Business Statistics: For Contemporary Decision Making, 7th Edition

UNIT III

MAKING INFERENCES ABOUT POPULATION PARAMETERS

The ability to estimate population parameters or to test hypotheses about population parameters using sample statistics is one of the main applications of statistics in improving decision making in business. Whether estimating parameters or testing hypotheses about parameters, the inferential process consists of taking a random sample from a group or body (the population), analyzing data from the sample, and reaching conclusions about the population using the sample data, as shown in Figure 1.1 of Chapter 1.

One widely used technique for estimating population measures (parameters) from a sample using statistics is the confidence interval. Confidence interval estimation is generally reserved for instances where a business researcher does not know what the population value is or does not have a very clear idea of it. For example, what is the mean dollar amount spent by families per month at the movies including concession expenditures, or what proportion of workers telecommute at least one day per week? Confidence intervals can be used to estimate these and many other useful and interesting population parameters, including means, proportions, and variances in the business world.

Sometimes, a business analyst already knows the value of a population parameter or has a good idea but would like to test to determine if the value has changed, if the value applies in other situations, or if the value is what other researchers say it ...