Business Statistics: A Decision-Making Approach

6th $%ition

Chapter 5 Discrete an% "ontinuous Pro&a&ilit' Distri&utions

Business Statistics: A Decision-Making Approach, 6e 2005 PrenticeHall, nc!

"hap 5-#

"hapter (oals
After completing this chapter, you should be able to: Apply the binomial distribution to applied problems

Compute probabilities for the Poisson and hypergeometric distributions Find probabilities using a normal distribution table and apply the normal distribution to business problems

Recognize when to apply the uniform and Business Statistics: A Decisionexponential Making Approach, 6edistributions 2005 Prentice-Hall, nc! "hap 5-2

Probability Distributions
Probability Distributions Discrete Probability Distributions Binomial Poisson Business Statistics: A DecisionHypergeometric Making Approach, 6e 2005 Prentice-Hall, nc! Continuous Probability Distributions ormal !niform "xponential "hap 5-#

Discrete Pro&a&ilit' Distri&utions

A discrete random #ariable is a #ariable that can assume only a countable number of #alues
Many possible outcomes: number of complaints per day number of $%&s in a household number of rings before the phone is answered

Only two possible outcomes: gender' male or female defecti#e' yes or no spreads peanut butter first #s( spreads )elly first Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc! "hap 5-$

"ontinuous Pro&a&ilit' Distri&utions

A continuous random #ariable is a #ariable that can assume any #alue on a continuum *can assume an uncountable number of #alues+

thic,ness of an item time re-uired to complete a tas, temperature of a solution height. in inches

$hese can potentially ta,e on any #alue. only on the ability to measure Business depending Statistics: A Decisionaccurately( Making Approach, 6e 2005

Prentice-Hall, nc!

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$he Binomial Distribution

Probability Distributions Discrete Probability Distributions Binomial Poisson Business Statistics: A DecisionHypergeometric Making Approach, 6e 2005 Prentice-Hall, nc!

"hap 5-6

)he Bino*ial Distri&ution

Characteristics of the Binomial Distribution'

A trial has only two possible outcomes / 0success1 or 0failure1 $here is a fixed number. n. of identical trials $he trials of the experiment are independent of each other $he probability of a success. p. remains constant from trial to trial 2f p represents the probability of a success. then Business Statistics: *34p+ 5 - A is Decisionthe probability of a failure Making Approach, 6e 2005 Prentice-Hall, nc! "hap 5-%

Bino*ial Distri&ution Settings

A manufacturing plant labels items as either defecti#e or acceptable A firm bidding for a contract will either get the contract or not A mar,eting research firm recei#es sur#ey responses of 0yes 2 will buy1 or 0no 2 will not1

ew )ob A applicants Business Statistics: Decision- either accept the offer or re)ect6e it 2005 Making Approach, Prentice-Hall, nc! "hap 5-&

"ounting +ule ,or "o*&inations

A combination is an outcome of an experiment where x ob)ects are selected from a group of n ob)ects

n6 C = x6 *n x +6
n x

where'

n6 5n*n 4 3+*n 4 7+ ( ( ( *7+*3+ x6 5 x*x 4 3+*x 4 7+ ( ( ( *7+*3+

Business Statistics: A Decision86 5 3 *by definition+ Making Approach, 6e 2005 Prentice-Hall, nc!

"hap 5-'

Bino*ial Distri&ution -or*ula

n6 x nx P*x+ = p x 6 *n x +6
P*x+ 5 probability of x successes in n trials. with probability of success p on each trial x 5 number of 9successes& in sample. *x 5 8. 3. 7. (((. n+ p 5 probability of 0success1 per trial - 5 probability of 0failure1 5 *3 / p+ Business Statistics: A Decisionn 5 number of trials *sample size+
Example: Flip a coin four times. let x 5 : heads' n5; p 5 8(< - 5 *3 4 (<+ 5 (< x 5 8. 3. 7. =. ;

Making Approach, 6e 2005 Prentice-Hall, nc!

