Statistics For Managers Using Microsoft® Excel 5th Edition: The Normal Distribution and Other Continuous Distributions

Statistics for Managers
Using Microsoft® Excel

5th Edition
Chapter 6
The Normal Distribution and Other
Continuous Distributions
Statistics for Managers Using Microsoft Excel, 5e © 2008 Pearson Prentice-Hall, Inc. Chap 6-1
Learning Objectives
In this chapter, you will learn:

 To compute probabilities from the normal
distribution.
 To use the normal probability plot to determine
whether a set of data is approximately normally
distributed.
 To compute probabilities from the uniform
distribution.
 To compute probabilities from the exponential
distribution
Continuous Probability
Distributions
 A continuous random variable is a variable that can
assume any value on a continuum (can assume an
uncountable number of values)
 thickness of an item
 time required to complete a task
 temperature of a solution
 height
 These can potentially take on any value, depending only

on the ability to measure precisely and accurately.
The Normal Distribution
Properties
 ‘Bell Shaped’ f(X)
 Symmetrical
 Mean, Median and Mode are equal
 Location is characterized by the mean, μ σ
 Spread is characterized by the standard μ

deviation, σ
The random variable has an infinite Mean
= Median
theoretical range: - to +
= Mode
Density Function
 The formula for the normal probability density function is
2
1  (X μ) 
1  
2  

f(X)  e
2π
Where e = the mathematical constant approximated by 2.71828

π = the mathematical constant approximated by 3.14159
μ = the population mean
σ = the population standard deviation
X = any value of the continuous variable
Shape
By varying the parameters μ and σ, we obtain

different normal distributions
Shape
f(X) Changing μ shifts the

distribution left or right.
Changing σ increases or
decreases the spread.
σ
μ X
The Standardized Normal
Distribution
 Any normal distribution (with any mean and

standard deviation combination) can be
transformed into the standardized normal
distribution (Z).
 Need to transform X units into Z units.
 The standardized normal distribution has a
mean of 0 and a standard deviation of 1.
Distribution
 Translate from X to the standardized normal (the
“Z” distribution) by subtracting the mean of X and
dividing by its standard deviation:
X μ
Z
σ
Distribution: Density Function
 The formula for the standardized normal probability
density function is
Z2
1 
f(Z)  e 2
2π
Where e = the mathematical constant approximated by 2.71828
π = the mathematical constant approximated by 3.14159
Z = any value of the standardized normal distribution
Distribution: Shape
 Also known as the “Z” distribution
 Mean is 0
 Standard Deviation is 1
f(Z)
Z
0
Values above the mean have positive Z-values, values
below the mean have negative Z-values
Distribution: Example
 If X is distributed normally with mean of 100 and
standard deviation of 50, the Z value for X = 200 is
X  μ 200  100
Z   2.0
σ 50
 This says that X = 200 is two standard deviations

(2 increments of 50 units) above the mean of 100.
Distribution: Example
100 200 X (μ = 100, σ = 50)
0 2.0 Z (μ = 0, σ = 1)
Note that the distribution is the same, only the

scale has changed. We can express the problem
in original units (X) or in standardized units (Z)
Normal Probabilities
Probability is measured by the area under the curve
f(X)
P(a ≤ X ≤ b)
(Note that the probability

of any individual value is
zero)
a b
Normal Probabilities
The total area under the curve is 1.0, and the curve is
symmetric, so half is above the mean, half is below.
f(X) P(   X  μ)  0.5
P(μ  X   )  0.5
0.5 0.5
P(   X  )  1.0
Normal Probability Tables
 The Standardized Normal table in the textbook

(Appendix table E.2) gives the probability less
than a desired value for Z (i.e., from negative
infinity to Z)
.9772
Example:
P(Z < 2.00) = .9772
0 2.00 Z
Normal Probability Tables
The column gives the value of Z
to the second decimal point
Z 0.00 0.01 0.02 …
The row shows 0.0

the value of Z to 0.1
. The value within the table
the first decimal .
point . gives the probability from
2.0 .9772 Z =   up to the desired
Z value.
2.0
P(Z < 2.00) = .9772
Finding Normal Probability
Procedure
To find P(a < X < b) when X
is distributed normally:
 Draw the normal curve for the problem in terms of X.
 Translate X-values to Z-values.
 Use the Standardized Normal Table.
Example
 Let X represent the time it takes (in seconds) to
download an image file from the internet.
 Suppose X is normal with mean 8.0 and
standard deviation 5.0
 Find P(X < 8.6)
X
8.0
8.6
Example
 Suppose X is normal with mean 8.0 and standard
deviation 5.0. Find P(X < 8.6).
X  μ 8.6  8.0
Z   0.12
σ 5.0
μ=8 μ=0
σ = 10 σ=1
8 8.6 X 0 0.12 Z
P(X < 8.6) P(Z < 0.12)

