Answer to Question #235516 in Statistics and Probability for blossomqt

Question

Research and make a report of the importance of confidence interval estimations in business decision making and engineering design.

Answer 1

One effect of confidence intervals in businesses is in determining the reliability of market research. Marketing is an important function for most firms, particularly when estimating their level of future sales. By using a confidence interval, the company can determine the range its sales are likely to fall.

The confidence interval helps the user decide whether or not enough simulations have been run. If the confidence interval is too large for the particular application then it indicates that not enough simulations have been run. The size of the confidence interval will decrease as the number of simulations increases.