As an example of a situation in which several different statis- tics could reasonably be used to
Question:
As an example of a situation in which several different statis- tics could reasonably be used to calculate a point estimate, consider a population of N invoices. Associated with each invoice is its "book value," the recorded amount of that invoice. Let T denote the total book value, a known amount. Some of these book values are erroneous. An audit will be carried out by randomly selecting n invoices and determining the audited (correct) value for each one. Suppose that the sample gives the following results (in dollars). Invoice 1 2 3 4 5 Book value 300 720 526 200 127 Audited value 300 520 526 200 157 Error 0 200 0 0 -30 Let Y = sample mean book value X = sample mean audited value D= sample mean error Propose three different statistics for estimating the total audited (i.e., correct) value-one involving just N and X, another involving T, N, and D, and the last involving T and X/Y. If N 5000 and T-1,761,300, calculate the three corresponding point estimates. (The article "Statistical Models and Analysis in Auditing," Statistical Science, 1989: 2-33 discusses properties of these estimators.)
Step by Step Answer:
Probability And Statistics For Engineering And The Sciences
ISBN: 9781133169345
8th Edition
Authors: Jay L Devore, Roger Ellsbury