DISC: 203 – Probability &

Statistics
Lecture 7 - 9
Probability Distributions - I

1
Outline

• Random sampling
• Random variable
• Probability distribution (discrete random variables)
• Expected value and variance
• Binomial distribution
• Poisson distribution

2
RANDOM SAMPLING

• If n elements out of a population are selected in such a way

that every set of n elements has an equal probability of
being chosen, then n elements are said to be a random
sample.
• The methods we will learn in this class ASSUME that the
data come from a random sample of the population of
interest.
• If we select every 20th name in LUMS student enrollment list,
this does not constitute a simple random sample of LUMS
students.
• If the population can be listed, then we can use a computer
to randomly select the items that will make up the sample.
3
 Random Variable?
• A numeric outcome of a random experiment.

• Examples:
• Number of Heads in two tosses of a coin: x = 0,1,2
• Sum of numbers when you roll a dice twice: x= 2,
…,12
• The number of sales made by a salesperson in a
given week: x = 0,1,2,…
• The temperature (in degrees Celsius) of a cup of
coffee at PDC

4
Two Types of Random Variables

• Discrete Random Variable: takes on a countable

number of values, e.g.
• The number of customers waiting to be served in a
restaurant at a particular time x= 0,1,2, …
• The number of customers in sample of 500 who favor
product A overall : x= 0,1,2,..,500
• Continuous Random Variable: can assume any
values on one or more intervals.
• The amount of carbonated beverage loaded into a 12-
ounce can in a can-filling operation:0 ≤ x ≤12
• A runner’s time in milliseconds in a 100-meter race
5
 Probability Distributions for Discrete
Random Variables
• The probability distribution of the random variable tells what
values the random variable can take and the probability that is
associated with each of those values
• graph
• Table
• formula
• Let X be the random variable representing the number of heads
observed in a two coin tossing experiment. The probability
distribution of X is:

x 0 1 2
P(x) 1/4 1/2 1/4

6
 Probability Distributions for Discrete
Random Variables
• Requirements for a discrete probability distribution
• p(x) ≥ 0 for all values of x
• ∑ p(x)=1

Example: P(x) = x/10 for x =1,2,3,4.

Valid probability distribution?
Property1?
Property 2? 1/10 + 2/10 + 3/10 + 4/10 = 1

7
Expected value and variance

• All probability distributions are characterized by an

expected value (μ) and variance (σ2 ).
• Example 1: An insurance company sells a $5,000
whole life insurance policy at annual premium of
$100. Historical data reveals that the probability of
death of a person during next year is 0.001. What is
the expected gain for the company by selling one
policy?

8
Expected value and variance

• Let x= gain, our random variable of interest in this case.

Sample Point Gain, x Probability
Customer lives $100 0.999
Customer dies $(100-5000) = -$4,900 0.001

• Expected gain = (100)(0.999) + (-4900)(0.001)

• =$ 95…if the company were to sell a very large number of
one-year $5,000 policies to such customers, it would (on the
average) net $95 per sale in the next year.
• Note: The expected value does not have to be a possible
value …..it’s an average value.
9
Expected value and variance

• Expected value (mean of probability distribution):

• μ = E(x) = ∑ x p(x) ….its a weighted average of all
possible values of x.
• Population Variance σ2 is the expected value of the
squared deviations from the population mean.
• σ2 = E[(x - μ)2] = ∑(x - μ)2 p(x) ….its a weighted average
of squared deviations about the mean.
• Standard deviation σ = √σ2

10
Expected value and variance

• Example : Suppose you have an option of

participating in one of these games: Game A: You
win Rs.2 with probability 2/3 and lose Rs.1 with
probability 1/3. Game B: You win Rs.1002 with
probability 2/3 and lose Rs. 2001 with 1/3. Which
one would you choose and why?
x p(x) xp(x) y p(y) yp(y)
2 2/3 4/3 1002 2/3 668
-1 1/3 -1/3
-2001 1/3 -667
∑ 1 E(x) =1
∑ 1 E(y) = 1
11
Expected value and variance
x p(x) xp(x) (x-μ) (x-μ) 2 (x - μ)2 p(x)

2 2/3 4/3 1 1 2/3

-1 1/3 -1/3 -2 4 4/3
∑ 1 μ =1 Var[x] = 2
s.d = Rs.1.4

y p(y) yp(y) (y-μ) (y-μ) 2 (y - μ)2 p(y)

1002 2/3 668 1001 1002001 668000

-2001 1/3 -667 -2002 4008004 1336001
∑ 1 Var[y] = 2004002
μ=1 s.d. = Rs. 1416

12
Chebyshev’s rule and empirical rule
Using μ and σ with Chebyshev’s or Empirical rule (likelihood that values of x will
fall within interval ….

