Confidence interval and its application in business
Use the Internet or Strayer Library to research articles on confidence interval and its application in business. Select one (1) company or organization which utilized confidence interval technique to measure its performance parameters (e.g., mean, variance, mean differences between two processes, etc.). Give your opinion as to whether or not the utilization of such a technique improves business process for the company or organization that you selected. Justify your response.
Confidence interval provides a range of expected outcomes in the form of numerical values about the probability of something happening based on the data collected from a sample representative of the population. Confidence interval is used in many business fields. For example one of the use of confidence interval is in the stock exchange. If the confidence interval for a certain stock to fall between -5% +6% is 95% in the coming year, it would mean that there is a 95% surety that the stock would fall between -5% +6%.
US Census Bureau utilizes confidence interval. They use a 90% confidence interval when they are estimating the poverty level (number of people under the poverty line) for a certain year. According to US Census Bureau, they might widen the range of estimated poor people while using confidence interval to get accurate calculations (Small Area Income & Poverty Estimates Program, 2017).
I think that the use of confidence interval facilitates the US Census Bureau by enabling them to work with the range of data related to estimates related to financial status of people, racial characteristics and other parameters about the US population. There is not such way to be 100% about expected results, therefore, using confidence interval with 90% surety is a good probable estimate in my opinion.
Small Area Income & Poverty Estimates Program, C. (2017). A Basic Explanation of Confidence Intervals – U.S. Census Bureau. Census.gov. Retrieved 5 June 2017, from https://www.census.gov/did/www/saipe/methods/statecounty/ci.html