Skip to content

Sample size for equal type I and II error of 5 percent

Question

A sales manager wants to detect a one-deal shift in the weekly mean number of deals per salesperson. He tests H0:μ=15H_0:\mu=15 against Ha:μ=16H_a:\mu=16 with known variance σ2=6\sigma^2=6, assuming normally distributed counts and simple random sampling. How many observations are needed so that both the significance level and the type II error probability equal 0.050.05?

Short answer

6565. For a one-sided z-test, n=(zα+zβ)2σ2(μa−μ0)2=(2×1.645)2×61≈64.9n=\dfrac{(z_\alpha+z_\beta)^2\sigma^2}{(\mu_a-\mu_0)^2}=\dfrac{(2\times1.645)^2\times 6}{1}\approx64.9, which rounds up to 6565.

Adapted from QuantQuestions.io; question and answer rewritten by SelfMadeQuant.com.

See the hint and the full worked solution in the question bank (free account).

Open the worked solution

Lessons behind this question

Start with a free lesson: Expectation, Variance and Covariance is part of a free topic. Create a free account, no card needed, to read it in full with worked solutions.

Read it free