Probability Distribution

The probability distribution is the listing of the probabilities of all possible outcomes of an experiment.
(Eg. Tossing a coin (say 3 times) for number of tails)

A frequency distribution is the frequencies of the outcomes of the experiment that was done,
Probability distribution is the probability of all possible outcomes that would occur if the
experiment were done
Probability distribution can be

 Discrete
 Continuous
 Probability Distribution
What is a Random Variable?

What is Expected Value of Random Variable?

For the recent Rajya Sabha elections one contender believed that he may get 12, 13, 14 or 15 legislators
to support him. The probabilities he assigned were

Number of Votes 12 13 14 15
Probability .1 .3 .4 .2

How many votes can he expect to get?

 Probability Distribution

Analyzing the pattern of the last 100 weeks the following data has been arrived at

HOME MORTGAGES APPROVED PER WEEK PROBABILITY

0 .1
1 .1
2 .2
3 .3
4 .15
5 .10
6 .05

What is the expected number of mortgages per week?

 Probability Distribution
Use of expected value in decision making:

Let us look at the case of a fruit and vegetable vendor who sells strawberries. This product is highly
perishable and has a very limited useful life. If not sold on the very day of delivery it becomes useless.
One box of strawberries cost $20 and fetches $50 to the vendor. The vendor cant specify exactly what
will be the demand for strawberries in a day but past 100 days analysis has led to the data in following
table

DAILY SALES NUMBER OF DAYS SOLD

10 15
11 20
12 40
13 25

How many boxes of strawberries should the vendor order?

Probability Distribution
 Probability Distribution

The assumptions of a Bernoulli process

• Each trial has only two possible outcomes

• The probability of the outcome of any trial remains constant over time

• The trials are statistically independent

 Probability Distribution

So in a binomial distribution

• The sample consists of a fixed number of observations, n. Each observation is classified into
*

one of two mutually exclusive and collectively exhaustive categories, usually called success
and failure.
• The probability of an observation being classified as success, p, is constant from observation
to observation. Thus, the probability of an observation being classified as failure, 1 - p, is
constant over all observations.
• The outcome (i.e., success or failure) of any observation is independent of the outcome of
any other observation.
 Probability Distribution
BINOMIAL FORMULA
 Probability Distribution
Examples:

What's the probability of getting exactly two heads in three tosses of coins?
Ans: .375

Accuracy in taking orders at a drive-through window is an important feature for fast-food

chains. Each month QSR Magazine, www.qsrmagazine.com, publishes the results of its
surveys. In a recent month, suppose that the percentage of correct orders filled at Burger King
was approximately 88%.
• Suppose that you and two friends go to the drive-through window at Burger King, and each of
you places an order. What are the probabilities that all three, that none of the three, and that
at least two of the three orders will be filled accurately? What is the mean and standard
deviation of such a distribution?
• Suppose 15 of you go to Burger King what is the chance that at least 10 of you will be served
accurately?

Ans: .6815, .0017,.9603, mean = 2.64, S.D = .563

 Probability Distribution
In April 2006, Gallup News Service reported that just 25% of U.S. adults view the country’s economic
outlook as positive. Gallup further reports that this pessimistic view of the economy is relatively unchanged
since early 2001. During this five-year period, Gallup has surveyed more than 100,000. Thus the probability
that a randomly selected adult in the United States views the economic outlook as positive is 0.25.

a. You select a random sample of 10 adults in the United States. Assume that the number of the 10 adults
having a positive outlook on the economy is distributed as a binomial random variable. What are the mean
and standard deviation of this distribution? Ans: (2.5, 1.37)

b. What assumptions are necessary in (a)?

c. find the probability that of the 10 adults 0 have a positive outlook on the economy.
Ans: (.0563)

d. exactly 5 have a positive outlook on the economy.

Ans: (.0584)

e. 5 or less have a positive outlook on the economy.

Ans: (.9803)

f. 6 or more have a positive outlook on the economy.

Ans: (.0197)
 Probability Distribution
Example:
In a factory workers are late very often. Five workers are in the pharmacy. The manager has
studied the system deeply and has concluded that there is .4 chance that a worker is late. What
is the probability that 0,1,2,3,4 or 5 workers are late. What is the chance that 4 or more workers
are late.
What happens to the graph with changes in p and q?
What happens to the graph when n increases?
Probability Distribution
 Probability Distribution
Many studies are based on counts of the times a particular event occurs in a given area of
opportunity.
An area of opportunity is a continuous unit or interval of time, volume, or such area in which
more than one occurrence of an event can occur. Examples are the surface defects on a new
refrigerator, the number of network failures in a day, number of cars passing a toll booth etc.
When you have situations such as these, you can use the Poisson distribution provided:

 The probability that an event occurs in a given area of opportunity is the same for all the
areas of opportunity and is very small.

 The number of events that occur in one area of opportunity is independent of the number
of events that occur in any other area of opportunity.

