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Estimation

Introduction to Estimation
•Definition: Estimation involves using sample data
to infer properties of a population.

•Purpose: Provides insights for decision-making in

business.

11/26/2024
McGraw-Hill/Irwin
Univariate and multivariate analysis are two fundamental concepts in statistics,
each dealing with different numbers of variables:

Univariate Analysis
•Definition: The examination of a single variable.
•Purpose: Summarizes and describes the characteristics of that single variable.
•Examples: Mean, median, mode, standard deviation, range, and distribution of a variable.
•Visualization: Histograms, bar charts, pie charts, and box plots.
•Example Scenario: Analyzing the annual income of a group of people without considering any other
variables.
Multivariate Analysis
•Definition: The examination of more than one variable simultaneously.
•Purpose: Understand the relationships between multiple variables and how they interact with each
other.
•Examples: Multiple regression, factor analysis, MANOVA (Multivariate Analysis of Variance), cluster
analysis.
•Visualization: Scatter plots, heatmaps, 3D plots, and multivariate control charts.
•Example Scenario: Analyzing the relationship between income, education level, and age in
predicting spending behavior.
Key Differences:
•Number of Variables: Univariate involves one variable; multivariate involves two or more variables.
•Complexity: Univariate analysis is simpler, focused on describing data; multivariate analysis is more complex,
focused on understanding relationships and interactions.
•Application: Univariate is often used for descriptive statistics; multivariate is used for modeling and making
predictions.
Understanding these differences is crucial for selecting the right analytical approach based on the data and research
questions at hand. If you need more detailed examples or have a specific context in mind, feel free to ask!
 LEARNING OBJECTIVES
ESTIMATION

Calculate a confidence interval for the

population mean when the population
standard deviation is not known.

Calculate a confidence interval for the

population proportion.

Select a sample size to estimate the

population mean and the population
proportion.
 Estimation
• In most statistical studies population parameters are unknown, and must be estimated

through sampling.

• The primary goal of a sampling activity is to make an inference about something using

the least amount of information possible.

• It is possible to draw valid conclusion about the population parameter from sampling

distributions.

• The problem is to construct a sample quantity that will serve to estimate the unknown

parameter. Such a sample quantity is called the estimator.

NOTATION

PIE
TYPES OF ESTIMATE

PIE
 TYPES OF ESTIMATE

Applications in Business
•Market Research: Estimating customer preferences and market trends.

•Financial Forecasting: Predicting future sales, costs, and profits.

•Quality Control: Assessing product quality and consistency.

 CONFIDENCE INTERVAL
• Definition:
Definition : A range of values that likely contains the population parameter
with a certain level of confidence (e.g., 95% confidence interval)The probability
that the true value will fall in this interval is 95 % (i.e.) you are confident that the
true value of the population parameter will fall in this interval
• `CI = Point Estimate ± (Critical Value * Standard Error).
Z value @ 90 % 1.64

Z value @ 95 % 1.96

Z value at 99 % 2.58

Lower Limit Upperr Limit

Based on sample data,95 % of the time population average will lie between these 2 limits.
 Estimation
• Any sample statistics that is used to estimate an unknown population parameter is called
an “ESTIMATOR”.
• ‘ẍ’ Sample mean can be an estimator of the population mean ‘µ’
• ‘p1’- sample proportion can be an estimator of the population proportion ‘p”.

TYPES OF ESTIMATES

We can make 2 types of estimates about a population.

Point Estimates and
Interval Estimates

Point Estimate:
Is a single number that is used to estimate an unknown population parameter, in other
words, the estimate of a population parameter given by a single number is called the point estimate of
the parameter.
For example, if a firm takes a sample of 50 salesman and finds out that the average amount
of time that each salesman spends with his customer is 80 minutes. If this figure is used for an estimate
of all the salesman employed by the firm it is referred to as a point estimate because we are using one
value to obtain the population value.
 Point Estimates
▪ A point estimate is a single number. For the population mean

(and population standard deviation), a point estimate is the

sample mean (and sample standard deviation).

