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Learning Objectives

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4.1 Statistics and Sampling Distributions

• Statistical inference is concerned with drawing conclusions about

populations (or processes) based on sample data from that system
• Random sample – a sample that is selected so that the observations
are independent – a random sample has the property that it has the
same probability of selection as any other sample.
• Statistic – any function of the observations in a sample that doesn't
contain unknown parameters
• The sample mean, the sample variance, and the sample standard
deviation are all statistics

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 Observations in a sample are used to draw
conclusions about the population

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Sampling Distributions
• A statistic is a random variable, because a
different sample with produce a different
observed value of the statistic
• Every statistic has a probability distribution
• The probability distribution of a statistic is called
a sampling distribution

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Sampling from a Normal Distribution

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Sampling from a Bernoulli Distribution

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Sampling from a Poisson Distribution

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4.2 Point Estimation of Process Parameters

• Distributions are described by their parameters

• Parameters are generally unknown and must be
estimated
• Point estimator – a statistic that a single numerical
value that is the estimate of the parameter
• Examples, page 110 & 111

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 Properties of Point Estimators

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Relative efficiency of the range:

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4.3 Statistical Inference for a Single Sample
• Statistical inference = decision making
• Hypothesis testing
• Null hypothesis, H0
• Alternative hypothesis, H1
• Confidence intervals
• These two techniques are closely related

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4.3.1 Inference on the Mean of a Population, Variance Known

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 Upper and
lower
confidence
bounds

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4.3.2 P-Values

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4.3.3 Inference on the Mean of a Normal Distribution,
Variance Unknown

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 Checking the normality assumption – we will see how to do
this in Example 4.3

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P-values for t-Tests
• The tables of the standard normal distribution can give exact P-
values for the Z test for values of Z to two decimals
• The t-table only has a selection of probabilities (see the column
headings in the table)
• Unless the value of the test statistic exactly matches a value in the
table, only an approximate P-value can be obtained
• See text, page 124, for an example
• P-values can also be obtained from Minitab by using the “Probability
Distribution” function “Calc” menu

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 4.3.4 Inference on the Variance of a Normal Distribution

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 Upper and
lower
confidence
bounds

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4.3.5 Inference on a Population Proportion

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 4.3.6 Type II Error and Sample Size

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 Minitab can perform sample size and power calculations. From
Example 4.7:

From Example 4.3:

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4.4 Statistical Inference for Two Samples

Comparing means, comparing variances, comparing proportions

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 4.4.1 Inference on the Difference in Means, Variances Known

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Test Procedures:

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Confidence Interval on the Difference in Means

This is a two-sided CI. The one-sided confidence

bounds would be found by using only one of the
limits in Equation (4.49) with α/2 replaced by α.

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4.4.2 Inference on the Difference in Means of Two Normal
Distributions, Variances Unknown

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 Confidence Intervals – Case 1:

Case 2:

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 Paired Data:

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 4.4.3 Inference on the Variances of Two Normal Distributions

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 The two-sided CI is:

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 4.4.4 Inference on Two Proportions

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4.5 What if There Are More Than Two Populations? The Analysis of
Variance

Example: Does changing the hardwood concentration in the pulp affect

the mean tensile strength of paper?

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The Analysis of Variance (ANOVA)

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 The ANOVA is based on the following partitioning of the total sum of
squares (which measures the total variability in the sample data):

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 Computing Formulas:

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 The ANOVA test statistic is:

If F0 is greater than the critical value Fα,a-1, a(n-1) then the null hypothesis of
equal treatment means is rejected. A P-value approach can also be used.
The P-value would be the probability above F0 in the Fa-1, a(n-1) distribution.

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 Graphical comparison of individual means

20% hardwood produces higher mean strength than the

others; 5% hardwood produces lower strength; 10% and 15%
hardwood don’t differ but give lower strength than 20%.
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4.5.3 Checking Assumptions: Residual Analysis

eij  yij  yˆij  yij  yi .

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 Residual Plots:

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 4.6 Linear Regression Models

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 Models that are not linear in the regressors can still be fit using linear regression
techniques, so long as they are linear in the parameters.
Important cases include models with interaction terms and polynomials.

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 The method of least squares:

Least
squares
normal
equations

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 The test procedure is to calculate the test statistic

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 The regression sum of squares is

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 See Table 4.12 (slide
96) for the t-tests on
the individual
regressors in the
consumer finance
model – both variables
are significant

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Other Diagnostic Tools
• Standardized and Studentized residuals
• R-student – an outlier diagnostic
• The PRESS statistic
• R2 for prediction based on PRESS – a measure of how well the model
will predict new data
• Measure of leverage – hat diagonals
• Cook’s distance – a measure of influence

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