Title: How the Confidence Interval Affects Business | Small Business - Chron.com
Headings: How the Confidence Interval Affects Business
How the Confidence Interval Affects Business
Confidence Intervals
Market Research
Risk Management
Budget Forecasting

Content: How the Confidence Interval Affects Business | Small Business - Chron.com
How the Confidence Interval Affects Business
Small Business
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Advertising & Marketing
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Business Value
By Leigh Richards
Business, like many other fields, can benefit from the use of statistics in estimating or predicting future events. An important tool for business statistics is a confidence interval, which helps a business evaluate the reliability of a particular estimate. Because no estimate can be 100 percent reliable, businesses must be able to know how confident they should be in their estimates and whether or not to act on them. Confidence Intervals
In statistics, a confidence interval gives the percentage probability that an estimated range of possible values in fact includes the actual value being estimated. For example, a business might estimate that a machine uses 10 lbs. of plastic for each unit of a product created. Because the machine cannot be expected to use precisely 10 lbs. per unit, a confidence interval can be created to give a range of possibilities. The company might predict that there is a 95 percent chance that the machine uses on average between 9.85 and 10.5 lbs. of plastic per unit.