"hap 5-(0

Bino*ial Distri&ution

Mean

$he shape of the binomial distribution depends on the #alues of p and n

!$ !# !" P)(*

n 5 < p 5 8(3

Here. n 5 < and p 5 (3

( % P)(* " & # '

Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

Here. n 5 < and p 5 (<

!$ !# !"

n 5 < p 5 8(<
( % " & # '

"hap 5-((

Bino*ial Distri&ution "haracteristics

>ean

@ = "*x+ = np
A = np7

%ariance and ?tandard De#iation

A = npn 5 sample size Business Statistics: A Decisionp 5 probability of success - 5 *3 6e / p+ 5 probability Making Approach, 2005 of failure Bhere

Prentice-Hall, nc!

"hap 5-(2

Bino*ial "haracteristics
"xamples

@ = np = *<+*(3+ = 8(< Mean

A = np- = *<+*(3+*3 (3+ = 8(CD8E

!$ !# !"

P)(*

n 5 < p 5 8(3
( % " & # '

@ = np = *<+*(<+ = 7(<
A = np- = *<+*(<+*3 (<+

Business Statistics: A Decision= 3(33E Making Approach, 6e 2005 Prentice-Hall, nc!

!$ !# !"

P)(*

n 5 < p 5 8(<
( % " & # '

"hap 5-(#

.sing Bino*ial )a&les

n+% x 8 3 7 & ; < C D E F 38 p5(3< 8(3FCF 8(=;D; 8(7D<F 8(37FE 8(8;83 8(88E< 8(8837 8(8883 8(8888 8(8888 8(8888 p5(E< p5(78 8(38D; 8(7CE; 8(=878 8(783= 8(8EE3 8(87C; 8(88<< 8(888E 8(8883 8(8888 8(8888 p5(E8 p5(7< 8(8<C= 8(3EDD 8(7E3C 8(7<8= 8(3;C8 8(8<E; 8(83C7 8(88=3 ! # 8(8888 8(8888 p+!,' p5(=8 8(87E7 8(3733 8(7==< 8(7CCE 8(7883 8(387F 8(8=CE 8(88F8 8(883; 8(8883 8(8888 p5(D8 p+!&' 8(83=< 8(8D7< 8(3D<D !"'"" 8(7=DD 8(3<=C 8(8CEF 8(8737 8(88;= 8(888< 8(8888 p5(C< p5(;8 8(88C8 8(8;8= 8(378F 8(73<8 8(7<8E 8(788D 8(333< 8(8;7< 8(838C 8(883C 8(8883 p5(C8 p5(;< 8(887< 8(878D 8(8DC= 8(3CC< 8(7=E; 8(7=;8 8(3<FC 8(8D;C 8(877F 8(88;7 8(888= p5(<< p5(<8 8(8838 8(88FE 8(8;=F 8(33D7 8(78<3 8(7;C3 8(78<3 8(33D7 8(8;=F 8(88FE 8(8838 p5(<8 38 F E D C < ; = " 3 8 x

"xamples'
n 5Statistics: 38. p 5 (=<. 5 =' P*x 5 =Gn 538. p 5 (=<+ 5 (7<77 Business AxDecisionMaking 6ex 2005 P*x 5 7Gn 538. p 5 (D<+ 5 (888; n Approach, 5 38. p 5 (D<. 5 7' Prentice-Hall, nc! "hap 5-($

.sing PHStat

?elect PH?tat H Probability I Prob( Distributions H BinomialJ

Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

"hap 5-(5

.sing PHStat

"nter desired #alues in dialog box

Here' n 5 38 p 5 (=< Kutput for x 5 8 to x 5 38 will be generated by PH?tat Kptional chec, boxes for additional Business Statistics: A output Decision-

Making Approach, 6e 2005 Prentice-Hall, nc!

"hap 5-(6

PHStat /utput

P*x 5 = G n 5 38. p 5 (=<+ 5 (7<77

Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

P*x L < G n 5 38. p 5 (=<+ 5 (8F;F

"hap 5-(%

$he Poisson Distribution

Probability Distributions Discrete Probability Distributions Binomial Poisson Business Statistics: A DecisionHypergeometric Making Approach, 6e 2005 Prentice-Hall, nc!