▪ A confidence interval provides additional information about

variability

Lower Confidence Upper Confidence

Limit Point Estimate Limit

Width of
confidence interval
 Statistics in Business
▪ Canadian Grocery Shopping Statistics A study of 1,000 adult Canadians was conducted by
the Environics Research Group in a recent year in behalf of Master Card Worldwide to
ascertain information about Canadian shopping habits. Canadian shopping activities were
divided into two core categories: 1.) the “quick” trip for traditional staples, convenience
items, or snack foods, and 2.) the “stock-up” trip that generally occurs once per week and
is approximately two and a half times longer than a quick trip. As a result, many
interesting statistics were reported. Canadians take a mean of 37 stock-up trips per year,
spending an average of 44 minutes in the store, and they take a mean of 76 quick trips per
year, spending an average of 18 minutes in the store. Forty-six percent of households with
kids usually take them on quick trips as do 51% on stock-up trips. On average, Canadians
spend four times more money on a stock-up trip than on a quick trip. Some other
interesting statistics from this survey include: 23% often buy items that are not on their list
but catch their eye, 28% often go to a store to buy an item that is on sale, 24% often
switch to another checkout lane to get out faster, and 45% often bring their own bag. Since
these statistics are based on a sample of 1,000 shoppers, it is virtually certain that the
statistics given here are point estimates.
 Estimation
Interval Estimate
If an estimate of a population parameter is given by 2
distinct numbers between which the population parameter may
be expected to lie then the estimate is called an interval or
confidence interval or confidence limits.

It is a range of values within which, with a known

probability or to a known degree of reliance, the value of the
population parameter is expected to lie.
 Confidence Interval Estimates
▪ A confidence interval gives a range estimate of values:

▪ Takes into consideration variation in sample statistics from

sample to sample

▪ Based on all the observations from 1 sample

▪ Gives information about closeness to unknown population

parameters

▪ Stated in terms of level of confidence

▪ Ex. 95% confidence, 99% confidence

▪ Can never be 100% confident

 Confidence Interval Estimates

▪ The general formula for all

confidence intervals is:

Point Estimate ± (Critical Value) (Standard Error)

 Confidence Level

▪ Confidence Level

▪ Confidence in which the interval will contain the unknown

population parameter

▪ A percentage (less than 100%)

 Confidence Level
▪ Suppose confidence level = 95%

▪ Also written (1 - ) = .95

▪ A relative frequency interpretation:

▪ In the long run, 95% of all the confidence intervals that can

be constructed will contain the unknown true parameter

▪ A specific interval either will contain or will not contain

the true parameter

Confidence Interval for μ (σ Known)
Assumptions
▪ Population standard deviation σ is known
▪ Population is normally distributed
▪ If population is not normal, use large sample
Confidence interval estimate:
σ
XZ
n
(where Z is the standardized normal distribution critical value
for a probability of α/2 in each tail)
 Finding the Critical Value, Z

Consider a 95% confidence interval: =NORM.S.INV(0.975)

1−  = .95

α α
= .025 = .025
2 2

Z units: Z= -1.96 0 Z= 1.96

Lower Upper
X units: Confidence Point Estimate Confidence
Limit Limit
Estimation- Population proportion : Large sample

The HR director of a large organisation wanted to know what proportion of all persons who
had ever been interviewed for a job with his organisation has been hired. He was willing to
settle for 95% confidence interval. A random sample of 500 interview records reveal that 76 or
0.152 of the persons in the sample, had been hired.

Data given

n = sample size 500

p = sample proportion

Z value @ 90 % 1.64
Std error
Z value @ 95 % 1.96

Z value at 99 % 2.58

At 95 % 0.152 ± 1.96 *0.016 =0.183, 0.121

S.E= 0.016
Estimation- Population mean : Large sample -1
(σ Known)

In order to introduce some incentives for higher balance in savings account a random sample of size 64 savings
account at a banks branch was studied to estimate the average monthly balance in savings bank accounts. The mean
and S.D. of the 64 savings account were found to be Rs.8,500 and Rs.2000 respectively. Find (i) 90% (ii) 95% (iii)
99% confidence interval for the population mean.

1.64 Data given

Z value @ 90 %
n = sample size 64
Z value @ 95 % 1.96
Mean Rs 8500
Z value at 99 % 2.58
S.D Rs 2000
=NORM.S.INV(0.995))

At 95 % 8500 ± 1.96 * 250 = 8010 ,8990 Std error

At 99 % 8500 ± 2.58 *250 = 7855, 9145

At 90 % 8500 ± 1.64*250 = 8090 , 8910

Confidence Interval for μ (σ Known)
Example
▪ A sample of 11 circuits from a large normal population

has a mean resistance of 2.20 ohms. We know from

past testing that the population standard deviation is .35
ohms.

