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Continuous Random Distribution

The normal distribution is one of the most important probability distributions for describing continuous random variables. It has a symmetric bell-shaped curve and is defined by its mean and standard deviation. Over 68% of observations fall within one standard deviation of the mean, 95% within two standard deviations, and nearly all within three standard deviations. The document provides examples of how to calculate probabilities and percentiles for the normal distribution and convert between the standard normal distribution with mean 0 and standard deviation 1.

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Jethro Miñano
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Download as DOCX, PDF, TXT or read online on Scribd
46 views

Continuous Random Distribution

The normal distribution is one of the most important probability distributions for describing continuous random variables. It has a symmetric bell-shaped curve and is defined by its mean and standard deviation. Over 68% of observations fall within one standard deviation of the mean, 95% within two standard deviations, and nearly all within three standard deviations. The document provides examples of how to calculate probabilities and percentiles for the normal distribution and convert between the standard normal distribution with mean 0 and standard deviation 1.

Uploaded by

Jethro Miñano
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Lyka Mariño Jan Mark Recto Joshua Diño

Continuous Random Distribution

History of Normal Distribution • The normal probability


distribution is the most important
The normal distribution was first
distribution for describing a
discovered by De Moivre (English
continuous random variable.
Mathematician) in 1733 as limiting case
of binomial distribution. Later it was • It is widely used in statistical
applied in natural and social science by inference
Laplace (French Mathematician) in
1777. The normal distribution is also • It has been used in a wide variety
known as Gaussian distribution in honor of applications
of Karl Friedrich Gauss (1809). a) Heights of people
b) Scientific measurements
c) Test scores
Types of CRD d) Amounts of rainfall

One of the most important differences


is that we now consider a probability
Normal Probability Density Function
density, rather than a value of the
probability per se 1 2 2
f (x)  e ( x   ) /2
Uniform Normal
 2
f Probability f Probabil
( Distribu ity
Distribu
x tion ( tion Condition of Normal Distribution
x
) x 1. Normal distribution is a limiting
x
f Probability )
Exponential form of the binomial distribution
under the following conditions. a.
Distribut n, the number of trials is
indefinitely large ie., 𝑛 → ∞ and
( ion b. Neither p nor q is very small.
x
x 2. Normal distribution can also be
What is CRD?) obtained as a limiting form of
Poisson distribution with
The probability of the random variable parameter 𝑚 → ∞
assuming a value within some given
interval from x1 to x2 is defined to be the
area under the graph of the probability
density function between x1 and x2.
Lyka Mariño Jan Mark Recto Joshua Diño

3. Constants of normal distribution area under the curve is 1 (.5 to


are mean = m, variation = σ2 , the left of the mean and .5 to the
Standard deviation = s right).
Empirical Rule
Normal Probability Curve
• 68.26% of all observations lie
The curve representing the normal within 1 standard deviation of the
distribution is called the normal mean
probability curve. The curve is • 95.44% of all observations lie
symmetrical about the mean (m), bell- within 2 standard deviations of
shaped and the two tails on the right the mean
and left sides of the mean extends to • 99.72% of all observations lie
the infinity. The shape of the curve is within 3 standard deviations of
shown in the following figure. the mean

f
(
x
x
)
Characteristics
1. The distribution is symmetric; its
skewness measure is zero.
2. The entire family of normal
probability distributions is defined
Standard Normal Probability
by its mean m and its standard
Distribution
deviation s .
3. The highest point on the normal • A random variable having
curve is at the mean, which is a normal distribution with a
also the median and mode. mean of 0 and a standard
4. The mean can be any numerical deviation of 1 is said to have a
value: negative, zero, or standard normal probability
positive. distribution.
5. The standard deviation • The letter z is used to
determines the width of the designate the standard normal
curve: larger values result in random variable.
wider, flatter curves. • Converting to the Standard
6. Probabilities for the normal Normal Distribution:
random variable are given by x
areas under the curve. The total z

Lyka Mariño Jan Mark Recto Joshua Diño

We can think of z as a
measure of the number of
standard deviations x is
from m.
Example: Pep Zone
Pep Zone sells auto parts and
supplies including a popular multi-grade
motor oil. When the stock of this oil
drops to 20 gallons, a replenishment
order is placed.
The store manager is concerned
that sales are being lost due to
stockouts while waiting for an order. It
has been determined that demand
during replenishment lead-time is
normally distributed with a mean of 15
gallons and a standard deviation of 6 If the manager of Pep Zone wants
gallons. the probability of a stockout to be
The manager would like to know no more than .05, what should the
the probability of a stockout, P(x > 20) reorder point be?
(Demand exceeding 20 gallons)
Solving for the Stockout Probability

Step 1: Convert x to the standard


normal distribution.

= (20 - 15)/6

=0.83
Step 1: Find the z-value that cuts
Step 2: Find the area under the off an area of .05 in the right tail of
standard normal curve to the left of the standard normal distribution.
z = .83.
We look up the
Step 3: Compute the area under complement of the tail area
the standard normal curve to the (1 - .05 = .95)
right of z = .83.
Step 2: Convert z.05 to the
corresponding value of x.
Lyka Mariño Jan Mark Recto Joshua Diño

A reorder point of 25 gallons will


place the probability of a stockout
during leadtime at (slightly less
than) .05. Example 2:

By raising the reorder point from Students of a class were given an


20 gallons to 25 gallons on hand, aptitude test. Their marks were found to
the probability of a stockout be normally distributed with mean 60
decreases from about .20 to .05. and standard deviation 5. What
percentage of students scored.
This is a significant decrease in
the chance that Pep Zone will be out i. More than 60 marks
of stock and unable to meet
acustomer’s desire to make a ii. Less than 56 marks
purchase.
iii. Between 45 and 65 marks
Example 1:
Solution: Given that mean = m = 60 and
Given a normal distribution with m = 50 standard
and s = 8, find the probability that x
assumes a value between 42 and 64. deviation = s = 5

Solution: The standard normal variate, z = (x -


Given that m = 50 and s = 8 m)/s
The standard normal variate, z = (x -
m)/s If x = 60, z =(60−60)/5=0

If x = 42, z = (42 - 50)/8 = -1 P(x > 60) = P(z > 0)


If x = 64, z = (64 -50)/8 = 1.74
= P(0 < z < ∞ )
P(42 < x < 64) = P(-1 < z <1.75)
= P(-1< z < 0) + P(0 < z <1.95) = 0.5
= P(0<z<1) + P (0 < z <1.75)
(by symmetry)
= 0.3413 +0 .4599 (from the table) Hence the percentage of students
= 0 .8012 scored more than 60 marks is 0.5×100 =
50 %

The standard normal variate,


Lyka Mariño Jan Mark Recto Joshua Diño

z = (x - m)/s
If x = 56, z =(56−60)/5= -0.8

P(x < 56) = P(z < -0.8)


= P(- ∞ < z < 0) – P(-0.8 < z < 0)
(by symmetry)
= P(0 < z < ∞) – P(0 < z < 0.8)
= 0.5 - 0.2881 (from the table)
= 0.2119

Hence the percentage of students score


less than 56 marks is 0.2119×100 =
21.19 %

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