One of your employees has suggested that your company develop a new product. You

Question

One of your employees has suggested that your company develop a new product. You decide to take a random sample of your customers and ask whether or not there is interest in the new product. The response is on a 1 to 5 scale with 1 indicating "definitely would not purchase"; 2, "probably would not purchase"; 3, "not sure"; 4, "probably would purchase"; and 5, "definitely would purchase." For an initial analysis, you will record the responses 1, 2, and 3 as "No" and 4 and 5 as "Yes." What sample size would you use if you wanted the 99% margin of error to be 0.15 or less? (Round your answer up to the next whole number.)

Explanation / Answer

Note that      
      
n = z(alpha/2)^2 p (1 - p) / E^2      
      
where      
      
alpha/2 =    0.005  
As there is no previous estimate for p, we set p = 0.5.      
      
Using a table/technology,      
      
z(alpha/2) =    2.575829304  
      
Also,      
      
E =    0.15  
p =    0.5  
      
Thus,      
      
n =    73.72107334  
      
Rounding up,      
      
n =    74   [ANSWER]

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