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Central Limit Theorem

The Central Limit Theorem is used in the case of optimizing the weekly re-stocking of

seltzer water. The local grocer wants to know how much seltzer water will it order every week

for each of the branches to minimize excess inventory that would end up being idle in each of the

stores. The manager does not want to visit each of the stores and check the sales every day and

then project inventory, so they decided to use the Central Limit Theorem to solve their problem.

With the use of the Central Limit Theorem, there is no need to visit every store and get

the sale number or the week. What they did is they collected samples for the weekly sales in each

of the stores which became their population. After the collection of the sample data, they

calculated the average number of cases of seltzer sold. Then the distribution of the sample mean

was created which they referred to as the sampling distribution.

They assumed that the distributions if the sample means is normally distributed to need

the criteria that to be able to apply the central limit theorem, the data must be normally

distributed.

The study conducted was able to satisfy the following requirements for the sample:

a. The samples were randomly selected to avoid bias and a guarantee that each of the

samples is independent of each other;

b. The samples are representatives of the whole population;

c. The sample size is greater than 30 to ensure that conclusion are drawn;
 d. The sample size was less than 10% of the population since the study used sampling

without replacement.

The Central bvLimit Theorem may be a simple statistical tool, but there are several real-

world problems for which it can be applied.