Question

The head of maintenance at XYZ Rent-A-Car believes that the mean number of miles between services is 3639 3639 miles, with a variance of 145,161 145,161 . If he is correct, what is the probability that the mean of a sample of 41 41 cars would differ from the population mean by less than 126 126 miles

Answer 1

96.6% probability that the mean of a sample would differ from the population mean by less than 126 miles

Explanation:

To solve this question, we need to understand the normal probability distribution and the central limit theorem.

A reminder is that the standard deviation is the square root of the variance.

Normal probability distribution

When the distribution is normal, we use the z-score formula.

In a set with mean
`\mu` and standard deviation
`\sigma`, the zscore of a measure X is given by:

`Z = (X - \mu)/(\sigma)`

The Z-score measures how many standard deviations the measure is from the mean. After finding the Z-score, we look at the z-score table and find the p-value associated with this z-score. This p-value is the probability that the value of the measure is smaller than X, that is, the percentile of X. Subtracting 1 by the pvalue, we get the probability that the value of the measure is greater than X.

Central Limit Theorem

The Central Limit Theorem estabilishes that, for a normally distributed random variable X, with mean
`\mu` and standard deviation
`\sigma`, the sampling distribution of the sample means with size n can be approximated to a normal distribution with mean
`\mu` and standard deviation
`s = (\sigma)/(√(n))`.

For a skewed variable, the Central Limit Theorem can also be applied, as long as n is at least 30.

In this question:

`\mu = 3639, \sigma = √(145161) = 381, n = 41, s = (381)/(√(41)) = 59.5`

Probability that the mean of the sample would differ from the population mean by less than 126 miles

This is the pvalue of Z when X = 3639 + 126 = 3765 subtracted by the pvalue of Z when X = 3639 - 126 = 3513. So

X = 3765

`Z = (X - \mu)/(\sigma)`

By the Central Limit Theorem

`Z = (X - \mu)/(s)`

`Z = (3765 - 3639)/(59.5)`

`Z = 2.12`

`Z = 2.12` has a pvalue of 0.983

X = 3513

`Z = (X - \mu)/(s)`

`Z = (3513 - 3639)/(59.5)`

`Z = -2.12`

`Z = -2.12` has a pvalue of 0.017

0.983 - 0.017 = 0.966

96.6% probability that the mean of a sample would differ from the population mean by less than 126 miles