Sales of a new line of athletic footwear are crucial to the success of a company. The company wishes to estimate the average weekly sales of the new footwear to within $300 with 90% reliability. The initial sales indicate that the standard deviation of the weekly sales figures is approximately $1100. How many weeks of data must be sampled for the company to get the information it desires?
Solution :
Given that,
Population standard deviation = = $ 1100
Margin of error = E = $ 300
At 90% confidence level the z is,
= 1 - 90%
= 1 - 0.90 = 0.10
/2 = 0.05
Z/2 = Z0.05 = 1.645
sample size = n = [Z/2* / E] 2
n = [1.645 * 1100 / 300 ]2
n = 36.38
Sample size = n = 37 weeks.
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