1. 8- 1 Chapter Eight McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

2. 8- 2 Chapter Eight Sampling Methods and the Central Limit Theorem GOALS When you have completed this chapter, you will be able to: ONE Explain why a sample is the only feasible way to learn about a population. TWO Describe methods to select a sample. THREE Define and construct a sampling distribution of the sample mean. FOUR Explain the central limit theorem. Goals

3. 8- 3 Chapter Eight continued Sampling Methods and the Central Limit Theorem GOALS When you have completed this chapter, you will be able to: FIVE Use the Central Limit Theorem to find probabilities of selecting possible sample means from a specified population. Goals

4. 8- 4 Why Sample the Population? Why sample? The destructive nature of certain tests. The physical impossibility of checking all items in the population. The cost of studying all the items in a population. The adequacy of sample results in most cases. The time-consuming aspect of contacting the whole population.

5. 8- 5 Probability Sampling/Methods Systematic Random Sampling The items or individuals of the population are arranged in some order. A random starting point is selected and then every k th member of the population is selected for the sample. Simple Random Sample A sample formulated so that each item or person in the population has the same chance of being included. A probability sample is a sample selected such that each item or person in the population being studied has a known likelihood of being included in the sample.

6. 8- 6 Methods of Probability Sampling Stratified Random Sampling: A population is first divided into subgroups, called strata, and a sample is selected from each stratum.

7. 8- 7 Cluster Sampling Cluster Sampling: A population is first divided into primary units then samples are selected from the primary units.

8. 8- 8 Methods of Probability Sampling The sampling error is the difference between a sample statistic and its corresponding population parameter. In nonprobability sample inclusion in the sample is based on the judgment of the person selecting the sample. The sampling distribution of the sample mean is a probability distribution consisting of all possible sample means of a given sample size selected from a population.

9. 8- 9 Example 1 The law firm of Hoya and Associates has five partners. At their weekly partners meeting each reported the number of hours they billed clients for their services last week. If two partners are selected randomly, how many different samples are possible?

10. 8- 10 Example 1 5 objects taken 2 at a time. A total of 10 different samples

11. 8- 11 Example 1 continued As a sampling distribution

12. 8- 12 Example 1 continued Compute the mean of the sample means. Compare it with the population mean. The mean of the sample means The population mean Notice that the mean of the sample means is exactly equal to the population mean.

13. 8- 13 Central Limit Theorem  x x =   n For a population with a mean  and a variance  2 the sampling distribution of the means of all possible samples of size n generated from the population will be approximately normally distributed. This approximation improves with larger samples. The mean of the sampling distribution equal to m and the variance equal to  2 /n. The standard error of the mean is the standard deviation of the standard deviation of the sample means given as: Central Limit Theorem

14. 8- 14 Sample Means the sample size is large enough even when the underlying population may be nonnormal Sample means follow the normal probability distribution under two conditions: the underlying population follows the normal distribution OR

15. 8- 15 Use  in place of s if the population standard deviation is known. Sample Means To determine the probability that a sample mean falls within a particular region, use

16. 8- 16 Example 2 Suppose the mean selling price of a gallon of gasoline in the United States is $1.30. Further, assume the distribution is positively skewed, with a standard deviation of $0.28. What is the probability of selecting a sample of 35 gasoline stations and finding the sample mean within $.08?

17. 8- 17 Example 2 continued Step One : Find the z-values corresponding to $1.24 and $1.36. These are the two points within $0.08 of the population mean.

18. 8- 18 Example 2 continued Step Two: determine the probability of a z-value between -1.69 and 1.69. We would expect about 91 percent of the sample means to be within $0.08 of the population mean.