 The probability that two or more events will occur in an area of opportunity approaches
zero as the area of opportunity becomes smaller.
 Probability Distribution

𝑒 = 𝑡ℎ𝑒 𝑏𝑎𝑠𝑒 𝑜𝑓 𝑛𝑎𝑝𝑖𝑒𝑟𝑖𝑎𝑛 𝑜𝑟 𝑛𝑎𝑡𝑢𝑟𝑎𝑙 𝑙𝑜𝑔𝑎𝑟𝑖𝑡ℎ𝑚 = 2.718

λ = the mean number of occurrences per unit area of opportunity
X = number of successes

Mean = μX = λt
Standard Deviation = Sqrt (μX)
 Probability Distribution

Poisson distribution as an approximation of binomial distribution:

sometimes to avoid the tedious calculations of binomial distribution, we can

use a Poisson distribution as an approximation. As a rule Poisson is a good
approximation of the binomial when n is greater than or equal to 20 and p is
less than or equal to .05.

The mean (np) of binomial distribution replaces lambda (Poisson mean)

 Probability Distribution

1. We are investigating the safety of a dangerous traffic intersection. Past traffic police
records show a mean of five accidents per month at this intersection. The number of
accidents can be taken to be distributed according to a Poisson distribution. The safety
division wants us to calculate the probability in any month of exactly 0,1,2,3,or 4 accidents. If
the probability of more than 3 accidents is higher than .65 the department wants to initiate
an awareness program. Should they?
Ans: (.00674, .03369, .08422, .14037, .17547, Yes=.734974)

2. Suppose that the mean number of customers who arrive per minute at the bank during
the noon-to-1 p.m. hour is equal to 3.0. What is the probability that in a given minute, exactly
two customers will arrive? And what is the probability that more than two customers will
arrive in a given minute?
Ans: (.00119, .00002)
 Probability Distribution

The number of work-related injuries per month in your manufacturing plant is known to follow a
Poisson distribution with a mean of 2.5 work-related injuries a month. What is the probability that in a
given month no work-related injuries occur? That at least one work-related injury occurs?
Ans: (.0821)

The quality control manager of Marilyn s Cookies is inspecting a batch of chocolate-chip cookies that
has just been baked. If the production process is in control, the mean number of chip parts per cookie is
6.0. What is the probability that in any particular cookie being inspected

a. Less than five chip parts will be found?

Ans: (.2851)
b. Exactly five chip parts will be found?
Ans: (.1606)
c. Five or more chip parts will be found?
Ans: (.7149)
d. Either four or five chip parts will be found?
Ans: (.2945)
 Probability Distribution

The U.S. Department of Transportation maintains statistics for mishandled

bags per 1,000 airline passengers. In 2005, Delta Airlines had 7.09 mishandled
bags per 1,000 passengers (extracted from M. Mullins, Out of Place, USA
Today, March 24, 2006, p. 10A). What is the probability that in the next 1,000
passengers, Delta will have

a. No mishandled bags?
Ans: ( .00083)

b. At least one mishandled bag?

Ans: (.99917)

c. At least two mishandled bags?

Ans: (.99326)
Probability Distribution
 Probability Distribution
A continuous probability distribution defines the distribution of the values for
a continuous random variable and is uniquely defined by mean and standard
deviation.

The normal distribution (sometimes referred to as the Gaussian distribution)

is particularly important because

• Numerous continuous variables common in business have distributions that

closely resemble the normal distribution.

• The normal distribution can be used to approximate various discrete

probability distributions.

• The normal distribution provides the basis for classical statistical inference
because of its relationship to the Central Limit Theorem
 Probability Distribution
The normal distribution has several important theoretical properties:

 It is bell shaped in its appearance and is symmetrical.

 Its measures of central tendency (mean, median, and mode) are equal and
at the centre of the curve.

 Its interquartile range is equal to 1.33 standard deviations. This means that
the middle 50% of the values are contained within an interval of two-thirds
of a standard deviation below the mean and two-thirds of a standard
deviation above the mean.

 It has an infinite range. The tails never touch the X-Axis

 Probability Distribution

THICKNESS FREQUENCY RELATIVE FREQUENCY The data in Table here represents the
<.0180 48 0.0048 thickness (in inches) of 10,000 brass
.0180 > .0182 122 0.0122 washers manufactured by a large
.0182 < .0184 325 0.0325 company. The continuous variable of
.0184 < .0186 695 0.0695 interest, thickness, can be
.0186 < .0188 1198 0.1198 approximated by the normal
.0188 < .0190 1664 0.1664 distribution. The measurements of the
thickness of the 10,000 brass washers
.0190 < .0192 1896 0.1896
cluster in the interval 0.0190 to 0.0192
.0192 > .0194 1664 0.1664
inch and distribute symmetrically
.0194 > .0196 1198 0.1198
around that grouping, forming a bell-
.0196 > .0198 695 0.0695
shaped pattern
.0198 > .0200 325 0.0325
.0200 > .0202 122 0.0122
.0202 OR ABOVE 48 0.0048
TOTAL 10000 1
 Probability Distribution
0.2
0.1896
0.18

