EIB-504 Spring 24 Lecture 4

LECTURE 4
Sampling Methods and

the Central Limit Theorem
Statistical Techniques in Business & Economics
Lind, D. A., Marchal, W. G., and Wathen, S. A.
18th Edition (2020)
Chapter 8
Business Statistics Saiful Islam

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Executive MBA Program, 1st Semester 2024 Dept. of International Business
Lecture Overview
• Sampling Methods
• The Central Limit Theorem
• Sampling “Error”
• Standard Error
• Sampling Distribution of the Sample Mean

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Introduction
• A population is an entire set of • A sample is a subset of people,
individuals or objects of interest items, or events from a larger
or the measurements obtained population that you collect and
from all individuals or objects of analyze to make inferences
interest

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Reasons to use Sample
1. To contact the whole population would be time consuming
2. The cost of studying all the items in a population may be prohibitive
3. The physical impossibility of checking all items in the population
4. Destructive nature of some tests
5. The sample results are adequate

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Concepts need to know before Sampling
• Sampling Design
• Sampling Frame
• Sampling Unit
• Sample Size

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Sampling Methods
• Simple Random Sampling
Probability • Systematic Random Sampling
Sampling • Stratified Random Sampling
• Cluster Sampling
• Convenience Sampling
• Consecutive Sampling
Non-probability
• Quota Sampling
Sampling
• Judgmental Sampling
• Snowball Sampling
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Sampling Methods
• Probability Sample • Common Probability Sampling
• A sample selected such that Methods
each item or person in the 1. Simple Random Sample
population being studied has 2. Systematic Random
a known likelihood of being Sampling
included in the sample 3. Stratified Random Sampling
4. Cluster Sampling

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Sampling Methods
• Simple Random Sample • Systematic Random Sampling
• A sample selected so that • The items or individuals of
each item or person in the the population are arranged
population has the same in some order
chance of being included • A random starting point is
selected and then every kth
member of the population is
selected for the sample

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Sampling Methods: Simple Random Sample
(Using Table of Random Numbers)
• A population consists of 845 employees of Nitra Industries. A sample
of 52 employees is to be selected from that population.
• A more convenient method of selecting a random sample is to use
the identification number of each employee and a table of random
numbers such as the one in Appendix B.4

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Sampling Methods: Stratified Random Sampling
• A population is first divided into subgroups, called strata, and a
sample is selected from each stratum
• Useful when a population can be clearly divided in groups based on
some characteristics

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Sampling Methods: Cluster Sampling
• A population is divided into clusters using naturally occurring
geographic or other boundaries. Then, clusters are randomly selected
and a sample is collected by randomly selecting from each cluster.

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Sampling Distribution of the Sample Mean
• 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

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Sampling Distribution of the Sample Mean: Example
• Tartus Industries has seven production employees (considered the
population). The hourly earnings of each employee are given in the
table below.
1. What is the population mean?
2. What is the sampling distribution of the sample mean for samples of size 2?
3. What is the mean of the sampling distribution?
4. What observations can be made about the population and the sampling
distribution?

13
14
Sampling Distribution of the Sample Mean: Example

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Central Limit Theorem
• If all samples of a particular size are selected from any population, the
sampling distribution of the sample mean is approximately a normal
distribution
• This approximation improves with larger samples

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• If the population follows a normal
probability distribution, then for any
sample size the sampling distribution
of the sample mean will also be
normal
• If the population distribution is
symmetrical (but not normal), shape
of the distribution of the sample
mean will emerge as normal with
samples as small as 10

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• If a distribution that is skewed or
has thick tails, it may require
samples of 30 or more to observe
the normality feature
• The mean of the sampling
distribution equal to μ and the
variance equal to σ2/n

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Sampling Error
• The difference between a sample statistic and its corresponding
population parameter
• Since the sample is a part or portion of the population, it is unlikely
that the sample mean would be exactly equal to the population mean
and sample standard deviation would be exactly equal to the
population standard deviation
• We can therefore expect a difference between a sample statistic and
its corresponding population parameter

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Sampling Error-Example
• Johnny operates the September Rentals September Rentals September Rentals
Comfort Inn, which 1 8 11 6 21 1
has eight rooms 2 4 12 2 22 2
available for rent. 3 3 13 4 23 3
Rentals for September 4 2 14 4 24 6
are displayed. There 5 4 15 0 25 7
were 95 rentals in 6 3 16 0 26 4
September, so the 7 2 17 5 27 1
mean number of units 8 3 18 3 28 3
rented per night is 9 4 19 3 29 3
3.16. 10 0 20 2 30 3

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Sampling Error-Example
• We take 3 random samples of five-nights rented
• The first random sample of rooms rented: 5, 3, 7, 3, and 4 and the mean of
this sample is 4.4 rooms, so the sampling error is (4.4–3.16) = + 1.24
• The second random sample of rooms rented: 3, 3, 2, 3, and 6 and the mean of
this sample is 3.4 rooms, so the sampling error is (3.4–3.16) = + 0.24
• In the third sample, the sampling error was found to be –1.35

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End of Lecture 4
* All clipart, image and graphics are sourced from Google webpage

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LECTURE 4

Sampling Methods and

Business Statistics Saiful Islam

Business Statistics Saiful Islam

Business Statistics Saiful Islam

Business Statistics Saiful Islam

Business Statistics Saiful Islam

Business Statistics Saiful Islam

Business Statistics Saiful Islam

Business Statistics Saiful Islam

Business Statistics Saiful Islam

Business Statistics Saiful Islam

Business Statistics Saiful Islam

Business Statistics Saiful Islam

Business Statistics Saiful Islam

Business Statistics Saiful Islam

Business Statistics Saiful Islam

Business Statistics Saiful Islam

Business Statistics Saiful Islam

Business Statistics Saiful Islam

Business Statistics Saiful Islam

Business Statistics Saiful Islam

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