Study Guide Sample Statistics 06 20 2013 Used to estimate population parameters Sampling Distribution The distribution of all possible values of a statistic for a given sample size given that the sample is randomly selected Sample mean Is an unbiased estimator It s an unbiased estimator if the difference between the estimator and the parameter becomes smaller as sample becomes bigger Central Limit Theorem As the sample size gets large enough the sampling distribution becomes almost normal regardless of shape of population the proportion of the population having some characteristic Sample proportion p Provides an estimate of P x n number of successes in the sample sample size A single number used to estimate an unknown population Point Estimate parameter Confidence Interval Provides additional information about variability Also known as an interval estimate o Provides more information about a population characteristic than does a point estimate Gives us a range of values and gives information about closeness to unknown population parameters Point Estimate Critical Value Standard Error The larger the confidence interval is the wider the data is going to be Use T Table if Margin of Error Population standard deviation is unknown See an s Sample standard deviation is involved The amount added and subtracted to the point estimate to form the confidence interval E z standard deviation the square root of n Standard error x critical value gives you margin of error Changing the Sample Size Increases in the sample size reduce the width of the confidence Larger sample size means a smaller sampling error interval Decision Making Knowing if to decide then when and what to decide Includes understanding the consequences of decisions The Payoff Table A method of organizing and illustrating the payoffs from different decisions given various states of nature A payoff is the outcome of the decision Maximax Criterion optimistic Choose decision with the maximum of the maximum payoffs Choose decision with the minimum of the minimum payoffs Choose decision with the maximum of the minimum payoffs Minimin Criterion Maximin Criterion Expected Value A weighted average of decision outcomes in which each future state of nature is assigned a probability of occurrence Expected Maximum Value Multiply probability x outcome payoff Choose the decision with the highest expected maximum value EVPI Maximum value with perfect information to the decision maker expected value with perfect information VPI information Maximum amount that an investor would pay to purchase perfect Value of perfect information VPI EVPI Largest EMV without perfect information Predict value of dependent variable Got to have a relationship Strength of relationship 1 to 1 Regression Correlation Causation Quality Did independent variable cause change in dependent variable Just because there s a correlation doesn t mean there is a causation Fitness for use as designed to be used definition of quality is defined by the customer not the company Measure of goodness that is inherent to a product or service Product Quality Dimensions Product based found in the product attributes User based if customer is satisfied Manufacturing Based conform to specs Value Based perceived as providing good value for the price Demings 14 Points Create constancy of purpose Adopt philosophy of prevention Cease mass inspection Select a few suppliers based on quality Constantly improve system and workers Institute worker training Instill leadership among supervisors Eliminate fear among employees Eliminate barriers between departments Eliminate slogans Remove numerical quotas Enhance worker pride Develop a commitment from top management to implement these Institute vigorous training and education programs 13 points The Deming Wheel or PDCA Cycle Plan Do Study Check Act Six Sigma Quality management program that measures and improves the operational performance of a company by identifying and correcting defects in the company s processes and products Define Measure Analyze Improve Control Started by Motorola made famous by General Electric ISO 9000 Family Family of standards represents an international consensus on good quality management practices It consists of standards and guidelines relation to quality management systems and related supporting standards 06 20 2013 06 20 2013