Example
P(X < 8.6)
Standardized Normal Probability
Table (Portion) = P(Z < 0.12)
.5478
Z .00 .01 .02
0.0 .5000 .5040 .5080 μ=0

0.1 .5398 .5438 .5478 σ=1
0.2 .5793 .5832 .5871
0.3 .6179 .6217 .6255 0 0.12 Z
Example
 Find P(X > 8.6)…
P(X > 8.6) = P(Z > 0.12) = 1.0 - P(Z ≤ 0.12)

= 1.0 - .5478 = .4522
.5478
1.0 - .5478 = .4522
Z
0
0.12
Between Two Values
 Suppose X is normal with mean 8.0 and standard
deviation 5.0. Find P(8 < X < 8.6)
Calculate Z-values:
X μ 8 8
Z  0
σ 5
8 8.6 X
X  μ 8.6  8 0 0.12 Z
Z   0.12
σ 5 P(8 < X < 8.6)
= P(0 < Z < 0.12)
Between Two Values
P(8 < X < 8.6)
Standardized Normal Probability = P(0 < Z < 0.12)
Table (Portion) = P(Z < 0.12) – P(Z ≤ 0)
= .5478 - .5000 = .0478
Z .00 .01 .02
.0478
0.0 .5000 .5040 .5080 .5000
0.1 .5398 .5438 .5478
0.2 .5793 .5832 .5871
0.3 .6179 .6217 .6255 Z

0.00 0.12
Given Normal Probability,
Find the X Value
 Let X represent the time it takes (in seconds) to download an
image file from the internet.
 Suppose X is normal with mean 8.0 and standard deviation 5.0
 Find X such that 20% of download times are less than X.
.2000
? 8.0 X
? 0 Z
Find the X Value
 First, find the Z value corresponds to the
known probability using the table.
Z …. .03 .04 .05
-0.9 …. .1762 .1736 .1711

.2000
-0.8 …. .2033 .2005 .1977
-0.7 …. .2327 .2296 .2266

? 8.0 X
-0.84 0 Z
Find the X Value
 Second, convert the Z value to X units using
the following formula.
X  μ  Zσ
 8.0  (0.84)5.0
 3.80
So 20% of the download times from the distribution with mean

8.0 and standard deviation 5.0 are less than 3.80 seconds.
Assessing Normality
 It is important to evaluate how well the data set
is approximated by a normal distribution.
 Normally distributed data should approximate
the theoretical normal distribution:
 The normal distribution is bell shaped
(symmetrical) where the mean is equal to the
median.
 The empirical rule applies to the normal
distribution.
 The interquartile range of a normal distribution is
1.33 standard deviations.
Assessing Normality
 Construct charts or graphs
 For small- or moderate-sized data sets, do stem-and-
leaf display and box-and-whisker plot look
symmetric?
 For large data sets, does the histogram or polygon
appear bell-shaped?
 Compute descriptive summary measures
 Do the mean, median and mode have similar values?
 Is the interquartile range approximately 1.33 σ?
 Is the range approximately 6 σ?
Assessing Normality
 Observe the distribution of the data set
 Do approximately 2/3 of the observations lie within
mean ± 1 standard deviation?
 Do approximately 80% of the observations lie within
mean ± 1.28 standard deviations?
 Do approximately 95% of the observations lie within
mean ± 2 standard deviations?
 Evaluate normal probability plot
 Is the normal probability plot approximately linear
with positive slope?
The Normal Probability Plot
 Normal probability plot (steps):