0.1664 0.1664
0.16

0.14

0.12 0.1198 0.1198

0.1
Series1
0.08
0.0695 0.0695
0.06

0.04
0.0325 0.0325

0.02
0.0122 0.0122
0.0048 0.0048
0
<.0180 .0180 > .0182 < .0184 < .0186 < .0188 < .0190 < .0192 > .0194 > .0196 > .0198 > .0200 > .0202
.0182 .0184 .0186 .0188 .0190 .0192 .0194 .0196 .0198 .0200 .0202 OR
ABOVE
 Probability Distribution

The transformation Formula: of a random variable into a

standardized normal random variable, Z. Where,

Z = ( x-μ ) / σ

AND THEN USE NORMAL TABLES TO FIND VALUES OF AREA

UNDER THE CURVE
 Probability Distribution
You are the designer of the campus website. Its important that if the members were to use it
the time to download a page must not be too much. Past data indicate that the mean
download time is 7 seconds and that the standard deviation is 2 seconds. Approximately two-
thirds of the download times are between 5 and 9 seconds, and about 95% of the download
times are between 3 and 11 seconds. In other words, the download times are distributed as a
bell-shaped curve, with a clustering around the mean of 7 seconds.

1. What is the probability that download time is less than 9 seconds?

2. What is the probability that download time is more than 9 seconds?
3. What is the probability that the download time will be between 7 and 9 seconds?
4. What is the probability that the download time will be between 5 and 9 seconds?
5. What is the probability that the download time will be between 3 and 11 seconds?
6. What is the probability that the download time will be between 1 and 13 seconds?
7. What is the probability that the download time is under 7 seconds or over 9 seconds?
8. What is the probability that a download time will be under 3.5 seconds?
9. What are the lower and upper values of X, symmetrically distributed around the mean,
that include 95% of the download times?
 Probability Distribution

In a recent year, about two-thirds of U.S. households purchased ground coffee. Consider the
annual ground coffee expenditures for households purchasing ground coffee, assuming that
these expenditures are approximately distributed as a normal random variable with a mean
of $45.16 and a standard deviation of $10.00.

1. Find the probability that a household spent less than $25.00.

2. Find the probability that a household spent more than $50.00.

3. What proportion of the households spent between $30.00 and $40.00?

4. 99% of the households spent less than what amount?

 Probability Distribution

EXPONENTIAL DISTRIBUTION

• The exponential distribution is a continuous distribution that is right-skewed and ranges from zero to
positive infinity. The exponential distribution is widely used in waiting-line (or queuing) theory to
model the length of time between arrivals in processes such as customers at a bank’s ATM, patients
entering a hospital emergency room, and hits on a Web site.
• The exponential distribution is defined by a single parameter, its mean, , the mean number of arrivals
per unit of time. The value 1/λ is equal to the mean time between arrivals. For example, if the mean
number of arrivals in a minute is = 4, then the mean time between arrivals is 1/λ = 0.25 minutes, or
15 seconds.

P (Arrival time < x) = 1 – e-λX

 Probability Distribution

EXPONENTIAL DISTRIBUTION
1.
a. Suppose that customers arrive at a bank’s ATM at a rate of 20 per hour. If a customer has just arrived, what is the
probability that the next customer will arrive within 6 minutes (that is, 0.1 hour)? (ans.8647).
b. In the above ATM example, what is the probability that the next customer will arrive within 3 minutes?
(ans.6321)
2. Telephone calls arrive at the information desk of a large computer software company at a rate of 15 per hour.
a. What is the probability that the next call will arrive within 3 minutes?
b. What is the probability that the next call will arrive within 15 minutes?
3. An on-the-job injury occurs once every 10 days on average at an automobile plant. What is the probability that the
next on-the-job injury will occur within
a. 10 days? (ans .6321)
b. 5 days? (ans .3935)
c. 1 day? (ans .0952)
 Probability Distribution

EXPONENTIAL DISTRIBUTION
1. The time between unplanned shutdowns of a power plant has an exponential distribution with a
mean of 20 days. Find the probability that the time between two unplanned shutdowns is
a. less than 14 days.
b. more than 21 days.
c. less than 7 days.
2. Customers arrive at the drive-up window of a fast-food restaurant at a rate of 2 per minute during
the lunch hour.
a. What is the probability that the next customer will arrive within 1 minute? (.864665)
b. What is the probability that the next customer will arrive within 5 minutes? (.99996)
c. If during the dinner time period, the arrival rate is 1 per minute. What are your answers to (a) and (b)
for this period? (.6321, .9933)