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: 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. The confidence interval in this example is 95 percent, and the likelihood that the actual amount of plastic used is outside the estimated range is 5 percent. Market Research
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. A company will want to have an idea of how many products it will sell in a given financial period, but cannot know the true number with certainty until after the end of the period. By collecting data from customers, past sales numbers and other sources, a company can statistically estimate the value of future sales.