▪ Determine a 95% confidence interval for the true mean

resistance of the population.

Confidence Interval for μ (σ Known)
Example
σ
X Z
n
= 2.20  1.96 (.35/ 11)
= 2.20  .2068
(1.9932 , 2.4068)
▪ We are 95% confident that the true mean resistance is between
1.9932 and 2.4068 ohms
▪ Although the true mean may or may not be in this interval, 95%
of intervals formed in this manner will contain the true mean
Estimation- Population mean : Large sample -2
(σ Known)

The shopping bills of customers of a departmental stores are known to follow normal
distribution with mean Rs.2000 and s.d of the population is Rs.500. One day the first hundred
customers bills are found to have an average of Rs.2,200. Can the first 100 customers be
regarded as a truly representative random sample of the population of all customers.
1.64 Data given
Z value @ 90 %
1.96 µ = pop.mean Rs2000
Z value @ 95 %
1.95
2.58
9964 S.D Rs 500
Z value at 99 %

=NORM.S.INV(0.975) 1.96 n = sample size 100

At 95 % 1.95
2200 ± 1.96 * 50 =2298 ,2102 Mean Rs2200
9964

Conclusion Std error

Population Average Rs 2000 is not falling within this
interval, the first 100 customers bills cannot be a true
representative of the population
Estimation- Population mean : Large sample -3
(σ Known)
The Quality department of a wire manufacturing company periodically selects a sample of
wire specimens in order to test for breaking strength. Past experience has shown that the
breaking strength of a certain type of wire are normally distributed with S.D. of 200 kg. A
random sample of 64 specimens gave a mean breaking strength of 6,200 kg. The quality
control supervisor wanted a 95% confidence interval for the mean breaking strength of the
population.

Z value @ 90 % 1.64 Data given

Z value @ 95 % 1.96
S.D 200 kg
Z value at 99 % 2.58
n = sample size 64
Mean 6200 kg
At 95 % 6200 ± 1.96 * 25 =6249 , 6151
Std error
Conclusion

95 % confidence Interval for the mean breaking strength of

the Population will lie between 6151 kg to 6249 kg
 STANDARD ERROR FOR FINITE POPULATION

Most formulas used to compute standard errors are based on the idea that

(1) samples are selected with replacement or that (2) samples are

selected from an infinite population.

In actual research, neither of these ideas hold true.

Luckily this doesn’t tend to be a problem if the sample size is less than 5% of the

total population size.

However, when the sample size is larger than 5% of the total population it’s best to

apply a finite population correction (often abbreviated FPC), which is calculated as

FPC = √(N-n) / (N-1) where: N: Population size ,n: Sample size

Standard error of mean: s / √n * √(N-n) / (N-1)

 PROBLEM
Researchers want to estimate the proportion of residents in a county of 1,300 people that are
in favor of a certain law. They select a random sample of 100 residents and ask them about
their stance on the law. Here are the results:

•Sample size n = 100

•Proportion in favor of law p = 0.56
Calculate a 95% confidence interval for a population proportion is

Sample size in this example is 100/1,300 = 7.7% of the population, which exceeds
5%.
Apply a finite population correction to our formula for the confidence interval

95% C.I. = p +/- z*(√p(1-p)/n) * √(N-n) / (N-1)

95% C.I. = 0.56 +/- 1.96*(√.56(1-.56) / 100) * √(1300-100) / (1300-1)

= [0.4665, 0.6535]
 Example

A survey was taken of U.S. companies that do business with

firms in India. One of the questions on the survey was:
Approximately how many years has your company been
trading with firms in India? A random sample of 44 responses
to this question yielded a mean of 10.455 years. Suppose the
population standard deviation for this question is 7.7 years.
Using this information, construct a 90% confidence interval for
the mean number of years that a company has been trading in
India for the population of U.S. companies trading with firms
in India.
 Example

A study is conducted in a company that employs 800

engineers. A random sample of 50 engineers reveals that the
average sample age is 34.3 years. Historically, the population
standard deviation of the age of the company’s engineers is
approximately 8 years. Construct a 98% confidence interval to
estimate the average age of all the engineers in this company
Confidence Interval for μ (σ Unknown)
▪ If the population standard deviation σ is unknown, we can
substitute the sample standard deviation, S

▪ This introduces extra uncertainty, since S is variable from

sample to sample

▪ So we use the t distribution instead of the normal distribution.