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)he Poisson Distri&ution

Characteristics of the Poisson Distribution'

$he outcomes of interest are rare relati#e to the possible outcomes $he a#erage number of outcomes of interest per time or space inter#al is $he number of outcomes of interest are random. and the occurrence of one outcome does not influence the chances of another outcome of interest

$he probability of that an outcome of interest occurs in a gi#en segment is the same for all segments Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc! "hap 5-('

Poisson Distri&ution -or*ula

* t + e P* x + = x6
x

where' t 5 size of the segment of interest x 5 number of successes in segment of interest 5 expected number of successes in a segment of unit size

Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

e 5 base of the natural logarithm system *7(D3E7E(((+

"hap 5-20

Poisson Distri&ution "haracteristics

>ean

@ = Mt
A 7 = Mt
A = Mt

%ariance and ?tandard De#iation

Business Making Approach, 6e 2005 Prentice-Hall, nc!

where

5 number of successes in a segment of unit size Statistics: Decisiont 5 the A size of the segment of interest

"hap 5-2(

.sing Poisson )a&les

t ( 8(38 8(78 8(=8 8(;8 !' 8(C8 8(D8 8(E8 8(F8

8 3 " = ; < C D

8(F8;E 8(8F8< 8(88;< 8(8887 8(8888 8(8888 8(8888 8(8888

8(E3ED 8(3C=D 8(83C; 8(8833 8(8883 8(8888 8(8888 8(8888

8(D;8E 8(7777 8(8=== 8(88== 8(888= 8(8888 8(8888 8(8888

8(CD8= 8(7CE3 8(8<=C 8(88D7 8(888D 8(8883 8(8888 8(8888

8(C8C< 8(=8== ! ,'8(837C 8(883C 8(8887 8(8888 8(8888

8(<;EE 8(=7F= 8(8FEE 8(83FE 8(88=8 8(888; 8(8888 8(8888

8(;FCC 8(=;DC 8(373D 8(87E; 8(88<8 8(888D 8(8883 8(8888

8(;;F= 8(=<F< 8(3;=E 8(8=E= 8(88DD 8(8837 8(8887 8(8888

8(;8CC 8(=C<F 8(3C;D 8(8;F; 8(8333 8(8878 8(888= 8(8888

"xample' Find P*x 5 7+ if 5 (8< and t 5 388

*t +x e t *8(<8+ 7 e 8(<8 P* x = 7A += = (8D<E Business Statistics: Decision- = x6 76 Making Approach, 6e 2005

Prentice-Hall, nc! "hap 5-22

(raph o, Poisson Pro&a&ilities

Nraphically'
+ ! ' and t + %
( 8 3 7 = ; < C Business D
P)x*
8(D8 8(C8 8(<8 8(;8 8(=8 8(78 8(38 8(88 8 3 7 = ; < C D

t + !' 8(C8C< 8(=8== 8(8D<E 8(837C 8(883C 8(8887 8(8888 Statistics: 8(8888

A Decision- P*x 5 7+ 5 (8D<E Making Approach, 6e 2005 Prentice-Hall, nc!

"hap 5-2#

Poisson Distri&ution Shape

$he shape of the Poisson Distribution depends on the parameters and t'
t 5 8(<8 t 5 =(8
8(7< 8(78

8(D8 8(C8 8(<8 8(;8 8(=8 8(78

8(3<

P)x*

P)x*

8(38

8(8<
8(38 8(88

8(88
8 3 7 = ; < C D

Business Statistics:x A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

<

38

33

37

"hap 5-2$

$he Hypergeometric Distribution

Probability Distributions Discrete Probability Distributions Binomial Poisson Business Statistics: A DecisionHypergeometric Making Approach, 6e 2005 Prentice-Hall, nc!

"hap 5-25

)he H'pergeo*etric Distri&ution

0n1 trials in a sample ta,en from a finite population of size ?ample ta,en without replacement $rials are dependent Concerned with finding the probability of 0x1 successes in the sample where there are 0O1 successes in the population
"hap 5-26

Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

H'pergeo*etric Distri&ution -or*ula

*$wo possible outcomes per trial+

P* x + =
Bhere

O ( n x

O x

Cn

Business Making Approach, 6e 2005 Prentice-Hall, nc!

