INTRODUCTION TO SAMPLING AND

ACCEPTANCE SAMPLING
 Introduction to Sampling:

 Information can be collected by examining every person/item from the totality related
to the problem (population), this is complete enumeration, or census.

 Sometimes it is not possible and practical (cost-value analysis) to examine/measure

every person/item in the population. So, information is collected from a part of the
population, known as sample. The process is sampling.
 Types of Sampling:

 Random or probability sampling.

 Non random or judgment sampling.

 Random or probability sampling:
 All the items in the population have a chance of being chosen in the sample.

 Non-random or judgment sampling:

 Personal knowledge and opinion are used to identify the items from the population
that are to be included in the sample. It is based on someone’s expertise about the
population.
 Sometimes a judgment sample is used as a pilot or trial sample, to decide how to take
a random sample later.
 The rigorous statistical analysis that can be done with probability samples cannot be
done with judgment samples.
 Judgment sampling is less representative and valid, but it is more convenient and can
be used in more general situations.
 Random Sampling:
 In random sampling all the items in the population have a chance of being chosen in
sample.

Simple Random
Sampling

Systematic Sampling

Random Sampling

Stratified Sampling

Cluster Sampling
 Simple Random Sampling:

 Allows each possible sample to have an equal probability of being picked and each
item in the population to have an equal chance of being included in the sample.
 A random sample can be selected by using random numbers. These numbers can be
generated by a computer program or by a table of random numbers (random number
table).
 Systematic Sampling:

 Elements are selected from the population at a uniform interval that is measured in time,
order or space.
 Here, each element has an equal chance of being selected but each sample does not have
an equal chance of being selected.
 Advantage: May require less time and results in lower costs.
 Disadvantage: Systematic sampling may be inappropriate when the elements lie in a
sequential pattern.
 Stratified Sampling:

 Population is divided into relatively homogeneous groups (strata). Then, elements are
selected from each stratum randomly.

 It is appropriate when the population is already divided into groups of different sizes
and this fact is being acknowledged.
 Cluster Sampling:

 Population is divided into separate groups, or clusters, and then a simple random sample
of clusters is selected from the population. These individual clusters are representative of
the population as a whole.
o In stratified sampling, each group has small variation within itself but there is a wide
variation between the groups. In cluster sampling, there is substantial variation within
each group but the groups are essentially similar to each other.
 Non-Random Sampling:
 They do not provide units in the population a known chance of being selected in the
sample. The selection procedure is partially subjective.

Convenience Sampling

Judgment Sampling

Non-Random Sampling Quota Sampling

Shopping Mall Intercept Sampling

Snowball Sampling
 Convenience Sampling:

 No planning is required for the sampling, it is based on convenience of the researcher.

It is the least effective method.
Or
 That involves the sample being drawn from that part of the population that is close to
hand. It is used for pilot testing and also called Grab, Accidental, and Opportunity
sampling)
 Judgment Sampling:

 Based on the judgment of the researcher to draw a representative sample. It is better

than the previous one but personal bias limits its applicability.
 Quota Sampling:

 Researcher observes the specific characteristic of potential respondents before making

the selection.

Ex. A study to investigate the proportion of cakes and burgers who eat at home.

Step 1. Divide the population into sub-groups (4 Cakes & 6 Burgers).

Step 2. Identify the proportions of this sub-groups in the population (4 Cakes & 6 Burgers).
Step 3. Select subjects to form sample group
Collect 50% from each group

50% of 4 = 2 Cakes 50% of 6 = 3 Burgers

 Shopping Mall Intercept Sampling:

 It involves drawing samples (establishing malls) in marketplaces, shopping malls,

fairs, etc. This sampling method is popular because of convenience and
representativeness.
 Snowball Sampling (Chain Sampling):

 Initial respondents are selected randomly, then additional respondents by their

recommendations, and so on. This method is useful for rare population.
Or
 Where existing subjects recruit future subjects among their knowledge or experience.

 The sample group grows like a rolling snowball.

 The first respondent refers a friend
 The friend also refers a friend, and so on
TYPES OF SAMPLING PLANS
Types of Sampling Plans:

How to choose the sampling plan for your quality control inspection?

Sampling plans are used to determine how we will choose the batch to be checked.
Usually, an inspector only checks a part of the whole. A portion should be enough in
order to determine the quality of the items to be delivered.

Different types of sampling plans can be used for acceptance sampling, depending upon
the number of samples drawn from a lot.
1. Single Sampling Plan: In this plan a single sample is drawn from the lot of items. Ex. If
the consignment sent by a supplier contains 10,000 items, a sample of size 100 units may be
drawn at random from the lot. Thus,

Universe Size N = 10,000

Sample Size n = 100

 It may be decided by the quality control (QC) manager beforehand that a lot will be
accepted if the sample of size 100 units drawn at random contains say 5 defective units or
less.

