||To estimate the relative potency of a certain drug, an experiment is performed which involves several sequential dilution steps. In doing this, error would be introduced to the experiment and this dilution error will be accumulated from the highest concentration to the lowest concentration. The purpose of this thesis is to investigate the effect of dilution errors on the estimation of potency. Before investigating how the dilution error affects the estimation of potency, we set up the dilution error model. Based on the dilution error model, we use the usual statistical method to estimate the potency and then demonstrate the potentially wrong conclusion that can be drawn when the dilution error is not included in the model. In the second part, we introduce alternative methods to estimate the potency, which can increase the accuracy of the estimation of potency.