a. What percentage of the waybills constituted the sample?
b. What percentage error was made by using the sample to estimate the total revenue due C&O?
c. At the time of the study, the cost of a census was approximately $5000, whereas the cost for the sample estimate was only $1000. Knowing this information and your answers to parts (a) and (b), do you think that sampling was preferable to a census? Explain your answer.
d. In the study, the $83 error was against C&O. Could the error have been in C&O's favor?
At the beginning of this chapter, we discussed a freight study commissioned by the Chesapeake and Ohio Railroad Company (C&O). A sample of 2072 waybills from a population of 22,984 waybills was used to estimate the total revenue due C&O. The estimate arrived at was $64,568. Because all 22,984 waybills were available, a census could be taken to determine exactly the total revenue due C&O and thereby reveal the accuracy of the estimate obtained by sampling. The exact amount due C&O was found to be $64,651.