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Chapter Goals
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 exponential distributions
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Probability Distributions
Probability Distributions Discrete Probability Distributions Binomial Poisson Hypergeometric Continuous Probability Distributions Normal Uniform Exponential
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These can potentially take on any value, depending only on the ability to measure
n! C ! x! (n x )!
n x
where: n! =n(n - 1)(n - 2) . . . (2)(1) x! = x(x - 1)(x - 2) . . . (2)(1) 0! = 1
(by definition)
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P(x) = probability of x successes in n trials, with probability of success p on each trial x = number of successes in sample, (x = 0, 1, 2, ..., n) p = probability of success per trial q = probability of failure = (1 p) n = number of trials (sample size)
Example: Flip a coin four times, let x = # heads: n=4 p = 0.5 q = (1 - .5) = .5 x = 0, 1, 2, 3, 4
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Binomial Distribution
The shape of the binomial distribution depends on the Mean of p and n values
P(X) .6 .4 .2 0 0
n = 5 p = 0.1
X 1 2 3 4 5
Here, n = 5 and p = .1
P(X)
Here, n = 5 and p = .5
.6 .4 .2 0 0
n = 5 p = 0.5
X 1 2 3 4 5
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! E(x) ! np
Variance and Standard Deviation
2
! npq
! npq
Where n = sample size p = probability of success q = (1 p) = probability of failure
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Binomial Characteristics
Examples
P(X) .6 .4 .2 0 0
n = 5 p = 0.1
X 1 2 3 4 5
! np ! (5)(.5) ! 2.5
! npq ! (5)(.5)(1 .5) ! 1.118
P(X) .6 .4 .2 0 0
n = 5 p = 0.5
X 1 2 3 4 5
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Examples:
n = 10, p = .35, x = 3: n = 10, p = .75, x = 2: P(x = 3|n =10, p = .35) = .2522 P(x = 2|n =10, p = .75) = .0004
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Using PHStat
Select PHStat / Probability & Prob. Distributions / Binomial
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Using PHStat
Enter desired values in dialog box Here: n = 10 p = .35 Output for x = 0 to x = 10 will be generated by PHStat Optional check boxes for additional output
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PHStat Output
The outcomes of interest are rare relative to the possible outcomes The average number of outcomes of interest per time or space interval is P The number of outcomes of interest are random, and the occurrence of one outcome does not influence the chances of another outcome of interest The probability of that an outcome of interest occurs in a given segment is the same for all segments
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( Pt ) e P( x ) ! x!
Pt
where: t = size of the segment of interest x = number of successes in segment of interest P = expected number of successes in a segment of unit size e = base of the natural logarithm system (2.71828...)
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! t
Variance and Standard Deviation
2
! t t
!
where
P = number of successes in a segment of unit size t = the size of the segment of interest
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Graphically:
P = .05 and t = 100
X 0 1 2 3 4 5 6 7
P(x)
P(x = 2) = .0758
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Pt = 3.0
0.25 0.20
0.15
P(x)
P(x)
0.10
0.05
0.10 0.00 0 1 2 3 4 5 6 7
0.00 1 2 3 4 5 6 7 8 9 10 11 12
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P( x ) !
Where
N X . n x N n
X x
N = Population size X = number of successes in the population n = sample size x = number of successes in the sample n x = number of failures in the sample
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N = 10 X=4
n=3 x=2
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P(x = 2) = 0.3
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f(x)
Location is determined by the mean, Spread is determined by the standard deviation, The random variable has an infinite theoretical range: + g to g Mean = Median = Mode
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f(x)
Changing shifts the distribution left or right. Changing increases or decreases the spread.
x
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by the area P (a e x e b)
x
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P( g
) ! 0.5
P(
g ) ! 0.5
0.5
0.5 x
P( g
g ) ! 1.0
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Empirical Rules
What can we say about the distribution of values around the mean? There are some general rules:
f(x)
1
of xs
68.26%
x
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(continued)
2 x 95.44%
3 x 99.72%
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Values above the mean have positive z-values, values below the mean have negative z-values
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z!
x
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Example
If x is distributed normally with mean of 100 and standard deviation of 50, the z value for x = 250 is
z!
x
This says that x = 250 is three standard deviations (3 increments of 50 units) above 43 the mean of 100.
100 0
250 3.0
x z
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)
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textbook (Appendix D) gives the probability from the mean (zero) .4772 up Example:to a desired value for z
P(0 < z < 2.00) = .4772 0 2.00 z
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0.1 0.2
. . .
2.0
.4772
The value within the table gives the probability from z = 0 up to the desired z value
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Z Table example
Suppose x is normal with mean 8.0 and standard deviation 5.0. Find P(8 < x < 8.6)
Calculate z-values:
z!
x
88 ! !0 5
8 8.6 x Z
z!
x
8.6 8 ! ! 0.12 5
0 0.12
Z Table example
(continued)
Suppose x is normal with mean 8.0 and standard deviation 5.0. Find P(8 < x < 8.6)
Q=8 W=5 Q=0 W=1
8 8.6
0 0.12
.00
.01
.02
8.0 8.6
Z
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.5000
.0478
8.0 8.6
Z
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(continued)
P(x > 8.6) = P(z > 0.12) = P(z > 0) - P(0 < z < 0.12) = .5 - .0478 = .4522 .0478 .50 - .0478 = .4522
.5000
0 0.12
0 0.12
Z
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8.0 7.4
Z
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(continued)
.0478
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PHStat Output
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(continued)
f(x) =
1 ba 0
if a e x e b otherwise
where f(x) = value of the density function at any x value a = lower limit of the interval b = upper limit of the interval
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Uniform Distribution
Example: Uniform Probability Distribution Over the range 2 x 6: 1 f(x) = 6 - 2 = .25 for 2 x 6
f(x) .25 x
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P(0 e x e a) ! 1 e
where 1/P is the mean time between events
a
Note that if the number of occurrences per time period is Poisson with mean P, then the time between occurrences is exponential with mean time 1/ P
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Exponential Distribution
Shape of the exponential distribution
f(x)
P = 3.0 (mean = .333) P = 1.0 (mean = 1.0) P= 0.5 (mean = 2.0)
(continued)
x
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Example
Example: Customers arrive at the claims counter at the rate of 15 per hour (Poisson distributed). What is the probability that the arrival time between consecutive customers is less than five minutes? Time between arrivals is exponentially distributed with mean time between arrivals of 4 minutes (15 per 60 minutes, on average) 1/P = 4.0, so P = .25 P(x < 5) = 1 - e-Pa = 1 e-(.25)(5) = .7135
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