When we calculate a statistic for example, a mean, a variance, a proportion, or a correlation coefficient, there is no reason to expect that such point estimate would be exactly equal to the true population value, even with increasing sample sizes. There are always sampling inaccuracies, or error. In most Six Sigma projects, there are at least some descriptive statistics calculated from sample data. In truth, it cannot be said that such data are the same as the population’s true mean, variance, or proportion value. There are many situations in which it is preferable instead to express an interval in which we would expect to find the true population value. This interval is called an interval estimate. A confidence interval is an interval, calculated from the sample data, that is very likely to cover the unknown mean, variance, or proportion. For example, after a process improvement a sampling has shown that its yield has improved from 78% to 83%. But, what is the interval in which the population’s yield lies? If the lower end of the interval is 78% or less, you cannot say with any statistical certainty that there has been a significant improvement to the process. There is an error of estimation, or margin of error, or standard error, between the sample statistic and the population value of that statistic. The confidence interval defines that margin of error. The next page shows a decision tree for selecting which formula to use for each situation. For example, if you are dealing with a sample mean and you do not know the population’s true variance (standard deviation squared) or the sample size is less than 30, than you use the t Distribution confidence interval. Each of these applications will be shown in turn.
Confidence Intervals in Six Sigma Methodology
Confidence intervals are very important to Six Sigma methodology. To understand Confidence Intervals better, consider this example scenario: Acme Nelson, a leading market research firm conducts a survey among voters in USA asking them whom would they vote if elections were to be held today. The answer was a big surprise! In addition to Democrats and Republicans, there is this surprise independent candidate, John Doe who is expected to secure 22% of the vote. We asked Acme, how sure are you? In other words how accurate is this prediction? Their answer: “Well, we are 95% confident that John Doe will get 22% plus or minus 2% vote” In the statistical world, they are saying that John Doe will get a vote between 20% and 24% (also known is Confidence Range) with a probability of 95% (Confidence Level).
Definition of Confidence Intervals
According to University of Glasgow Department of Statistics, Confidence Interval is defined as: A confidence interval gives an estimated range of values which is likely to include an unknown population parameter, the estimated range being calculated from a given set of sample data. If independent samples are taken repeatedly from the same population, and a confidence interval calculated for each sample, then a certain percentage (confidence level) of the intervals will include the unknown population parameter. Confidence intervals are usually calculated so that this percentage is 95%, but we can produce 90%, 99%, 99.9% (or whatever) confidence intervals for the unknown parameter. In our Acme research example
- The confidence interval is the range 20 to 24
- The confidence level is 95%
- The confidence limits are 20 (lower limit) and 24 (upper limit)
- The unknown population parameter is “What percentage of the total vote will John Doe Get”
Confidence Limits
Confidence limits are the lower and upper boundaries of a confidence interval. In our Acme example, the limits were 20 and 24.
Confidence Level
The confidence level is the probability value attached to a given confidence interval. It can be expressed as a percentage (in our example it is 95%) or a number (0.95).
Confidence Interval for a Mean
A confidence interval for a mean is a range of values within which the mean (unknown population parameter) may lie. Examples of Confidence Interval for a Mean* A Web master who wishes to estimate her mean daily hits on a certain webpage. * An environmental health and safety officer who wants to estimate the mean monthly spills.
Confidence Interval for the Difference between Two Means
A confidence interval for the difference between two means specifies a range of values within which the difference between the means of the two populations may lie. Examples of Confidence Interval for the Difference between Two Means* A Web master who wishes to estimate her difference in mean daily visitors between two websites. * An environmental health and safety officer who wants to estimate the difference in mean monthly spills between two production sites.
When we calculate a statistic for example, a mean, a variance, a proportion, or a correlation coefficient, there is no reason to expect that such point estimate would be exactly equal to the true population value, even with increasing sample sizes. There are always sampling inaccuracies, or error. In most Six Sigma projects, there are at least some descriptive statistics calculated from sample data. In truth, it cannot be said that such data are the same as the population’s true mean, variance, or proportion value.
There are many situations in which it is preferable instead to express an interval in which we would expect to find the true population value. This interval is called an interval estimate. A confidence interval is an interval, calculated from the sample data that is very likely to cover the unknown mean, variance, or proportion. For example, after a process improvement a sampling has shown that its yield has improved from 78% to 83%. But, what is the interval in which the population’s yield lies? If the lower end of the interval is 78% or less, you cannot say with any statistical certainty that there has been a significant improvement to the process.
There is an error of estimation, or margin of error, or standard error, between the sample statistic and the population value of that statistic. The confidence interval defines that margin of error. The next page shows a decision tree for selecting which formula to use for each situation. For example, if you are dealing with a sample mean and you do not know the population’s true variance (standard deviation squared) or the sample size is less than 30, than you use the t Distribution confidence interval. Each of these applications will be shown in turn.
Decision Tree for selecting What Formula to use:

Six Sigma Z Confidence Intervals for Means
Z Confidence Interval for Means applies to a mean from a normal distribution of variable data. Use the normal distribution for the confidence interval for a mean if the sample size n is relatively large (= 30), and s is known. The confidence interval (C.I.) includes the shaded area under the curve in between the critical values, excluding the tail areas (the a risk). The entire curve represents the most likely distribution of population means, given the sample’s size, mean, and the population’s standard deviation.

Here we are making an assumption that the underlying data we are working with is distributed like the bell curve shown. The most common confidence interval used in industry is probably the 95% confidence interval. If we were to use its formula on many sets of data from the population, then 95% of the intervals would contain the unknown population mean that we are trying to estimate. And 5% of the intervals would not contain the population mean. 2.5% of the time, the interval would be low, and 2.5% of the time, the interval would be too high. The probability is 95% that the interval contains the population parameter. The 95% value is the confidence coefficient, or the degree of confidence. The end points of the interval are called the confidence limits. In the graphic on the top, the endpoints are defined by

Example – Z Confidence Interval for Means
Calculate a 95% C.I. on the mean for a sample (n = 35) with an x-bar of 15.6″and a known s of 2.3 ”

This interval represents the most likely distribution of population means, given the sample’s size, mean, and the population’s standard deviation. 95% of the time, the population’s mean will fall in this interval.
Use the t distribution for the confidence interval for a mean if the sample size n is relatively small (< 30), and/or s is not known. The confidence interval (C.I.) includes the shaded area under the curve in between the critical values, excluding the tail areas (the a risk). The entire curve represents the most likely distribution of population means, given the sample’s size, mean, and standard deviation.


Use the χ2 (chi-squared) distribution for the confidence interval for the variance The confidence interval (C.I.) includes the area under the curve in between the critical values, excluding the tail areas (the a risk). The entire curve represents the most likely distribution of population variances (sigma squared), given the sample’s size and variation.

Six Sigma t Confidence Interval for a Variance Example
Calculate a 95% C.I. on variance for a sample (n = 35) with an S of 2.3″

This interval represents the most likely distribution of population variances, given the sample’s size and variance. 95% of the time, the population’s variance will fall in this interval.
This Z Confidence Interval for Proportions applies to an average proportion (which is from a binomial distribution).

Example – Z Confidence Interval for Proportions
