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You are hired by an online retail store to estimate the mean of customers’ annual purchase...

You are hired by an online retail store to estimate the mean of customers’ annual purchase frequency. According to pretesting results, the variance of purchase frequency is 16. The manager required that the margin of error should be controlled below 0.5 at confidence level 95%. What is the minimum sample size?

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Answer #1

Given

Variance of frequency=​​​​​​=16

Standard deviation===16^0.5=4

Critical value of z for 95% confidence interval=z=1.96

Marginal of error is given as

We know that ME should be less than 0.5


n>61.46 or say 62

Sample should be 62 or above

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