Section 8 Operation Management Statistics

Section 8 Operation Management Statistics - Dr. Harvey A....

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© 2007 by Harvey A. Singer 1 OM 210:  Statistical Analysis for  Management 1 Point Estimation Dr. Harvey A. Singer School of Management George Mason University
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© 2007 by Harvey A. Singer 2 Why Estimate? Managers must make rational and objective decisions based on what is expected. “Objective” means without bias or prejudice. “Rational” means by a logical and reproducible method. Usually, planning decisions based on present information predicting future performance. But the decision making is often without complete information and with some uncertainty about the information that is available. So, cannot predict what to expect exactly and with absolute certainty
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© 2007 by Harvey A. Singer 3 Why Estimate? So, estimate what to expect. Use statistical inference to make reasonable estimates or approximations of what to expect. Avoid making subjective and/or snap estimates. Use the techniques and estimation and hypothesis testing. Make inferences about characteristics of populations from information contained in samples. In particular, estimate the values of population parameters from values of sample statistics.
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© 2007 by Harvey A. Singer 4 Estimating Population Parameters “Point” estimation of population parameters from the corresponding sample statistics. The value of the sample statistic is the first and best guess for the value of the corresponding population parameter. A point estimate of a population parameter is the value of the corresponding sample statistic. The calculated mean of a sample, x , is the first and best guess for μ . So x is the point estimate of μ .
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© 2007 by Harvey A. Singer 5 Point Estimates Single-number representations from the sample data (e.g., the sample statistics) which estimate the values of the unknown parameters of the population. Common estimators: x estimates μ . the sample median estimates the population median. or x , for a symmetrically distributed population. s 2 estimates σ 2 s estimates σ .
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© 2007 by Harvey A. Singer 6 Principal Results The sample mean x is the point estimate of the population mean μ. If x = 3, then 3 is the estimate of μ. The sample median x is the point estimate of the population mean μ. If x = 5, then 5 is the estimate of μ. The sample standard deviation s is the point estimate of the population standard deviation σ. If s = 2, then 2 is the estimate of σ.
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7 Population Mean Estimation The sample mean x is the unbiased “point estimate” of the true but generally unknown population mean μ . μ = x The first and best guess of μ is x . x
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This note was uploaded on 01/26/2011 for the course OM 210 taught by Professor Singer during the Fall '08 term at George Mason.

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Section 8 Operation Management Statistics - Dr. Harvey A....

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