5 Population size O 5 number of successes in the population n 5 sample size x 5 number of successes in the sample Statistics: A Decisionn / x 5 number of failures in the sample

"hap 5-2%

H'pergeo*etric Distri&ution -or*ula

P

"xample' = Qight bulbs were selected from 38( Kf the 38 there were ; defecti#e( Bhat is the probability that 7 of the = selected are defecti#eR

5 38 O5;

n5= x57

P*x = 7+ =

O n x

O x

Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

Cn

C C *C+*C+ = = = 8(= 38 C= 378

"hap 5-2&

C 3

; 7

H'pergeo*etric Distri&ution in PHStat

?elect'
PH?tat H Probability I Prob( Distributions H Hypergeometric J

Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

"hap 5-2'

H'pergeo*etric Distri&ution in PHStat

Complete dialog box entries and get output J

5 38 O5; n5= x57

(continued )

Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

P*x 5 7+"hap 5 8(= 5-#0

$he ormal Distribution

Probability Distributions Continuous Probability Distributions ormal !niform Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc! "xponential "hap 5-#(

)he 0or*al Distri&ution

.ell /haped0 /ymmetrical Mean, Median and Mode are E1ual

f)x*

2ocation is determined by the mean, 3 /pread is determined by the standard de4iation, 5 6he random 4ariable has an Business Statistics: A Decisioninfinite theoretical range: Making Approach, 6e 2005 S to Prentice-Hall, nc! 3

Mean + Median + Mode "hap 5-#2

Man' 0or*al Distri&utions

.y 4arying the parameters 3 and 5, we obtain Business Statistics: A Decisiondifferent normal distributions Making Approach, 6e 2005 Prentice-Hall, nc! "hap 5-##

)he 0or*al Distri&ution Shape

f)x*

Changing 3 shifts the distribution left or right( Changing A increases or decreases the spread( x "hap 5-#$

Business Statistics: A Decision- 3 Making Approach, 6e 2005 Prentice-Hall, nc!

-in%ing 0or*al Pro&a&ilities

Probability is the Probability is measured area under the cur4e7 under the cur#e f)x*

by the area P *a x b+

Business Statistics: A Decision- a Making Approach, 6e 2005 Prentice-Hall, nc!

x "hap 5-#5

Pro&a&ilit' as Area .n%er the "ur1e

$he total area under the cur#e is 3(8. and the cur#e is symmetric. so half is abo#e the mean. half is below f)x*

P* < x < @+ = 8(<

P*@ < x < + = 8(<

0!5 Business Statistics: A Decision- 3 Making Approach, 6e 2005 P* Prentice-Hall, nc!

0!5 x "hap 5-#6

< x < + = 3(8

$*pirical +ules
Bhat can we say about the distribution of #alues around the meanR $here are some general rules'
f)x*

3 %5 encloses about
$-8 of x0s

31 3 3+1 Business Statistics: A Decision5 2005 Making Approach, 6e $-!"$85 Prentice-Hall, nc!

x "hap 5-#%

)he $*pirical +ule

3 "5 co4ers about 9'8 of x0s 3 &5 co4ers about 99!,8 of x0s

(continue d)

"5 3

"5 x

&5 3

&5 x

9'!##8 Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

99!,"8 "hap 5-#&

*portance o, the +ule

2f a #alue is about 7 or more standard de#iations away from the mean in a normal distribution. then it is far from the mean $he chance that a #alue that far or farther away from the mean is highly unli,ely. gi#en that particular mean and standard de#iation

Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

"hap 5-#'

)he Stan%ar% 0or*al Distri&ution

Also ,nown as the 0z1 distribution >ean is defined to be 8 ?tandard De#iation is 3

f):* % :

abo#e the mean ha#e positi#e z4#alues. Business%alues Statistics: A Decision#alues below the mean ha#e negati#e z4#alues Making Approach, 6e 2005 Prentice-Hall, nc! "hap 5-$0

)he Stan%ar% 0or*al

Any normal distribution *with any mean and standard de#iation combination+ can be transformed into the standard normal distribution *z+ eed to transform x units into z units

Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

"hap 5-$(

)ranslation to the Stan%ar% 0or*al Distri&ution

$ranslate from x to the standard normal *the 0z1 distribution+ by subtracting the mean of x and di#iding by its standard de#iation'

x @ z= A
Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc! "hap 5-$2

$2a*ple

2f x is distributed normally with mean of 388 and standard de#iation of <8. the z #alue for x 5 7<8 is

x @ 7<8 388 z= = = =(8 A <8

$his says that x 5 7<8 is three standard de#iations *= increments of <8 units+ abo#e Businessthe Statistics: Aof Decisionmean 388(

Making Approach, 6e 2005 Prentice-Hall, nc!