 Otherwise, the lot will be rejected.

 This limiting number of defective units used to take a decision about accepting or rejecting
a lot is called the acceptance number (a). In our example,

a=5
 The number of defective items in the sample drawn may be represented by d. Thus, if d ≤
a (in our example d ≤ 5), the lot will be accepted.

 If d > a, the lot will be rejected.

2. Double Sampling Plan:

 In double sampling plan the decision on acceptance or rejection of the lot is based on two
samples.

 A lot may be accepted at once if the first sample is good enough or rejected at once if the
first sample is bad enough.

 If the first sample is neither good enough nor bad enough, the decision is based on the
evidence of the first and second sample combined.
Parameters -
𝑛1 = number of pieces in the first sample.
𝑐1 = acceptance number for the first sample.

i.e. the maximum number of defectives that will permit the acceptance of the lot on the basis
of the first sample.

𝑛2 = number of pieces in the second sample.

𝑛1 + 𝑛2 = number of defectives in the first and second samples combined.
𝑐2 = acceptance number for the two samples combined.

i.e. the maximum number of defectives that will permit the acceptance of the lot on the basis
of the first and second sample combined.
 Inspect 𝑛1 pieces

If the no. of defectives

Does not exceed 𝑐1 𝑐1 ≤ Def. ≤ 𝑐2 Exceeds 𝑐2

Accept the lot Take second sample of Reject the lot

𝑛2 pieces

No. of defectives in the 1st

and 2nd samples combined
i.e. in (𝑛1 + 𝑛2 )

Does not exceed 𝑐2 Exceeds 𝑐2

Accept the lot Reject the lot

Ex.

If, N =100
𝑐1 (acceptance number for the first sample) = 1
𝑐2 (acceptance number for the two samples combined) = 3
𝑛1 (number of pieces in the first sample) = 8
d (defects) = 2
Now,
𝑛2 (number of pieces in the second sample) = 8
d (defects) = 1
And
𝑑1 + 𝑑2 = 3 = 𝑐2 (Accept the lot)
3. Multiple Sampling Plan:

 As discussed in the double sampling plan, when more than two samples are chosen, it
becomes a multiple sampling plan.
SAMPLING AND SAMPLING DISTRIBUTIONS
 Standard Error of the Mean for Infinite Populations:

Population
standard deviation
Standard error 𝜎
of the mean 𝜎𝑥ҧ =
𝑛
Sample size

 Properties of the Sampling Distribution of the Mean When the Population is

Normally Distributed:

Property Illustrated
Symbolically
The sampling distribution has a mean equal to the population mean µ𝑥ҧ = µ
The sampling distribution has a standard deviation (a standard error) σ
σ𝒙ഥ =
equal to the population standard deviation divided by the square root of 𝒏
the sample size
o Ex 1. A bank calculates that its individual savings accounts are normally distributed with a
mean of $2,000 and a standard deviation of $600. If the banks takes a random sample of
100 accounts, what is the probability that the sample mean will lie between $1,900 and
$2,050?
𝜎 600
𝜎𝑥ҧ = = = 60
𝑛 100

𝑥ҧ − µ 1900 − 2000 Standard deviations from the

𝑧= = = −1.67 mean of a standard normal
σ𝑥ҧ 60 probability distribution

𝑥ҧ − µ 2050 − 2000
𝑧= = = 0.83
σ𝑥ҧ 60
Area between the means and a z Area between the means and a z
of -1.67 = 0.4525 of 0.83 = 0.2967

Total shaded area = 0.7492

$1,900 µ=2,000 $2,050

o Ex 2. The distribution of annual earnings of all bank tellers with five years’ experience is
skewed negatively. This distribution has a mean of $ 19,000 and a standard deviation of
$2,000. If we draw a random sample of 30 tellers, what is the probability that their earnings
will average more than $19,750 annually?

