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Question 807552: A group of investors wants to develop a chain of fast-food restaurants. In determining potential costs for each facility, they must consider, among other expenses, the average monthly electric bill. They decide to sample some fast-food restaurants currently operating to estimate the monthly cost of
electricity. They want to be 90% confident of their results and want the error of the interval estimate to be no more than $100. They estimate that such bills range from $600 to $2,500. How large a sample should they take?
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! A group of investors wants to develop a chain of fast-food restaurants. In determining potential costs for each facility, they must consider, among other expenses, the average monthly electric bill. They decide to sample some fast-food restaurants currently operating to estimate the monthly cost of
electricity. They want to be 90% confident of their results and want the error of the interval estimate to be no more than $100. They estimate that such bills range from $600 to $2,500. How large a sample should they take?
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Using the 6-sigma estimate for the standard deviation:
6s = (2500-600)
s = 1900/6
s = 316.67
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Formula:
n = [z*s/E]^2
n = [1.645*316.67/100]^2
n = 28 when rounded up
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Cheers,
Stan H.
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