Confidence and Tolerance Intervals
Abstract:
Marketing researchers are often interested in estimating the average value in a population. Information about the population average, in the form of a sample estimate, can be supplemented by drawing and interval or range of values around the sample average likely to include the true population average. Such intervals are called confidence intervals. The researcher can be confident, to a chosen degree, that the interval contains the true population average. However, sometimes the range of values in a population is of greater importance than the average. In such cases another type of interval, a tolerance interval may be useful. Tolerance limits define the bounds of an interval which contains a specified proportion of the individuals (or, in general, objects) in the population, with a chosen level of confidence. This report discusses both confidence and tolerance intervals, and their application.