𝜎 2,000
𝜎𝑥ҧ = = = 365.16
𝑛 30

𝑥ҧ − µ 19,750 − 19000 Standard deviations from the

𝑧= = = 2.05 mean of a standard normal
σ𝑥ҧ 365.16 probability distribution
 2.05 σ𝑥ҧ

0.0202 (Area between the right

hand tail and $19,750)

0.5000 0.4798

µ𝑥ҧ = 19,000 19,750

 Relationship between Sample Size and Standard Error: As the standard error
decreases, the value of any sample mean will probably be closer to the value of the
population mean.
“as n increases, 𝝈𝒙ഥ decreases. It is true that sampling more items will decrease the
standard error”

When n = 10;

𝜎 100
𝜎𝑥ҧ = = = 31.63
𝑛 10

When n = 100;
𝜎 100
𝜎𝑥ҧ = = = 10
𝑛 100
 Standard Error of the Mean for Finite Populations:

𝜎 𝑁−𝑛
𝜎𝑥ҧ = ×
𝑛 𝑁−1
Where,
N = size of the population; n = size of the sample

𝑁−𝑛
= Finite population multiplier
𝑁−1
Ex. We are interested in a population of 20 textile companies of the same size, all of which
are experiencing excessive labor turnover. Our study indicates that the standard deviation
of the distribution of annual turnover is 75 employees. If we sample five of these textile
companies, without replacement, and wish to compute the standard error of the mean.

𝜎 𝑁 − 𝑛 75 20 − 5
𝜎𝑥ҧ = × = × = 33.54 0.888 = 𝟐𝟗. 𝟖
𝑛 𝑁−1 5 20 − 1

 Finite population multiplier of 0.888 reduced the standard error from 33.54 to 29.8.
 In case in which the population is very large in relation to the size of the sample, this
finite population multiplier is close to 1 and has little effect on the calculation of the
standard error. Ex. Say that we have a population of 1,000 items and that we have taken
a sample of 20 items.

𝑁−𝑛 1000 − 20
= = 𝟎. 𝟗𝟗
𝑁−1 1000 − 1

 When the sampling fraction (n/N) is less than 0.05, the finite population multiplier need
not be used.
ESTIMATION
 Interval Estimates and Confidence Intervals:

 In statistics, the probability that we associate with an interval estimates is called the
confidence level.

 The confidence interval is the range of the estimate we are making.

 ±1.64 standard errors includes about 90 percent of the area under the curve; it includes
0.4495 of the area on either side of the mean in a normal distribution.

 Similarly, ±1.96 standard errors includes about 95 percent of the area under the curve;
it includes 0.4750 of the area.

 Finally, ±2.58 standard errors includes about 99 percent of the area, or 0.4951 of the
area.
 Relationship between Confidence Level and Confidence Interval:

Customer’s Question Store Manager’s Response Implied Implied Confidence

Confidence Level Interval

Will I get my washing machine I am absolutely certain of that. Better than 99% 1 year
within 1 year?

Will you deliver the washing I am almost positive it will be At least 95% 1 month
machine within 1 month? delivered this month.

Will you deliver the washing I am pretty certain it will go out About 80% 1 week
machine within 1 week? within this week.

Will I get my washing machine I am not certain we can get it to About 40% 1 day
tomorrow? you then.

Will my washing machine get There is little chance it will beat Near 1% 1 hour
home before I do? you home.
 You may think that we should use a high confidence level, such as 99 percent, in all
estimation problems.

 After all, a high confidence level seems to signify a high degree of accuracy in the
estimate.

 However, high confidence levels will produce large confidence intervals, and such
large intervals are not precise; they give very fuzzy estimates.
 As a customer sets a tighter and tighter confidence interval, the store manager agrees to
a lower and lower confidence level.

 When the confidence interval is too wide, as is the case with a one-year delivery, the
estimate may have very little real value, even though the store manager attaches a 99
percent confidence level to that estimate.

 Similarly, if the confidence interval is too narrow (“Will my washing machine get
home before I do?”), the estimate is associated with such a low confidence level (1
percent) that we question its value.
 Calculating Interval Estimates of the Mean from Large Samples:
Ex. A large automotive-parts wholesaler needs an estimate of the mean life it can expect
from windshield wiper blades under typical driving conditions. Already, management has
determined that the standard deviation of the population life is 6 months. Suppose we
select a simple random sample of 100 wiper blades, collect data on their useful lives, and
obtain these results:
n =100 (Sample size), 𝑥ҧ = 21 months (Sample mean), σ = 6 months (Population standard
deviation)

𝜎 6
𝜎𝑥ҧ = = = 0.6 month
𝑛 100

𝑥ҧ + 1.96σ𝑥ҧ = 21 + 1.96 (0.6) = 22.18 months (Upper Confidence Limit)

𝑥ҧ − 1.96σ𝑥ҧ = 21 – 1.96 (0.6) = 19.82 months (Lower Confidence Limit)

• We, estimate the mean life of the population of wiper blades to be between 19.82 and
22.18 months with 95 percent confidence.
 Calculating Interval Estimates of the Proportion from Large Samples:

 Statisticians often use a sample to estimate a proportion of occurrences in a population.

