Business Statistics:

A Decision-Making Approach
8th Edition

Chapter 7
Introduction to Sampling Distributions

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 Chapter Goals

After completing this chapter, you should be

able to:
 Define the concept of sampling error
 Determine the mean and standard deviation for the
_
sampling distribution of the sample mean, x
 Determine the mean and standard deviation for the
_
sampling distribution of the sample proportion, p
 Describe the Central Limit Theorem and its importance
 Apply sampling distributions for both x_ and p
_

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 Sampling Error
 Sample Statistics are used to estimate
Population Parameters
ex: X is an estimate of the population mean, μ
Problems:
 Different samples provide different estimates of the
population parameter
 Sample results have potential variability, thus sampling
error exits

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 Calculating Sampling Error
 Sampling Error:
The difference between a value (a statistic)
computed from a sample and the corresponding
value (a parameter) computed from a population

Example: (for the mean)

Sampling Error  x - μ
where:
Always present
x  sample mean just because
μ  population mean you sample!

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 Example
If the population mean is μ = 98.6 degrees
and a sample of n = 5 temperatures yields a
sample mean of x = 99.2 degrees, then the
sampling error is
x  μ  99.2  98.6  0.6 degrees

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 Sampling Errors
 The sampling error may be positive or negative
( x may be greater than or less than μ)
 The size of the error depends on the sample selected
 i.e., a larger sample does not necessarily produce a smaller
error if it is not a representative sample
 Download “Sampling Distributions using Excel”
 First sheet: “Sampling Error”

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 Sampling Distribution
 A sampling distribution is a distribution of all
possible values of a statistic for a given
sample size that has been randomly selected
from a population.
 Download “Sampling Distributions using Excel”
 Second sheet: “Sampling Dist”

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 Sampling Distribution Properties
 For any population,
 The average value of all possible sample means
computed from all possible random samples of a
given size from the population is equal to the
population mean (call “Unbiased Estimator”):
 See “Sampling Distributions using Excel”

Considered an μx  μ Theorem 1
“unbiased” estimator

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 Sampling Distribution Properties
(continued)
 The standard deviation of the possible sample means
computed from all random samples of size n is equal to
the population standard deviation divided by the square
root of the sample size (call Standard Error):
 Try using “Sampling Distributions using Excel”  Not Equal!

σ
Also called the σx 
standard error n Theorem 2

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 Finite Population Correction
 Virtually all survey research, sampling is conducted
without replacement from populations that are of a
finite size N.
 In these cases, particularly when the sample size n is
not small in comparison with the population size N (i.e.,
more than 5% of the population is sampled)
 so that n/N > 0.05, a finite population correction
factor (fpc) is used to define both the standard error of
the mean and the standard error of the proportion.

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Impact of fpc by Sample Size

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 Finite Population Correction
 Apply the Finite Population Correction (fpc) if:
 The sample size is greater than 5% of population size.

 Only with sampling without replacement

Then
(x  μ)
z
σ Nn
n N 1
 See fpc by “Sampling Distributions using Excel”

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 Sampling Distribution Properties
(continued)
 As the sample size is increased, the StdDev of
the sampling distribution is reduced…..
 That is, the potential for extreme sampling error
is reduced when larger sample size are used.
 Graphical illustration: next slide

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 Sampling Distribution Properties
(continued)
 The value of x becomes closer to μ as n
increases):
Population

x
Small
sample size
As n increases, x
σ x  σ/ n
Larger
decreases sample size

μ x
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 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
μx  μ and
σx 
n Theorem 3

As n increases the data behaves more like a normal distribution

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 z-value for Sampling Distribution
of x
 z-value for the sampling distribution of x:
(x  μ)
z
σ
n
where: x = sample mean
μ = population mean
σ = population standard deviation
n = sample size

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 Example
 Suppose that a population is known to be normally
distributed with μ = 2,000 and σ = 230 and random
sample of size n = 8 is selected.
 Because the population is normally distributed, the sampling
distribution for the mean will also be normally distributed.
 What is the probability that the sample mean will
exceed 2,100?
 Convert to Z value
 Using Excel: 1-NORMSDIST(1.23)
 Answer on the website

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 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
 …and the sampling distribution will have

σ
μx  μ and σx 
n Theorem 4

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 Central Limit Theorem
If necessary, watch the Video
the sampling
As the n↑
distribution
sample
becomes
size gets
almost normal
large
regardless of
enough…
shape of
population

x
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 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 is
sufficient
 For normal population distributions, the sampling
distribution of the mean is always normally
distributed

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 Example

 Suppose a population (not normally distributed) has

mean μ = 8 and standard deviation σ = 3 and
random sample of size n = 36 (greater than 30) is
selected.

 What is the probability that the sample mean is

between 7.8 and 8.2?

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 Example
(continued)
Solution (continued) -- find z-scores:
 
 7.8 - 8 μ x
- μ 8.2 - 8 
P(7.8  μ 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 0.1554
??? +0.1554
? ??
? ? Sample Standardize
? ? ?
?
7.8 8.2 -0.4 0.4
μ8 x μx  8 x μz  0 z

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 Sampling Distribution of a Proportion
 Try this by yourself!
 In many instances, the objective of sample is to
estimate a population proportion.
 An accountant may be interested in determining the proportion
of accounts payable balances that are correct.
 A production supervisor may wish to determine the percentage
of product that is defect free.
 A marketing research department might want to know the
proportion of potential customers who will purchase a prticular
product.

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 Population Proportions Example
 If the true proportion of voters who support Proposition
A is π (population proportion) = 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) ?

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 Example
(continued)
if π = .4 and n = 200, what is
P(0.40 ≤ p ≤ 0.45) ?

π(1  π) .4(1  0.4)

Find σ p : σ p   0  0.03464
n 200

Convert to  0.40  0.40 0.45  0.40 

standard P(0.40  p  0.45)  P 0 z0 
 .03464 .03464 
normal
(z-values):  P(0  z  1.44)

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

Use standard 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

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

 If two outcomes, p is a binomial distribution

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 Sampling Distribution of p

 Approximated by a
Sampling Distribution
normal distribution if: P( p )
.3
 nπ  5 .2
.1
0
n(1 π)  5 0 .2 .4 .6 8 1 p

where
and π(1  π)
μp  π σp  Theorem 5

n
(where π = population proportion)
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 z-Value for Proportions
Standardize p to a z value with the formula:

pπ pπ
z 
σp π(1  π)
n
 If sampling is without replacement
and n is greater than 5% of the
π(1 π) N  n
population size, then σ p must use σp 
the finite population correction n N 1
factor:

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 Using the Sample Distribution for
Proportions
1. Determine the population proportion, p
2. Calculate the sample proportion, p
3. Derive the mean and standard deviation of the
sampling distribution
4. Define the event of interest
5. If np and n(1-p) are both > 5, then covert p to
z-value
6. Use standard normal table (Appendix D) to
determine the probability

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 Chapter Summary
 Discussed sampling error
 Introduced sampling distributions
 Described the sampling distribution of the mean
 For normal populations
 Using the Central Limit Theorem (normality unknown)
 Described the sampling distribution of a
proportion
 Calculated probabilities using sampling
distributions
 Discussed sampling from finite populations
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Printed in the United States of America.

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