidence interval is
x 1.96 x = 21 1.96(0.6) =

22.18

and 19.82
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(Population std dev unknown, sample size large) CRY took a random sample of 50

Example For Confidence Interval

families in the Bhatwadi section where 700 families reside, and found that the mean monthly income of the sample was Rs.11,800, with a standard deviation of Rs.950.

What is the 90% confidence interval for the mean monthly income of all the 700 families in Bhatwadi?
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Solution For CRY Example

Given:x = 11800 s = 950 50 N = 700 Since is unknown, use s as an estimate of

sx

n=

s N 950 700 Then,s we can nonly get 50 = 134.37(0.9643) = 129.57 , not = =

x

Also since n/N > 0.05, we will have to use finite-population-correction. Thus,
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N 1

50

700 1

Interval Estimates

When sample sizes are < 30, and population std dev is un-known, sampling distribution of means is NOT Normal, and Normal tables cannot be used. Appropriate distribution is tdistribution

(Population std dev unknown, sample size small)

General shape is similar to Normal. There is no standard t-distribution

There are different t-distributions for different
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What A t-Table Looks Like

E T AC F O t-D T IB IO X R T R M IS R UT N Total 2-Tail Probabilities 0.10 0.05 0.02 0.01 (90% ) (95% ) (98% ) (99% ) 6.314 2.92 2.353 2.132 1.943 Df 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

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How To Use t-Tables For Confidence Intervals

See what confidence level (CL) you require.

(100 CL) will be the total probability required in the tails. (Ex: CL = 95%, probability reqd in tails = 5%) (Sample size 1) is the degrees of freedom (df)

See what sample size is.

Select the row corresponding to your 4/29/12 QM 2010 - Kingston 2020 df.

(Population std dev unknown, sample size Tata Power in The plant manager atsmall)
Chembur wants to estimate average coal usage in a week for the coming year. He took a random sample of 10 weeks, and found the average consumption was 11,400 tons. The standard deviation of the sample was 700 tons.

Example For Confidence Interval

Construct a 95% confidence interval on the mean weekly coal 4/29/12 QM 2010 - Kingston 2121

Solution For Tata Power Example

x Given: = 11,400 tons s = 700 tons n = 10 weeks

CL = 95%

So df = = s sx 9 And

700 = 221.38 10

We enter t-table with df = 9 and total 2-tail probability = 0.05, and find t = 2.262
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Thus, 95% CI is: 11400 QM 2010 - Kingston

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Calculating Sample Size For A Given CI

Sometimes we are given a CI and a CL and asked to find an n that will do the job.

(Population Std Dev Known)

z x See what is the half-width of the CI and what is the CL. Set = half-width x =
Choose z from Normal table as per CL Set Substitute in above Solve for n.QM 2010 - Kingston
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Example For Sample Size Calculation

Take previous example of car wiper blades What should be the sample size for a 95% CI of 1.0 month?

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Solution For Sample Size Problem

Given half-width = 1 month, and = z x = 1 6 months 6 = =

6 We must =have 1.96 1 n
x

For 95% CL, z = 1.96, and So Solving for n, we get n = (1.96x6)2 = 11.762 = 139 What was the previous half-width and 4/29/12 QM (1.18 months and 100) 2525 sample size? 2010 - Kingston

Confidence Intervals On Proportions

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About Proportions

Proportions (fractions) of various items in populations are of interest in many practical situations.

Ex: proportion un-employed, proportion of college graduates, etc.

There is p of a population, which is p estimated by of a sample. We can construct confidence intervals on

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How To Use Sampling Distnp Of

p We note sampling distn of is almost Normal p p Mean of sampling distribution p of p = p. p

pq Std deviation of sampling dist of p n =

, pq
n

We estimate p by We estimate by
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Example For CI For p

Survey was done to see how many employees have their own retirement plan (not companys). Sample of 75 was taken and it was found that 40% had their own plans. Develop 99% confidence interval for the true (population) proportion having their own plan.
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Solution To Retirement Plan Problem

Given: n = 75,p 0.4(0.6) 99%. p q Then

n

= 0.4

CL =

75

= 0.057

For 99% confidence, z = 2.58 --pq p from Normal ntable. CI is: z

= 0.4 2.58(0.057) = 4/29/12 QM 2010 3030 0.547 and 0.253 - Kingston

End Of Session Estimation

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