For example, the government estimates by a sampling procedure the unemployment
rate, or the proportion of unemployed people, in U.S. workforce.

 Mean and standard deviation of the binomial distribution:

µ = np (Product of the number of trials, n, and the probability of success, p)

np equals the mean number of Now, to change this number of successes

successes. to the proportion of successes

σ = 𝑛𝑝𝑞

where,
n = number of trials, p = probability of success, q = 1 – p = probability of a failure
 Because, sampling
Mean of the Sampling Distribution of the Proportion of Successes distribution has a
mean equal to the
µ𝑝ҧ = 𝑝 population mean i.e.
µ𝑥ҧ = µ

Standard Error of the Proportion But what are p and q

for the population?
𝑝𝑞 We can estimate the
σ𝑝ҧ =
𝑛 population
parameters by
substituting the
corresponding
Estimated Standard Error of the Proportion sample statistics 𝑝ҧ
and 𝑞ത in the formula
𝑝ҧ 𝑞ത for the standard error
σ
ෝ𝑝ҧ =
𝑛 of the proportion.
Ex. For a very large organization what proportion of the employees prefer to provide their
own retirement benefits in lieu of a company-sponsored plan. Management requests that
we use this sample to find an interval about which they can be 99 percent confidence that it
contains the true population proportion.
n = 75 (Sample Size)
𝑝ҧ = 0.4 (Sample proportion in favor)
𝑞ത = 0.6 (Sample proportion not in favor)

𝑝ҧ 𝑞ത (0.4)(0.6)
σ𝑝ҧ =
ෝ = = 0.057 (𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝑠𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑒𝑟𝑟𝑜𝑟 𝑜𝑓 𝑡ℎ𝑒 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛)
𝑛 75

𝑝ҧ + 2.58 σ
ෝ𝑝ҧ = 0.4 + 2.58 0.057 = 0.547 𝑈𝑝𝑝𝑒𝑟 𝑐𝑜𝑛𝑓𝑖𝑑𝑒𝑛𝑐𝑒 𝑙𝑖𝑚𝑖𝑡 − 𝑈𝐶𝐿
𝑝ҧ − 2.58 σ
ෝ𝑝ҧ = 0.4 − 2.58 0.057 = 0.253 (𝐿𝑜𝑤𝑒𝑟 𝑐𝑜𝑛𝑓𝑖𝑑𝑒𝑛𝑐𝑒 𝑙𝑖𝑚𝑖𝑡 − 𝐿𝐶𝐿)

• We believe that the proportion of the total population of employees who wish to
establish their own retirement plans lies between 0.253 and 0.547.
 Determining the Sample Size in Estimation:

 If the sample size is too small, we may fail to achieve the objective of our analysis, but
if it is too large, we waste resources.

 Some sampling error will arise because we have not studied the whole population.
Sampling error is controlled by selecting a sample that is adequate in size.

 If we want a high level of precision (that is, if we want to be quite sure of our estimate),
we have to sample enough of the population to provide the required information.
 Sample Size for Estimating a Mean:
Ex. Suppose a university is performing a survey of the annual earnings of last year’s
graduates from its business school. It knows from past experience that the standard
deviation of the annual earnings of the entire population (1,000) of these graduates is
about $1,500. How large a sample size should the university take in order to estimate
the mean annual earnings of last year’s class within $500 and at a 95 percent
confidence level?

𝑍αΤ2 σ 1.96 × 1500

𝑛= = = 5.88
𝐸 500

𝑛 = 34.6 (𝑆𝑎𝑚𝑝𝑙𝑒 𝑠𝑖𝑧𝑒)

 OR

𝑧σ𝑥ҧ = $500 and

z = 1.96

500
σ𝑥ҧ = = 255 (𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑒𝑟𝑟𝑜𝑟 𝑜𝑓 𝑡ℎ𝑒 𝑚𝑒𝑎𝑛)
1.96

𝜎 1500
𝜎𝑥ҧ = , 255 =
𝑛 𝑛

n = 34.6 (Sample size)

 Sample Size for Estimating a Proportion:
Ex. Suppose we wish to poll students at a large state university. We want to determine what
proportion of them is in favor of a new grading system. We would like a sample size
that will enable us to be 90 percent certain of estimating the true proportion of the
population of 40,000 students that is in favor of the new system within plus and minus
0.02.
If 𝑧σ𝑝ҧ = 0.02
and z = 1.64

0.02
σ𝑝ҧ = = 0.0122 (𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑒𝑟𝑟𝑜𝑟 𝑜𝑓 𝑡ℎ𝑒 𝑝𝑟𝑜𝑝𝑜𝑟𝑡𝑖𝑜𝑛)
1.64