▪ t distribution is similar in structure to the normal distribution

except that it depends on degrees of freedom
 DEGREES OF FREEDOM

Degrees of freedom are essential for determining critical values in statistical

tests, which in turn affect the p-values and confidence intervals.

Degrees of freedom provide a way to account for the amount of information

available in data relative to the complexity of the analysis being performed.

They ensure that statistical tests are appropriately calibrated to the amount of

available data.

If there are n observations, the degrees of freedom is n-1

 Degrees of Freedom
Idea: Number of observations that are free to vary after sample mean has
been calculated

Example: Suppose the mean of 3 numbers is 8.0

▪ Let X1 = 7
▪ Let X2 = 8
▪ What is X3? If the mean of these three values is 8.0,
then X3 must be 9 ,(i.e., X3 is not free to vary)

Here, n = 3, so degrees of freedom = n – 1 = 3 – 1 = 2

(2 values can be any numbers, but the third is not free to vary for a
given mean)
 Student’s t Distribution

▪ The t value depends on degrees of freedom (d.f.)

▪ Number of observations that are free to vary after

sample mean has been calculated

d.f. = n - 1
 Student’s t Distribution
Note: t Z as n increases

Standard
Normal
(t with df = ∞)

t (df = 13)
t-distributions are bell-shaped
and symmetric, but have
‘fatter’ tails than the normal t (df = 5)

0 t
 Student’s t Table
Upper Tail Area
Let: n = 3
df .25 .10 .05 df = n - 1 = 2
 = .10
1 1.000 3.078 6.314 /2 =.05

2 0.817 1.886 2.920

3 0.765 1.638 2.353 /2 = .05

The body of the table contains t

values, not probabilities 0 2.920 t

=T.INV(0.05,2) 2.92
 Confidence Interval for μ
(σ Unknown)
Assumptions
▪ Population standard deviation is unknown
▪ Population is normally distributed
▪ if n> 30 , use large sample- Z distribution
Use Student’s t Distribution ( for small sampling n< 30)
S
X  t n -1
Confidence Interval Estimate : n

(where t is the critical value of the t distribution with n-1 d.f. and an
area of α/2 in each tail)

In real world business situations,you would never know the std deviation of the population. In
business situations, population are often too large to examine all the values
Confidence Interval for μ (σ Unknown)
Example

A random sample of n = 25 has X = 50 and S = 8.

Form a 95% confidence interval ( alpha is 5%)
for μ
▪ d.f. = n – 1 = 24, so
▪ The confidence interval is
S 8
X  t/2, n -1 = 50  (2.0639)
n 25
(46.698 , 53.302)
Using Excel
=T.INV(0.025,24) = 2.064
2 sided : alpha / 2
 PROBLEM – 1
standard
The average travel time taken based on a random sample of 10 people working in
a company to reach the office is 40 minutes with a standard deviation of 10 mts
Establish 95 % confidence interval for the mean travel time of every one in the
conmpany

Step 1 : Data given : Step 5: Establish 95 % C.I Mean

n= sample size : 10
x bar = 40 mts
s : sample s.d = 10 mts
S 8
40 + 2.26* 3.16 = 47.14
Step 2 : Identify the Distribution
X  t/2, n -1 = 50  (2.0639)
to
Since n is < 30 & pop.sd is unknown n 25
40- 2.26* 3.16 = 32.86
use t distribution

Step 4: Find the critical value for t

when d.f is 9 from the table ( 2 sided)
2.26
Example
▪ The owner of a large equipment rental company wants to make a
rather quick estimate of the average number of days a piece of
ditchdigging equipment is rented out per person per time. The
company has records of all rentals, but the amount of time required to
conduct an audit of all accounts would be prohibitive. The owner 264
Estimation for Single Populations decides to take a random sample of
rental invoices. Fourteen different rentals of ditchdiggers are selected
randomly from the files, yielding the following data. She uses these
data to construct a 99% confidence interval to estimate the average
number of days that a ditchdigger is rented and assumes that the
number of days per rental is normally distributed in the population.

