INSTITUTE OF FINANCE MANAGEMENT
DEPARTMENT OF COMPUTER SCIENCE AND MATHEMATICS
MTU 07404: STATISTICS FOR DECISION MAKING
TUTORIAL QUESTIONS ON ESTIMATION
Question 1
As an aid in the establishment of personnel requirements, the director of MMC wishes to estimate
the mean number of people who are admitted to the emergency room during a 24-hour period. The
director randomly selects 64 different 24-hour periods and determines the number of admissions
for each. For this sample mean = 19.8 and Sample Standard deviation (s2) = 25. Estimate the
number of admissions per 24-hour period with a 95% confidence interval at MMC.
Question 2
In checking the reliability of a bank’s records, auditing firms sometimes ask a sample of the bank’s
customers to confirm the accuracy of their savings account balances as reported by the bank.
Suppose an auditing firm is interested in estimating p, the proportion of a bank’s savings accounts
on whose balances the bank and the customers disagree. Of 200 savings account customers
questioned by the auditors, 15 said their balance disagreed with that reported by the bank.
Required:
a) Use a 95% confidence interval to estimate the actual proportion of the bank’s savings accounts
on whose balances the bank and customers disagree.
b) How many savings account customers should the auditors question if they want to estimate p
to within 0.02 with probability equal to 0.95?
Question 3
a) In a small firm employing 100 people a random sample of 25 employees earn an average hourly
wage of TSZ. 475/= with a standard deviation of TZS. 25/=. Suppose the wages are
approximately normally distributed. Estimate the average hourly wage of all 100 employees,
using 95% confidence limits.
b) A random sample of the year- end statements of 22 small businesses (under TZS. 3 million in
sales) in the city shows the mean gross profit margin to be 7.2% (of sales) with a standard
deviation of 3.3.%. Use these data to place a 95% C.I. for Population mean µ.
Question 4
As part of an annual company audit, the 12,000 sales invoices issued by NSSF during the last
year have been sampled and checked for accuracy. The required sample of 200 invoices was
drawn randomly and the results were classified according to the number of items that each
invoice contains giving rise to the following table:
Items per Number Number of Invoices with
Invoice Sampled No error 1 error 2 errors
1-5 64 60 2 2
6-10 90 74 8 8
10 and 46 32 8 6
above
Required:
Estimate the proportion of all invoices that contain at least 1 error using a 95% confidence limits.
Question 5
Of 400 units inspected in an engineering firm, it was found that 32 did not conform to
specifications. Obtain a 95% estimate of the true proportion of faulty items.
Question 6
Suppose you are a retailer at Kariakoo area and you want to estimate the proportion of your
customer who are shoplifters. You decide to select a random sample of shoppers and check closely
to determine whether they steal any merchandise while in the store. How many customers should
you include in your sample if you want to estimate the proportion of shoplifters in your store
correct to within 0.02 with 95% Confidence limit?
Question 7
An analyst wishes to estimate the mean monthly wage of workers in a particular company within
TZS. 2500 and with 95% confidence. The standard deviation of the wage rates is estimated as
being no larger than TZS. 10,000. What is the number of personnel records that should be sampled,
as a minimum, to satisfy this research objective?
Question 8
When sampling from a normally distributed population, is there any advantage to taking a large
sample? Explain.
Question 9
Given information: p = 0.5, E = 0.02, 95% C.I=95%. Use the given information to estimate the
minimum sample size required.