𝑝𝑞 𝑝𝑞 𝑝𝑞
𝜎𝑝ҧ = , 0.0122 = , 0.00014884 = , (Consider p = 0.5)
𝑛 𝑛 𝑛

n = 1,680 (Sample size)

 Samples Size n Associated with Different Values of p and q

Choose this value for p Value of q, or 1-p 𝒑𝒒 Indicated sample size n

( )
𝟎. 𝟎𝟎𝟎𝟏𝟒𝟖𝟖𝟒
0.2 0.8 (0.2)(0.8) = 1075
( )
0.00014884
0.3 0.7 (0.3)(0.7) = 1411
( )
0.00014884
0.4 0.6 (0.4)(0.6) = 1613
( )
0.00014884
0.5 0.5 (0.5)(0.5) = 1680
( )
0.00014884
0.6 0.4 (0.6)(0.4) = 1613
( )
0.00014884
0.7 0.3 (0.7)(0.3) = 1411
( )
0.00014884
0.8 0.2 (0.8)(0.2) = 1075
( )
0.00014884
HYPOTHESIS TESTING OF PROPORTIONS:
LARGE SAMPLES
 Two-Tailed Tests of Proportions:
Ex. A company that is evaluating the promotability of its employees, that is, determining
the proportion whose ability, training, and supervisory experience quality them for
promotion to the next higher level of management. The human resources director tells the
president that roughly 80 percent, or 0.8, of the employees in the company are
“promotable”. The president assembles a special committee to assess the promotability of
all employees. This committee conducts in-depth interviews with 150 employees and finds
that in its judgment only 70 percent of the sample are qualified for promotion.

𝑝𝐻0 = 0.8 (Hypothesized value of the population proportion of successes)

𝑞𝐻0 = 0.2 (Hypothesized value of the population proportion of failures)
n = 150 (Sample size)
𝑝ҧ = 0.7 (Sample proportion of promotables)
𝑞ത = 0.3 (Sample proportion judged not promotable)

The president wants to test at the 0.05 significance level the hypothesis that 0.8 of the
employees are promotable:
 𝐻0 : 𝑝 = 0.8 (Null hypothesis, 80 percent of the employees are promotable)
𝐻1 : 𝑝 ≠ 0.8 (Alternative hypothesis. The promotion of the promotable employees is not 80 percent)
α = 0.05 (Level of significance for testing the hypothesis)

o In this instance, the company wants to know whether the true proportion is larger or
smaller than the hypothesized proportion. Thus, a two-tailed test of a proportion is
appropriate.
Critical value
Critical value
z = +1.96
z = - 1.96

0.025 of area 0.025 of area

0.475 of area 0.475 of area

z
0
o The significance level corresponds to the two colored regions, each containing 0.025 of
the area.
 𝑝𝐻0 𝑞𝐻0 (0.8)(0.2) Conclusion: It is clear that
σ𝑝ҧ = = = 0.0327 (Standard error of the proportion) this sample falls outside the
𝑛 150
region of acceptance.
Therefore, in this case the
ҧ 𝐻0
𝑝−𝑝 0.7−0.8 president should reject the null
𝑧= = = −𝟑. 𝟎𝟔 (Standardize sample proportion)
σ𝑝
ഥ 0.0327 hypothesis and conclude that
there is a significant difference
Acceptance region between the director of HR’s
Accept Ho if the sample value is in this region hypothesized proportion of
promotable employees (0.8)
and the observed proportion of
promotable employees in the
sample. From this, he should
infer that the true proportion
Standardized of promotable employees in
sample proportion the entire company is not 80
percent.

z
-3.06 -1.96 0 +1.96
 One-Tailed Tests of Proportions:
 A one-tailed test of a proportion is conceptually equivalent to a one-tailed test of a mean.
Ex. A member of a public interest group concerned with environmental pollution asserts at a
public hearing that “fewer than 60 percent of the industrial plants in this area are complying
with air-pollution standards”. Attending this meeting is an official of the Environmental
Protection Agency who believes that 60 percent of the plants are complying with the
standards; she decides to test that hypothesis at the 0.02 significance level.
The official makes a thorough search of the records in her office. She samples 60
plants from a population of over 10,000 plants and finds that 33 are complying with air-
pollution standards. Is the assertion by the member of the public interest group a valid one?
𝑝𝐻0 = 0.6 (Hypothesized value of the population proportion that is complying with air-pollution
standards)
𝑞𝐻0 = 0.4 (Hypothesized value of the population proportion that is not complying and thus polluting)
n = 60 (Sample size)
𝑝ҧ = 33Τ60 , 𝑜𝑟 0.55 (Sample proportion complying)
𝑞ത = 27Τ60 , 𝑜𝑟 0.45 (Sample proportion polluting)
 𝐻0 : 𝑝 = 0.6 (Null hypothesis: The proportion of plants complying with the air-pollution standards is 0.6)
𝐻1 : 𝑝 < 0.6 (Alternative hypothesis. The promotion complying with the standards is less than 0.6)
α = 0.02 (Level of significance for testing the hypothesis)

