Continuous Probability Distribution

Continuous Probability
Distributions
Douglas A Lind, William G Marchal and Samuel A
Wathen.
Statistical Techniques in Business and

Economics
Chapter 7
Characteristics of a Normal
Probability Distribution
It is bell-shaped and has a single peak at the center of
the distribution.
The arithmetic mean, median, and mode are equal
The total area under the curve is 1.00; half the area under
the normal curve is to the right of this center point and
the other half to the left of it.
It is symmetrical about the mean.
It is asymptotic: The curve gets closer and closer to the
X-axis but never actually touches it. To put it another way,
the tails of the curve extend indefinitely in both directions.
The location of a normal distribution is determined by the
mean,, the dispersion or spread of the distribution is
determined by the standard deviation, .
The Normal Distribution - Graphically
The Normal Distribution Families
The Standard Normal Probability

Distribution
The standard normal distribution is a normal
distribution with a mean of 0 and a standard

deviation of 1.
It is also called the z distribution.
A z-value is the distance between a selected
value, designated X, and the population mean
, divided by the population standard
deviation, .
The formula is:
Areas Under the Normal

Curve
The Normal Distribution

Example
The weekly incomes of shift foremen in the glass
industry follow the normal probability distribution with

a mean of $1,000 and a standard deviation of $100.
What is the z value for the income, lets call it X, of a
foreman who earns $1,100 per week? For a foreman
who earns $900 per week?
The Empirical Rule

About 68 percent of the area under the normal
curve is within one standard deviation of the

mean.
About 95 percent is within two standard
deviations of the mean.
Practically all is within three standard
deviations of the mean.
The Empirical Rule - Example

As part of its quality
assurance program, the

Autolite Battery
Company conducts tests
on battery life. For a
particular D-cell alkaline
battery, the mean life is
19 hours. The useful life
of the battery follows a
normal distribution with a
standard deviation of 1.2
hours.
10
Answer the following

questions.
1. About 68 percent of the
batteries failed between
what two values?
2. About 95 percent of the
batteries failed between
Using Z in Finding X Given Area - Example

Layton Tire and Rubber Company
11
wishes to set a minimum mileage

guarantee on its new MX100 tire.
Tests reveal the mean mileage is
67,900 with a standard deviation of
2,050 miles and that the
distribution of miles follows the
normal probability distribution. It
wants to set the minimum
guaranteed mileage so that no
more than 4 percent of the tires
will have to be replaced. What
Using Z in Finding X Given Area - Example
12
Normal Approximation to the

Binomial
The normal distribution (a continuous
distribution) yields a good approximation of the
binomial distribution (a discrete distribution) for
large values of n.
The normal probability distribution is generally a
good approximation to the binomial probability
distribution when n and n(1- ) are both greater
than 5.
13

Binomial
Using the normal distribution (a continuous distribution)
as a substitute for a binomial distribution (a discrete

distribution) for large values of n seems reasonable
because, as n increases, a binomial distribution gets
closer and closer to a normal distribution.
14
Continuity Correction Factor

The value .5 subtracted or added,
depending on the problem, to a

selected value when a binomial
probability distribution (a discrete
probability distribution) is being
approximated by a continuous
probability distribution (the normal
distribution).
15
How to Apply the Correction Factor

Only four cases may arise. These cases
are:
1. For the probability at least X occurs,
use the area above (X -.5).
2. For the probability that more than X
occurs, use the area above (X+.5).
3. For the probability that X or fewer
occurs, use the area below (X +.5).
4. For the probability that fewer than X
occurs, use the area below (X-.5).
16

Binomial - Example
Suppose the management of the
Santoni Pizza Restaurant found that

70 percent of its new customers
return for another meal. For a week
in which 80 new (first-time)
customers dined at Santonis, what
is the probability that 60 or more
will return for another meal?
17

Binomial - Example
18
P(X 60) = 0.063+0.048+ + 0.001) = 0.197
Normal Approximation to the Binomial Example

Step 1. Find the
mean and the
variance of a
binomial
distribution and
find the z
corresponding to
an X of 59.5 (x-.5,
the correction
factor)
Step 2: Determine
the area from 59.5
19
and beyond
Prob 51
Best Electronics, Inc., offers no hassle
returns policy. The number of items

returned per day follows the normal
distribution. The mean number of customer
returns is 10.3 per day and the standard
deviation is 2.25 per day.
In what percent of the days are there 8 or
fewer customers returning items?

In what percent of days are between 12 and
14 customers returning items?
Is there any chance of a day with no returns?
20
21
Prob 56
Cruise ships of the Royal Viking line report
that 80 percent of their rooms are occupied

during September. For a cruise having 800
rooms, what is the probability that 665 or
more are occupied in September?
22

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Continuous Probability

Statistical Techniques in Business and

The Normal Distribution - Graphically

The Normal Distribution Families

The Standard Normal Probability

distribution with a mean of 0 and a standard

Areas Under the Normal

The Normal Distribution

industry follow the normal probability distribution with

The Empirical Rule

curve is within one standard deviation of the

The Empirical Rule - Example

assurance program, the

Answer the following

Using Z in Finding X Given Area - Example

wishes to set a minimum mileage

Using Z in Finding X Given Area - Example

Normal Approximation to the

Normal Approximation to the

as a substitute for a binomial distribution (a discrete

Continuity Correction Factor

depending on the problem, to a

How to Apply the Correction Factor

Normal Approximation to the

Santoni Pizza Restaurant found that

Normal Approximation to the

P(X 60) = 0.063+0.048+ + 0.001) = 0.197

Normal Approximation to the Binomial Example

returns policy. The number of items

fewer customers returning items?

that 80 percent of their rooms are occupied

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