Consideration of a Biased Estimate in an Information-Sampling Situation

Sampling errors are generally a function of two factors the time spent making an observation, and the total number of observations. In addition, if sampling error costs are not symmetrically distributed about the true value, there is a problem as to whether the sampling mean should be used as a basis for making a decision, or if a biased estimate should be used. A general model is developed in this paper for the total expected cost of a sampling procedure as a function of the sample size, observation time per sample unit, and the use of a biased estimate. The general model is then applied to a specific situation to illustrate the application of the model. A method is also given for evaluating the observational variance as a function of observation time.