o This is one-tailed test: The EPA official wonders only whether the actual proportion is
less than 0.6. Specifically, this is a left-tailed test. The critical value of z from Appendix
Table 1 for 0.48 of the area under the curve is 2.05.
Critical value
z = - 2.05

0.02 of area

0.48 of area 0.50 of area

z
0
 𝑝𝐻0 𝑞𝐻0 (0.6)(0.4)
σ𝑝ҧ = = = 0.0632 (Standard error of the proportion)
𝑛 60

ҧ 𝐻0
𝑝−𝑝 0.55−0.6
𝑧= = = −𝟎. 𝟕𝟗 (Standardize sample proportion)
σ𝑝
ഥ 0.0632

Acceptance region
Accept Ho if the sample value is in this region Conclusion: We can
see that the sample
proportion lies within
the acceptance region.
Therefore, the EPA
Standardized sample official should accept
proportion the null hypothesis
that the true
proportion of
complying plants is
0.6.
z
-2.05 -0.79 0
Q. 1: A ketchup manufacturer is in the process of deciding whether to produce a new extra-
spicy brand. The company’s marketing-research department used a national telephone
survey of 6,000 households and found that the extra-spicy ketchup would be purchased by
335 of them. A much more extensive study made 2 years ago showed that 5 percent of the
households would purchase the brand then. At a 2 percent significance level, should the
company conclude that there is an increased interest in the extra-spicy flavor? (Ans: z =
2.07, reject null)

Q. 2: Steve Cutter sells Big Blade lawn mowers in his hardware store, and he is interested in
comparing the reliability of the mowers he sells with the reliability of Big Blade mowers
sold nationwide. Steve knows that only 15 percent of all Bog Blade mowers sold nationwide
require repairs during the first year of ownership. A sample of 120 of Steve’s customers
revealed that exactly 22 of them required mower repairs in the first year of ownership. At
the 0.02 level of significance, is there evidence that Steve’s Big Blade mowers differ in
reliability from those sold nationwide? (Ans: z =1.02, do not reject)
 TESTS FOR DIFFERENCES BETWEEN
PROPORTIONS: LARGE SAMPLE SIZES
 Suppose we are interested in finding out whether the BJP party is stronger in Rajasthan
than in M.P.

Or

 We would like to know whether women are as likely as men to purchase sports cars.

 To reach a conclusion in situations like these, we can take samples from each of the two
groups in question (voters in Rajasthan and M.P. or women and men) and use the
sample proportions to test the difference between the two populations.
 Two-Tailed Tests for Differences between Proportions:
Ex. Consider the case of a pharmaceutical manufacturing company testing two new
compounds intended to reduce blood-pressure levels. The compounds are administered to
two different sets of laboratory animals. In group one, 71 of 100 animals tested respond to
drug 1 with lower blood-pressure levels. In group two, 58 of 90 animals tested respond to
drug 2 with lower blood-pressure levels. The company wants to test at the 0.05 level
whether there is a difference between the efficacies of these two drugs. How should we
proceed with this problem?

𝑝1ҧ = 0.71 (Sample proportion of successes with drug 1)

𝑞ത1 = 0.29 (Sample proportion of failures with drug 1)
𝑛1 = 100 (Sample size for testing drug 1)
𝑝ҧ2 = 0.644 (Sample proportion of successes with drug 2)
𝑞ത2 = 0.356 (Sample proportion of failures with drug 2)
𝑛2 = 90 (Sample size for testing drug 2)
𝐻0 : 𝑝1 = 𝑝2 (Null hypothesis: There is no difference between these two drugs)
𝐻1 : 𝑝1 ≠ 𝑝2 (Alternative hypothesis: There is a difference between them)
α = 0.05 (Level of significance for testing this hypothesis)
 The management of the pharmaceutical company wants to know whether there is a
difference between the two compounds, this is a two-tailed test.
 The significance level of 0.05 corresponds to the colored regions in the figure. We can
determine that the critical value of z for 0.475 of the area under the curve is 1.96.