31325121421311
 Confidence Intervals for the
Population Proportion, π

▪ An interval estimate for the population proportion (

π ) can be calculated by adding an allowance for
uncertainty to the sample proportion ( p )
Confidence Intervals for the Population Proportion, π

Recall that the distribution of the sample proportion is

approximately normal if the sample size is large, with
standard deviation
 (1 −  )
σp =
n
We will estimate this with sample data:

p(1− p)
n
 Confidence Intervals for the
Population Proportion, π
Upper and lower confidence limits for the population proportion
are calculated with the formula

p(1 − p)
pZ
n
where
▪ Z is the standardized normal value for the level of
confidence desired
▪ p is the sample proportion
▪ n is the sample size
▪ A clothing company produces men’s jeans. The jeans
are made and sold with either a regular cut or a boot
cut. In an effort to estimate the proportion of their
men’s jeans market in Oklahoma City that prefers
boot-cut jeans, the analyst takes a random sample of
212 jeans sales from the company’s two Oklahoma
City retail outlets. Only 34 of the sales were for
boot-cut jeans. Construct a 90% confidence interval
to estimate the proportion of the population in
Oklahoma City who prefer boot-cut jeans.
 Confidence Intervals for the
Population Proportion, Example
A random sample of 100 people shows that 25 have opened
IRA’s this year. Form a 95% confidence interval for the true
proportion of the population who have opened IRA’s.

p  Z p(1 − p)/n
= 25/100  1.96 .25(.75)/1 00

= .25  1.96 (.0433)

(0.1651 , 0.3349)
 Confidence Intervals for the
Population Proportion, Example

▪ We are 95% confident that the true percentage of left-

handers in the population is between 16.51% and

33.49%. Although the interval from .1651 to .3349
may or may not contain the true proportion, 95% of
intervals formed from samples of size 100 in this
manner will contain the true proportion.
SAMPLE SIZE
 Sample size Determination
To find the average kilometre per litre for Maruti Alto cars which are running in
Chennai city is considered to be unknown ( Population mean).

This can be estimated using sample mean for which determination of sample size is
crucial.

By selecting a sample size lower than the correct size may affect reliability and higher size
will mean more cost and time

The determination of the size of a sample is the most important factor for the purposes of
estimation of the value of the population parameters LIKE POPULATION MEAN &
POPULATION PROPORTION

FOR EXAMPLE, To find the proportion of people supporting a political party in Chennai .
This can be estimated using A sample proportion for which the determination of sample size
is crucial

In hypothesis testing Population parameter (population mean & population proportion) is

to be tested using sample statistics ( sample average, sample proportion ), for which
determination of sample size is crucial.
Determining Sample Size

▪ The required sample size can be found to

reach a desired margin of error (e) with a
specified level of confidence (1 - )
▪ The margin of error is also called sampling
error
▪ the amount of imprecision in the estimate of
the population parameter
▪ the amount added and subtracted to the point
estimate to form the confidence interval
 Determining Sample Size
▪ To determine the required sample size for the mean, you
must know:
▪ The desired level of confidence (1 - ), which determines
the critical Z value
▪ The acceptable sampling error (margin of error), e
▪ The standard deviation, σ

σ Z σ 2 2
e=Z Now solve
n=
n for n to get 2
e
 DETERMINATION OF SAMPLE SIZE – Example 1

A marketing research firm wants to conduct a survey to estimate the average amount
spent on purchasing food, by each person visiting a popular resort .

The people who plan the survey would like to determine the average amount spent by
all people visiting the resort , within $ 100 with 95% confidence .

From the past operation of the resort ,an estimate of the population standard deviation
is $300. what is the minimum required sample size?
Data Given
To determine the Estimating the average amount
Sample size for spent (Population Mean) Difference (error e) $ 100

Z at 95% From table

1.96

σ $ 300

2 2
n= = 34.57
 DETERMINATION OF SAMPLE SIZE – Example 2
g wants to determine on the basis of sample study the mean time required
A Pathologist
i a certain analysis so that he may be 98% confident that the mean may
to complete
remain with in ±3 days of true mean. As per the available record, the population
variance is 81 days. a) What must be the size of sample for his study? b) How large a
sample would be required if the precision is to be doubled.
To determine the Estimating the average Data Given
Sample size for time (Population Mean) Z at 98% From table 2.33

Difference (error e) 3 days

2 σ Square root of 81 = 9

2
= 48 .8 say 49
2
b) If precision is doubled, (ie ) e= 1.5 days = 196
 DETERMINATION OF SAMPLE SIZE- Example 3
Mr. X wants to determine on the basis of sample study. The average time required to
complete a certain job so that he may be 95% confident that the mean may be with in
±2 days of the true mean. The population variance is 64 days.
How large should the sample be for his study.

