An automobile manufacturer would like to know what proportion of its customers a

Question

An automobile manufacturer would like to know what proportion of its customers are dissatisfied with the service received from their local dealer. The customer relations department will survey a random sample of customers and compute a 95% confidence interval for the proportion that are dissatisfied. From past studies, they believe that this proportion will be about 0.3. Find the sample size needed if the margin of error of the confidence interval is to be no more than 0.02. (Round your answer up to the next whole number.)

Explanation / Answer

Solution:

The true proportion p = 0.2

Margin of Error E = 0.03

Significance level = 0.05

95% confidence interval for proportion

For 95% z value = 1.96

So, sample size n p (1 - p) * (z/E)2  = 0.2 * (1 - 0.2) * (1.96/0.03)2 = 682.94

So, required sampel size n= 683

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