Critical value
Critical value
z = +1.96
z = - 1.96

0.025 of area 0.025 of area

0.475 of area 0.475 of area

z
0
 We want to find the standard error of the difference between two proportions; therefore,
we would recall the formula for the standard error of the proportion:

Standard Error of the Difference between Two

Standard Error of the Proportion Proportions

𝑝𝑞 𝑝1 𝑞1 𝑝2 𝑞2
σ𝑝ҧ = σ𝑝ҧ1−𝑝ҧ2 = +
𝑛 𝑛1 𝑛2

Estimated Standard Error of the Difference between Two Proportions

𝑝1ҧ 𝑞ത1 𝑝ҧ2 𝑞ത2

σ
ෝ𝑝ҧ1 −𝑝ҧ2 = +
𝑛1 𝑛2
 Estimated Overall Proportion of Successes in Two Populations

𝑛1 𝑝1ҧ + 𝑛2 𝑝ҧ2 100 0.71 + (90)(0.644)

𝑝Ƹ = = = 0.6787
𝑛1 + 𝑛2 100 + 90

Estimate of the overall proportion of success in the combined

populations using combined proportions from both samples (𝑞ො
would be 1-0.6789 = 0.3211)

Estimated Standard Error of the Difference between Two Proportions

Using Combined Estimates from Both Samples

𝑝ො𝑞ො 𝑝ො𝑞ො (0.6787)(0.3213) (0.6787)(0.3213)

σ
ෝ𝑝ҧ1−𝑝ҧ2 = + = + = 0.0671
𝑛1 𝑛2 100 90
 Now, we standardize the difference between the two observed sample proportions, 𝑝1ҧ −
𝑝ҧ2 by dividing by the estimated standard error of the difference between two
proportions:
𝑝1ҧ − 𝑝ҧ2 − (𝑝1 − 𝑝2 )𝐻0 0.71 − 0.644 − 0
𝑧= = = 0.983
σ
ෝ𝑝ҧ1 −𝑝ҧ2 0.0671
Conclusion: We can Acceptance region
see in this figure that Accept Ho if the sample value is in this region
the standardized
difference between
the two sample
proportions lies within Standardized difference
the acceptance region. between the two sample
Thus, we accept the proportions
null hypothesis and
conclude that these
two new compounds
produce effects on
blood pressure that 0 z
-1.96 +0.983 +1.96
are not significantly
different.
 One-Tailed Tests for Differences between Proportions:
 Conceptually, the one-tailed test for the difference between two populations is similar to
a one-tailed test for the difference between two means.
Ex. Suppose that for tax purposes, a city government has been using two methods of listing
property. The first requires the property owner to appear in person before a tax lister, but
the second permits the property owner to mail-in a tax form. The city manager thinks the
personal-appearance method produces far fewer mistakes than the mail-in method. She
authorizes an examination of 50 personal-appearance listings and 75 mail-in listings. Ten
percent of the personal-appearance forms contain errors; 13.3 percent of the mail-in forms
contain them. The city manager wants to test at the 0.15 level of significance the
hypothesis that the personal-appearance method produces a lower proportion of errors.
What should she do? The results can be summarized:
𝑝1ҧ = 0.10 (Proportion of personal-appearance forms with errors)
𝑞ത1 = 0.90 (Proportion of personal-appearance forms without errors)
𝑛1 = 50 (Sample size of personal-appearance forms)
𝑝ҧ2 = 0.133 (Proportion of mail-in forms with errors)
𝑞ത2 = 0.867 (Proportion of mail-in forms without errors)
𝑛2 = 75 (Sample size of mail-in forms)
𝐻0 : 𝑝1 = 𝑝2 (Null hypothesis: There is no difference between the two methods)
𝐻1 : 𝑝1 < 𝑝2 (Alternative hypothesis: The personal-appearance method has a lower proportion of errors
than the mail-in method)
α = 0.15 (Level of significance for testing the hypothesis)
This is a one-tailed
(left-tailed) test,
because to reject the
Critical value null hypothesis, the
z = - 1.04 test result must fall in
the colored portion of
the left tail, indicating
that significantly
fewer errors exist in
0.15 of area the personal-
appearance forms.