Data Given
To determine the Estimating the average
Sample size for Z at 95% From table 1.96
time (Population Mean)

Difference (error e) 2 days

σ Square root of 64 = 8

48 .8 say 49

2
 Determining Sample Size

If  = 45, what sample size is needed to estimate the

mean within ± 5 with 90% confidence?

Z 2 σ 2 (1.645)2 (45)2
n= 2
= 2
= 219.19
e 5

So the required sample size is n = 220

 Determining Sample Size

▪ If unknown, σ can be estimated when using the

required sample size formula

▪ Use a value for σ that is expected to be at least as large as

the true σ

▪ Select a pilot sample and estimate σ with the sample

standard deviation, S
 Determining Sample Size
To determine the required sample size for the proportion, you must
know:
▪ The desired level of confidence (1 - ), which determines
the critical Z value
▪ The acceptable sampling error (margin of error), e
▪ The true proportion of “successes”, π
▪ π can be estimated with a pilot sample, if necessary (or
conservatively use π = .50)

 (1 −  ) Now solve Z  (1 −  )
2

e=Z for n to get n=

n e2
 Determining Sample Size

▪How large a sample would be necessary to estimate the

true proportion defective in a large population within

±3%, with 95% confidence?

▪ (Assume a pilot sample yields p = .12)

 Determining Sample Size

Solution:
For 95% confidence, use Z = 1.96
e = .03
p = .12, so use this to estimate π

Z 2  (1 −  ) (1.96) 2 (.12)(1 − .12)

n= 2
= 2
= 450.74
e (.03)
So use n = 451
 DETERMINATION OF SAMPLE SIZE
The manufacturers of a sports car wants to estimate the proportion of people in a given
income bracket , who are interested in a sports car model.
N=

The company wants to know the proportion p, to be within 0.1 with 99% confidence . Current
company records indicate that the proportion p may be around 0.35.

What is the minimum required sample size for this survey?

Data Given
Error (e) 0.1
Z at 99 % 2.58 (from table)
n =
Proportion (p) 0.35
= 151.43 say 151
q = 1-p since p +q = 1

q = 1- 0.35 = 0.65
 DETERMINATION OF SAMPLE SIZE
A company believes that it holds about 30% share of colour TV market in a city. The
company wishes to get a precise estimate of its share with in a margin of error 2%.
N=
a) How large a no. of household should be surveyed to get the desired estimate with a
confidence of 95%?
b) If the cost of contacting a household is Rs.20 what will be the total cost of the
survey?
c) If the budget for the survey is limited to Rs.10,000 what accuracy can be obtained by
a survey with in the budget?

Data Given

Proportion (p) 0.30

Error (e) 0.02

b) Total cost of survey = 2017 * 20 = Rs. 40,340
Z at 95% 1.96 (from table)

c) When the budget for the survey is Rs 10,000 q = 1-p since p +q = 1

then the sample size will be (10000/20) =500.
Find the error when n = 500 q = 1- 0.30 = 0.70

e = 0.040
 EXERCISE
➢ If the difference to be detected increases, what happens to the required sample size?
Sample size decreases when error (e) (denominator)increases

➢ If the standard deviation increases, what happens to the required sample size?
Sample size increases when σ (numerator) increases.

➢ If the power of the test( bad lot is rejected) required increases, what happens to the required
sample size?
When power(1-β) increases consumer risk decreases therefore sample size increases
➢ If the alpha error decreases, what happens to the required sample size?

When α decreases confidence level (1- α) increases therefore sample size increases

To estimate the To estimate the

population mean population
based on sample proportion based on
mean what should sample proportion
be the sample size? what should be the
2 sample size?

n=
 Ethical Issues

▪ A confidence interval (reflecting sampling error)

should always be reported along with a point estimate
▪ The level of confidence should always be reported
▪ The sample size should be reported
▪ An interpretation of the confidence interval estimate
should also be provided
 Chapter Summary
In this chapter, we have
▪ Determined required sample size for mean and
proportion settings
▪ Developed applications of confidence interval
estimation in auditing
▪ Confidence interval estimation for population total
▪ Confidence interval estimation for total difference in
the population
▪ One sided confidence intervals
▪ Addressed confidence interval estimation and ethical
issues