Statistics for

Business and Economics (14e)

Metric Version

Anderson, Sweeney, Williams, Camm, Cochran, Fry, Ohlmann

© 2020 Cengage Learning

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Chapter 6 - Continuous Probability
Distributions (連續機率分配)
6.1 – Uniform Probability Distribution
6.2 – Normal Probability Distribution
6.3 – Normal Approximation of Binomial Probabilities
6.4 – Exponential Probability Distribution

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Continuous Probability
Distributions (1 of 2)

• A continuous random variable (連續隨機變數) can

assume any value in an interval on the real line or
in a collection of intervals.
• It is not possible to talk about the probability of the
random variable assuming a particular value.
• Instead, we talk about the probability of the
random variable assuming a value within a given
interval.

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Continuous Probability
Distributions (2 of 2)

The probability of the random variable assuming a value

within some given interval (區間) from x1 to x2 is defined to be
the area under the graph of the probability density function
between x1 and x2.

x2
P( x1  x  x2 ) =  f ( x)dx and  f ( x)dx = 1
x1

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Uniform Probability Distribution
(齊一分配) (1 of 5)

• A random variable is uniformly distributed whenever the

probability is proportional to the interval’s length.
• The uniform probability density function is:

where: a = smallest value the variable can assume

b = largest value the variable can assume

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Uniform Probability Distribution
5)
(2 of

• The expected value of x is E(x) = (a + b)/2.

• The variance of x is Var(x) = (b – a)2/12.

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Uniform Probability Distribution
5)
(3 of

Example: Slater's Buffet

Slater’s customers are charged for the amount of salad they
take. Sampling suggests that the amount of salad taken is
uniformly distributed between 5 ounces and 15 ounces.
The uniform probability density function is

where:
x = salad plate filling weight

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Uniform Probability Distribution
5)
(4 of

What is the probability that a customer will take between 12 and 15 ounces of
salad?

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Uniform Probability Distribution
5)
(5 of

• The expected value of x is E(x) = (a + b)/2

= (5 + 15)/2
= 10

• The variance of x is Var(x) = (b – a)2/12

= (15 – 5)2/12
= 8.33

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Area as a Measure of Probability
• The area (面積) under the graph of f(x) and
probability are identical.
• This is valid for all continuous random variables.
• The probability that x takes on a value between
some lower value x1 and some higher value x2 can
be found by computing the area under the graph of
f(x) over the interval from x1 to x2.

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 Normal Probability Distribution (1 of 7)

• The normal probability distribution (常態分配) is the most

important distribution for describing a continuous random
variable.
• It is widely used in statistical inference.
• It has been used in a wide variety of applications including:
• Heights of people
• Amount of rainfall
• Test scores
• Scientific measurements
• Abraham de Moivre, a French mathematician, published
The Doctrine of Chances in 1733.
• He derived the normal distribution.

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Normal Probability Distribution (2 of 7)

Normal Probability Density Function

where:
𝜇 = mean
𝜎 = standard deviation
𝜋 = 3.14159
e = 2.71828

Notation: x ⁓ N(μ, σ2)

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Normal Probability Distribution (3 of 7)

The entire family of normal probability distributions is defined by

its mean μ and its standard deviation σ.

The highest point on the normal curve is at the mean, which is

also the median and mode. Normal distribution is symmetric.

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 Normal Probability Distribution (4 of 7)

The mean can be any numerical value: negative, zero, or positive.

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Normal Probability Distribution (5 of 7)

The standard deviation determines the width of the curve:

larger values result in wider, flatter curves.

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Normal Probability Distribution (6 of 7)

Probabilities for the normal random variable are given by areas

under the curve. The total area under the curve is 1 (0.5 to the
left of the mean and 0.5 to the right).

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 Normal Probability Distribution (7 of 7)

Empirical Rule
68.26% of values of a normal random variable are within ±1
standard deviation of its mean.
95.44% of values of a normal random variable are within ±2
standard deviations of its mean.
99.72% of values of a normal random variable are within ±3
standard deviations of its mean.

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Standard Normal Probability
Distribution (1 of 10)

A random variable having a normal distribution with a mean of

0 and a standard deviation of 1 is said to have a standard
normal probability distribution (標準常態機率分配).

The letter z is used to designate the standard normal random

variable.

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 Standard Normal Probability
Distribution (2 of 10)

We can convert any normal distributions to the

Standard Normal Distribution

We can think of z as a measure of the number of standard

deviations x is from μ.
E(z) = 0
Var(z) = 1
z⁓N(0,1)

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Example
• x ~N(3, 4)

xa = 1
za = (xa – μ)/σ = 1-3/2 = -1
Point a is one standard deviation below the mean.

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Standard Normal Probability Distribution
(3 of 10)

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 liters, a replenishment
order is placed.
The store manager is concerned that sales are being lost due to stockouts
(脫銷) while waiting for a replenishment (補貨) order.

It has been determined that demand during replenishment lead-time (交貨

時間) is normally distributed with a mean of 15 liters and a standard
deviation of 6 liters.

The manager would like to know the probability of a stockout during

replenishment lead-time. In other words, what is the probability that
demand during lead-time will exceed 20 liters? P(x>20) = ?

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Standard Normal Probability
Distribution (4 of 10)

Solving for the Stockout Probability

Step 1: Convert x to the standard normal distribution.

Step 2: Find the area under the standard normal curve to

the left of 𝑧 = 0.83.