0.35 of area 0.50 of area

z
0
 Estimated Overall Proportion of Successes in Two populations

𝑛1 𝑝1ҧ + 𝑛2 𝑝ҧ2 50 0.10 + (75)(0.133)

𝑝Ƹ = = = 0.12
𝑛1 + 𝑛2 50 + 75

Estimate of the overall proportion of success in the population

using combined proportions from both samples (𝑞ො would be 1-
0.12 = 0.88)

Estimated Standard Error of the Difference between Two Proportions

Using Combined Estimates from Both Samples

𝑝ො𝑞ො 𝑝ො𝑞ො (0.12)(0.88) (0.12)(0.88)

σ
ෝ𝑝ҧ1−𝑝ҧ2 = + = + = 0.0593
𝑛1 𝑛2 50 75
 𝑝1ҧ − 𝑝ҧ2 − (𝑝1 − 𝑝2 )𝐻0 0.10 − 0.133 − 0
𝑧= = = −0.556
σ
ෝ𝑝ҧ1−𝑝ҧ2 0.0593
Conclusion: We can
see that the
standardized
difference between
Acceptance region
Accept Ho if the sample value is in this region the two sample
proportions lies well
within the acceptance
region, and the city
manager should
Standardized sample accept the null
proportion hypothesis that there
is no difference
between the two
methods of tax listing.

z
-1.04 -0.556 0
Q. 1: Two different areas of a large eastern city are being considered as sites for day-care
centers. Of 200 households surveyed in one section, the proportion in which the mother
worked full time was 0.52. In another section, 40 percent of the 150 households surveyed
had mothers working at full-time jobs. At the 0.04 level of significance, is there a
significant difference in the proportions of working mothers in the two areas of the city?
(Ans: z-calculated = 2.23, z-table = ±2.05, reject null)
 Concept of Prob Values (p-Value):

 In all the works we have done so far on hypothesis testing, one of the first things we
had to do was choose a level of significance, α, for the test.

 It has been traditional to choose a significance level of α = 10 percent, 5 percent, 2

percent, or 1 percent.

 When we test the hypothesis:

H0 : µ = µH0
H1 : µ ≠ µH0
α = 0.05

 We take a sample, compute 𝑥ҧ and reject 𝐻0 if 𝑥ҧ is so far from µ𝐻0 that the probability of
seeing a value of 𝑥ҧ this far (or farther) from µ𝐻0 is less than 0.05.
 Suppose we take our sample, compute 𝑥ҧ , and then ask the question, “supposing 𝐻0
were true, what’s the probability of getting a value of 𝑥ҧ this far or farther from µ𝐻0 ?”
This probability is called a prob value or a p-value.

 Benefit of using prob values is that they provide more information. If you know that I
rejected 𝐻0 at α = 0.05, you know only that 𝑥ҧ was at least 1.96 standard errors away
from µ𝐻0 .

 However, a prob value of 0.05 tells you that 𝑥ҧ was exactly 1.96 standard errors away
from µ𝐻0 .
Ex. A machine is used to cut wheels of Swiss cheese into blocks of specified weight. On
the basis of long experience, it has been observed that the weight of the blocks is normally
distributed with a standard deviation of 0.3 ounce. The machine is currently set to cut
blocks that weight 12 ounces. A sample of nine blocks is found to have an average weight
of 12.25 ounces. Should we conclude that the cutting machine needs to recalibrated?

µ𝐻0 = 12 (Hypothesized value of the population mean)

σ = 0.3 (Population standard deviation)
n = 9 (Sample size)
𝑥ҧ = 12.25 (Sample mean)

The hypotheses we wish to test are

𝐻0 : µ = 12 (Null hypothesis: The true population mean weight is 12 ounces)
𝐻1 : µ ≠ 12 (Alternative hypothesis: The true population mean weight is not 12 ounces)
 σ 0.3
σ𝑥ҧ = = = 0.1
𝑛 9

Then we use this to convert 𝑥ҧ to a standard z score:

𝑥ҧ − µ 12.25 − 12
𝑧= = = 2.5
σ𝑥ҧ 0.1

 From Appendix Table 1, we see that the probability that z is greater than 2.5 is 0.5000-
0.4938 = 0.0062.

 Hence, this is a two-tailed hypothesis test, the p-value is 2(0.0062) = 0.0124.

 Critical value Critical value
z = - 1.96 z = +1.96

Acceptance region
Accept Ho if the sample value is in this region

Standardized sample
means

0.0062 of area
0.0062 of area

z
-2.5 0 +2.5
 If a significance level of α = 0.05 were adopted, we would reject 𝐻0 , if 𝑥ҧ is so far from
µ𝐻0 that less than 0.05 of the area under the curve is left in the two tails.

 Thus, the standardized value of 𝑥ҧ (2.5) is outside the acceptance region.

 Similarly, we can see that at a significance level of α = 0.01, we would accept 𝐻0 . In this
case, the critical z values for α = 0.01 would be ±2.58, and now the standardized value
of 𝑥,ҧ 2.5, is inside the acceptance region.

 Thus, we see that the prob value is precisely the largest significance level at which we
would accept 𝐻0 .