 Arrange data into ordered array
 Find corresponding standardized normal quantile (Z)
values
 Plot the pairs of points with observed data values (X) on
the vertical axis and the standardized normal quantile
(Z) values on the horizontal axis
 Evaluate the plot for evidence of linearity
A normal probability plot for data from a normal

distribution will be approximately linear:
X
90
60
30
-2 -1 0 1 2 Z
Left-Skewed Right-Skewed
X 90 X 90
60 60
30 30
-2 -1 0 1 2 Z -2 -1 0 1 2 Z
Rectangular
X 90
Nonlinear plots indicate a
60
deviation from normality
30
-2 -1 0 1 2 Z
The Uniform Distribution
 The uniform distribution is a probability

distribution that has equal probabilities for all
possible outcomes of the random variable
 Because of its shape it is also called a

rectangular distribution
The Continuous Uniform Distribution:
1
if a  X  b
ba
f(X) =
0 otherwise
where
f(X) = value of the density function at any X value
a = minimum value of X
b = maximum value of X
 The mean of a uniform distribution is:
ab
μ
2
 The standard deviation is:
(b - a)2
σ
12
Example: Uniform probability distribution

over the range 2 ≤ X ≤ 6:
1
f(X) = 6 - 2 = .25 for 2 ≤ X ≤ 6
f(X)
ab 26
μ  4
.25 2 2
(b - a) 2 (6 - 2) 2
σ   1.1547
2 6 X 12 12
The Exponential Distribution
 Used to model the length of time between two

occurrences of an event (the time between arrivals)
 Examples:
 Time between trucks arriving at an unloading
dock
 Time between transactions at an ATM
Machine
 Time between phone calls to the main
operator
 Defined by a single parameter, its mean λ (lambda)

 The probability that an arrival time is less than some
specified time X is
P(arrival time  X)  1  e  λX
where e = mathematical constant approximated by 2.71828
λ = the population mean number of arrivals per unit
X = any value of the continuous variable where 0 < X < 
Example: Customers arrive at the service counter at the rate

of 15 per hour. What is the probability that the arrival time
between consecutive customers is less than three minutes?
 The mean number of arrivals per hour is 15, so λ = 15

 Three minutes is .05 hours
 P(arrival time < .05) = 1 – e-λX = 1 – e-(15)(.05) = .5276
 So there is a 52.76% probability that the arrival time
between successive customers is less than three minutes
Chapter Summary
In this chapter, we have
 Presented key continuous distributions

 normal, uniform, exponential
 Found probabilities using formulas and tables
 Recognized when to apply different distributions
 Applied distributions to decision problems

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Statistics for Managers

Using Microsoft® Excel

In this chapter, you will learn:

 These can potentially take on any value, depending only

 Spread is characterized by the standard μ

Where e = the mathematical constant approximated by 2.71828

By varying the parameters μ and σ, we obtain

f(X) Changing μ shifts the

 Any normal distribution (with any mean and

 This says that X = 200 is two standard deviations

100 200 X (μ = 100, σ = 50)

Note that the distribution is the same, only the

Probability is measured by the area under the curve

(Note that the probability

 The Standardized Normal table in the textbook

The row shows 0.0

 Draw the normal curve for the problem in terms of X.

 Translate X-values to Z-values.

 Use the Standardized Normal Table.

P(X < 8.6) P(Z < 0.12)

0.0 .5000 .5040 .5080 μ=0

0.2 .5793 .5832 .5871

0.3 .6179 .6217 .6255 0 0.12 Z

P(X > 8.6) = P(Z > 0.12) = 1.0 - P(Z ≤ 0.12)

1.0 - .5478 = .4522

0.1 .5398 .5438 .5478

0.2 .5793 .5832 .5871

0.3 .6179 .6217 .6255 Z

Z …. .03 .04 .05

-0.9 …. .1762 .1736 .1711

-0.7 …. .2327 .2296 .2266

So 20% of the download times from the distribution with mean

 Normal probability plot (steps):

A normal probability plot for data from a normal

 The uniform distribution is a probability

 Because of its shape it is also called a

 The mean of a uniform distribution is:

Example: Uniform probability distribution

 Used to model the length of time between two

 Defined by a single parameter, its mean λ (lambda)

Example: Customers arrive at the service counter at the rate

 The mean number of arrivals per hour is 15, so λ = 15

 Presented key continuous distributions

 Found probabilities using formulas and tables

 Recognized when to apply different distributions

 Applied distributions to decision problems

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