"hap 5-$#

"o*paring 2 an% 3 units

@ 5 388 A 5 <8

"' &!

x :

;ote that the distribution is the same, only the scale has changed! <e can express the problem in Business Statistics: A Decisionoriginal units )x* or in standardi:ed units ):* Making Approach, 6e 2005 Prentice-Hall, nc! "hap 5-$$

)he Stan%ar% 0or*al )a&le

$he ?tandard ormal table in the textboo, *Appendix D+ gi#es the probability from the mean *zero+ up to a desired #alue for z
!#,,"

"xample' P*8 T z T 7(88+ 5 (;DD7 Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc! "!

: "hap 5-$5

)he Stan%ar% 0or*al )a&le

(continue d)

$he column gi#es the #alue of z to the second decimal point

z 8(88 8(83 8(87 J

$he row shows the #alue of z to the first decimal point

8(3 8(7

( ( (

"!

!#,,"

Business P) Statistics: 7(8 = : =A "!Decision* + !#,," Making Approach, 6e 2005 Prentice-Hall, nc!

$he #alue within the table gi#es the probability from z 5 8 up to the desired z #alue "hap 5-$6

(eneral Proce%ure ,or -in%ing Pro&a&ilities

$o find P*a T x T b+ when x is distributed normally'

Draw the normal cur#e for the problem in terms of x $ranslate x4#alues to z4#alues ormal $able
"hap 5-$%

!se theA ?tandard Business Statistics: DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

4 )a&le e2a*ple

?uppose x is normal with mean E(8 and standard de#iation <(8( Find P*E T x T E(C+

Calculate z4#alues'

x @ E E z= = =8 A < x @ E(C E z= = = 8(37 A <

- -!$ !%" x >

Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

P*E T x T E(C+ 5 P*8 T z T 8(37+ "hap 5-$&

4 )a&le e2a*ple

?uppose x is normal with mean E(8 and standard de#iation <(8( Find P*E T x T E(C+
5E 5<

(continue d)

58 53

- -!$

!%"

P*E T x T E(C+ Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

P*8 T z T 8(37+ "hap 5-$'

Solution: -in%ing P50 6 3 6 0!#27

?tandard ormal Probability $able *Portion+ P*E T x T E(C+ 5 P*8 T z T 8(37+ (8;DE

(88

(83

! "

8(8 (8888 (88;8 (88E8

!% (8=FE (8;=E !8;DE

8(7 (8DF= (8E=7 (8ED3 8(= (33DF (373D Business Statistics: A (37<< DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!
! !%" >

"hap 5-50

-in%ing 0or*al Pro&a&ilities

?uppose x is normal with mean E(8 and standard de#iation <(8( ow Find P*x T E(C+

Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

-! -!$

>

"hap 5-5(

-in%ing 0or*al Pro&a&ilities

?uppose x is normal with mean E(8 and standard de#iation <(8( ow Find P*x T E(C+

(continue d)

P*x T E(C+ 5 P*z T 8(37+ 5 P*z T 8+ S P*8 T z T 8(37+ Business Statistics: Decision5 (< S (8;DE 5 A (<;DE Making Approach, 6e 2005 Prentice-Hall, nc!

(<888

(8;DE

! !%" "hap 5-52

>

.pper )ail Pro&a&ilities

?uppose x is normal with mean E(8 and standard de#iation <(8( ow Find P*x L E(C+

Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

-! -!$

>

"hap 5-5#

.pper )ail Pro&a&ilities

ow Find P*x L E(C+J

5 (< 4 (8;DE 5 (;<77 (8;DE

(continue d)

P*x L E(C+ 5 P*z L 8(37+ 5 P*z L 8+ 4 P*8 T z T 8(37+

(<888

(<8 4 (8;DE 5 (;<77

Business Statistics: A Decision-> Making Approach, 6e 2005 !%" Prentice-Hall, nc!