Chebyshev’s Rule Empirical Rule

(any shape of (mound shape
distribution) distribution)

p(μ – σ < x< μ + σ ) ≈ 0.68

p(μ – 2σ < x< μ + 2σ ) ≥ 3/4 ≈ 0.95

p(μ – 3σ < x< μ + 3σ ) ≥ 8/9 ≈ 1.0

13
 Some important
probability distributions

1. Binomial

14
Binomial Random Variable

• The experiment consists of n identical trials.

• There are only two possible outcomes on each
trial. We denote S for success and F for failure.
• The probability of S remains the same from trial
to trial and is denoted by p
• The probability of F is denoted by q. Note q = 1-p
• The trials are independent.
• The binomial random variable x is the number of
successes (S’s) in n trials.

15
• Consider an experiment trial with only two
outcomes (e.g. True/False).
• Independently repeated trials of such an
experiment are called Bernoulli trials.
• A Binomial Experiment consists of a fixed number of
Bernoulli trials.
• Denoted as B(n, p) where n is the number of trials and
p is the probability of success.
• Example: Toss a fair coin 5 times and call Heads a
success. The random variable in this case is the number
of Heads we observe in the five tosses
• This is a Binomial Experiment: B(5, 0.5)
16
 Examples
• You randomly select three bonds out of possible ten for
an investment portfolio. Unknown to you, eight out of
ten shall maintain their present value and the other two
will lose value. Let x be the number of three bonds you
select that lose value.

• Is x a Binomial Random Variable or is this experiment a

Binomial Experiment?

17
 Examples
• Before marketing a new product, a consumer survey is
usually conducted to determine whether the product is
likely to be successful. Suppose a company develops a
diet soda and conducts a taste preference survey in which
100 randomly selected customers state their preferences
among the new soda and existing leading sellers. Let x be
the number of the 100 who choose the new soda over
the others.

• Is x a Binomial Random Variable or is this experiment a

Binomial Experiment?
18
The Binomial Probability Distribution

19
 Binomial Probability Distribution Example

Experiment: Toss 1 coin 5 times in a row. Note number

of tails. What’s the probability of 3 tails?

20
 Binomial Distribution - Exercise

You’re a telemarketer selling service contracts.

You’ve sold 20 in your last 100 calls (p = .20). If
you call 12 people tonight, what’s the probability
of
A. No sales?
B. Exactly 2 sales?
C. At most 2 sales?
D. At least 2 sales?

22
 Binomial Distribution Solution

n = 12, p = .20
A. p(0) = .0687
B. p(2) = .2835
C. p(at most 2) = p(0) + p(1) + p(2)
= .0687 + .2062 + .2835
= .5584
D. p(at least 2) = p(2) + p(3)...+ p(12)
= 1 – [p(0) + p(1)]
= 1 – .0687 – .2062
= .7251

23
Practice

• In each of 4 races, the Democrats have a 60% chance of winning.

Assuming that the races are independent of each other, what is the
probability that:
a. The Democrats will win 0 races, 1 race, 2 races, 3 races, or all 4
races?
b. The Democrats will win at least 1 race
c. The Democrats will win a majority of the races

24
Binomial Probabilities in R

• Probability function:
dbinom(x, size=n, prob=p)

Where x is the number of successes in n trials, and

p is the probability of success in a single trial.

For cumulative probability, use:

pbinom(x, size=n, prob=p)

25
 Some important
probability distributions

2. POISSON

26
The Poisson Distribution

• A common distribution used to model “count” data

• The experiment consists of counting the number of
times a certain event occurs in a specific period of
time or a specific area or volume
• Example:
• Number of telephone calls received per hour
• Number of claims received per day by an insurance
company
• Number of errors per 100 invoices in the accounting
records of a company.

27
The Poisson Distribution

• The probability that an event occurs in a given unit

of time (area or volume) is the same for all the
units.
• The number of events that occur in one unit of time
(area or volume) is independent of the number that
occurs in any other mutually exclusive event.
• The mean number of times a certain event occurs in
each unit for a Poisson Distribution is denoted by λ

28
Poisson Probability Distribution Function

x –
e
p (x )  (x = 0, 1, 2, 3, . . .)
x!
 = Mean (expected) number of events in unit
e = 2.71828 . . . (base of natural logarithm)
x = Number of events per unit

29
 The Poisson Distribution - example

Example:
Customers arrive at a rate of 72 per hour on
average. What is the probability of 4 customers
arriving in 3 minutes?

30
 The Poisson Distribution - example

72 Per Hr. → 3.6 per 3 min. interval

31
Example

Vehicles pass through a junction on a busy road at an average rate

of 300 per hour.

Find the probability that none passes in a given minute.

33
Poisson Probabilities R

• Probability function:
dpois(x,lambda = λ)

where x is the number of events per unit (number to be

tested) and λ is the expected (average) number of events
per unit

For cumulative probability:

ppois(x,lambda = λ)

34
PRACTICE EXERCISES

4.64 (pg 206)

4.90 (pg 211)

35
Reference: chapter 4
discrete random variables & probability
distributions

36