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Standard Normal Probability
Distribution (5 of 10)

Cumulative Probability Table for the Standard Normal

Distribution

z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09
. . . . . . . . . . .
.5 .6915 .6950 .6985 .7019 .7054 .7088 .7123 .7157 .7190 .7224
.6 .7257 .7291 .7324 .7357 .7389 .7422 .7454 .7486 .7517 .7549
.7 .7580 .7611 .7642 .7673 .7704 .7734 .7764 .7794 .7823 .7852
.8 .7881 .7910 .7939 .7967 .7795 .8023 .8051 .8078 .8106 .8133
.9 .8129 .8186 .8212 .8238 .8264 .8289 .8315 .8340 .8365 .8389
. . . . . . . . . . .

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Standard Normal Probability
Distribution (6 of 10)

Solving for the Stockout Probability

Step 3: Compute the area under the standard normal curve
to the right of z = 0.83.

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Standard Normal Probability
Distribution (7 of 10)

Solving for the Stockout Probability

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 Standard Normal Probability
Distribution (8 of 10)

If the manager of Pep Zone wants the probability of a

stockout during replenishment lead-time to be no more than
.05, what should the reorder point be?

(Hint: Given a probability, we can use the

standard normal table in an inverse fashion to
find the corresponding z value.)

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Standard Normal Probability Distribution
(9 of 10)

Solving for the Reorder Point

Step 1: Find the z-value that cuts off an area of .05 in the right
tail of the standard normal distribution by looking up the
complement of the right tail area 1 – 0.05 = 0.95. Z = 1.645

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Standard Normal Probability Distribution
(10 of 10)

Solving for the Reorder Point

Step 2: Convert z.05 to the corresponding value of x.

A reorder point of 25 liters will place the probability of a

stockout during lead time at (slightly less than) 0.05.

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Normal Probability Distribution
Solving for the Reorder Point

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Standard Normal Probability
Distribution
Solving for the Reorder Point
By raising the reorder point from 20 liters to 25 liters on
hand, the probability of a stockout decreases from about
.20 to .05.

This is a significant decrease in the chance that Pep Zone

will be out of stock and unable to meet a customer’s desire
to make a purchase.

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Cumulative Probability for an Interval
a
z ⁓ N(0,1) F (a) =  f ( z )dz
−

• P ( z >a ) = 1 − F (a ) .
• P (a  z  b) = F (b) − F (a )
Note: these relations hold for any cumulative
probability function).
• If the probability density function is symmetric at 0
(like z): P(z>c) = F(-c)

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Exercise1
• P(-0.5≤z≤1) = .

• P(z>2) =

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Exercise2
We can also convert any normal distribution to
standard normal
• x ⁓ N(5, 16)
• P(3 ≤ x ≤6) =

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Using Excel to Compute Normal
Probabilities
Excel has two functions for computing cumulative
probabilities and x values for any normal distribution:
• NORM.DIST is used to compute the cumulative
probability given an x value.
• NORM.INV is used to compute the x value given a
cumulative probability.

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Normal Approximation of Binomial
Probabilities
• Binomial: p: probability of success, n: number of
trials.
• When n is large, evaluating the binominal
distribution function becomes difficult.
• We can use normal approximation when np ≥ 5
and n(1-p) ≥ 5
• Normal approximation: μ=np;  = np(1 − p)

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Continuity Correction Factor (CCF)
• Continuity Correction Factor (連續性校正): With a
continuous probability distribution, the probability
of a single point is 0. To approximate P(x =a), we
use the area P(a-0.5≤x ≤ a+0.5).

Source:
Statisticshowto.com

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Continuity Correction Factor
Binomial Continuous
x = a a-0.5<x<a+0.5
x>a x > a+0.5
x≥a x > a-0.5
x<a x < a -0.5
x≤a x < a+ 0.5

• After correction, we can standardize x to standard

normal distribution and obtain probability

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Exercise
• 10% of invoices contain errors. In 100 trials, what is
the probability of have 12 invoices with errors?
1. P = 0.1, 1-p = 0.9, n = 100, np = 10 and n(1-p) =
90.
2. Normal approximation: μ = np = 10,  = np(1 − p) = 3
3. P(x=12) ≈ P(11.5<x<12.5)
4. P (11.5  x  12.5 ) = P(11.5 − 10  x −   12.5. − 10 )
3  3
= P ( 0.5  z  0.83) = 0.1052

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Exercise
• How about P(x≤13) = ?

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Exponential Probability Distribution (1 of 4)

• The exponential probability distribution (指數機率分

配) is useful in describing the time it takes to
complete a task.
• The exponential random variables can be used to
describe:
• Time between vehicle arrivals at a toll booth
• Time required to complete a questionnaire
• Distance between major defects in a highway
• In waiting line applications, the exponential
distribution is often used for service time.

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Exponential Probability Distribution (2 of 4)

• A property of the exponential distribution is that

the mean and standard deviation are equal.
• The exponential distribution is skewed to the right.
Its skewness measure is 2.
• Density Function

where 𝜇 = expected value or mean and e = 2.71828

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Exponential Probability Distribution
(3 of 4)

Cumulative Probabilities (累計機率)

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Source: Wikipedia

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 Exponential Probability Distribution (4 of 4)

Example: Al’s Full-Service Pump

The time between arrivals of cars at Al’s full-service gas pump
follows an exponential probability distribution with a mean
time between arrivals of 3 minutes. Al would like to know the
probability that the time between two successive arrivals will
be 2 minutes or less.

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44
Exponential Probability Distribution
• What is the probability that the time between two
successive arrivals is between 2 and 5?
P( 2 ≤ x ≤ 5)=?

45
Relationship between the Poisson
and Exponential Distributions

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