> !%"

"hap 5-5$

8o9er )ail Pro&a&ilities

?uppose x is normal with mean E(8 and standard de#iation <(8( ow Find P*D(; T x T E+

Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

,!#

-!

>

"hap 5-55

8o9er )ail Pro&a&ilities

ow Find P*D(; T x T E+J
$he ormal distribution is symmetric. so we use the same table e#en if z4#alues are negati#e' P*D(; T x T E+ 5 P*48(37 T z T 8+ 5 (8;DE Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!
,!# -! >

(continue d)

(8;DE

"hap 5-56

0or*al Pro&a&ilities in PHStat

Be can use "xcel and PH?tat to -uic,ly generate probabilities for any normal distribution Be will find P*E T x T E(C+ when x is normally distributed with mean E and standard de#iation <
"hap 5-5%

Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

PHStat Dialogue Bo2

?elect desired options Business Statistics: A Decisionand Making Approach, 6e enter 2005 #alues Prentice-Hall, nc!

"hap 5-5&

PHStat /utput

Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

"hap 5-5'

$he !niform Distribution

Probability Distributions Continuous Probability Distributions ormal !niform Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc! "xponential "hap 5-60

)he .ni,or* Distri&ution

$he uniform distribution is a probability distribution that has e-ual probabilities for all possible outcomes of the random #ariable

Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

"hap 5-6(

)he .ni,or* Distri&ution

$he Continuous !niform Distribution'
(continued )

f*x+ 5

3 ba 8

if a x b otherwise

Business Making Approach, 6e 2005 Prentice-Hall, nc!

where f*x+ 5 #alue of the density function at any x #alue a 5 lower limit of the inter#al Statistics: A Decisionb 5 upper limit of the inter#al

"hap 5-62

.ni,or* Distri&ution
"xample' !niform Probability Distribution K#er the range 7 U x U C' 3 f*x+ 5 C 4 7 5 (7< for 7 U x U C
f*x+ (7< Business Statistics: A Decision7 Making Approach, 6e 2005 Prentice-Hall, nc! C x "hap 5-6#

$he "xponential Distribution

Probability Distributions Continuous Probability Distributions ormal !niform Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc! "xponential "hap 5-6$

)he $2ponential Distri&ution

!sed to measure the time that elapses between two occurrences of an e#ent *the time between arri#als+

"xamples' $ime between truc,s arri#ing at an unloading doc, $ime between transactions at an A$> >achine $ime between phone calls to the main operator Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc! "hap 5-65

)he $2ponential Distri&ution

$he probability that an arri#al time is e-ual to or less than some specified time a is

P*8 x a+ = 3 e

Ma

where 3H is the mean time between e#ents

ote that if the number of occurrences per time period is Poisson with mean . then the time between occurrences is exponential Business Statistics: A Decisionwith mean time 3H

Making Approach, 6e 2005 Prentice-Hall, nc!

"hap 5-66

$2ponential Distri&ution

?hape of the exponential distribution

f)x*
+ &! )mean + !&&&* + %! )mean + %! * + !' )mean + "! *

(continued )

Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc!

x "hap 5-6%

$2a*ple
"xample' Customers arri#e at the claims counter at the rate of 3< per hour *Poisson distributed+( Bhat is the probability that the arri#al time between consecuti#e customers is less than fi#e minutesR $ime between arri#als is exponentially distributed with mean time between arri#als of ; minutes *3< per C8 minutes. on a#erage+ 3H 5 ;(8. so 5 (7<

4a 4*(7<+*<+ P*x T <+ 5 3 4 e 5 3 / e 5 (D3=< Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc! "hap 5-6&

"hapter Su**ar'

Re#iewed ,ey discrete distributions

binomial. poisson. hypergeometric normal. uniform. exponential

Re#iewed ,ey continuous distributions

Found probabilities using formulas and tables Recognized when to apply different distributions

Applied distributions to decision problems Business Statistics: A DecisionMaking Approach, 6e 2005 Prentice-Hall, nc! "hap 5-6'