In: Statistics and Probability
Bob Nale is the owner of Nale’s Quick Fill. Bob would like to estimate the mean number of gallons of gasoline sold to his customers. Assume the number of gallons sold follows the normal distribution with a population standard deviation of 2.50 gallons. From his records, he selects a random sample of 55 sales and finds the mean number of gallons sold is 6.30.
Solution :
Given that,
Point estimate = sample mean =
= 6.30
Population standard deviation =
= 2.50
Sample size = n =55
Point estimate = = 6.30
At 99% confidence level the z is ,
= 1 - 99% = 1 - 0.99 = 0.01
/ 2 = 0.01 / 2 = 0.005
Z/2 = Z0.005 = 2.576 ( Using z table )
Margin of error = E = Z/2* ( /n)
= 2.576* (2.50 / 55)
E= 0.87
At 99% confidence interval estimate of the population mean is,
- E < < + E
6.30- 0.87< <6.30+ 0.87
5.43< < 7.17
(5.43,7.17 )