IBA JU BBA -2

Course Instructor: Dr Swapan Kumar Dhar

Probability Distribution (continued)

Continuous Probability Distribution: The probability distribution of
continuous random variable is continuous probability distribution. If a random
variable assumes any numerical value in an interval or collection of intervals,
then it is called a continuous random variable.
The manner how a continuous variable is defined does not allow us to develop a
continuous probability distribution in the way we did in the case of a discrete
probability distribution. For instance, while developing the binomial distribution, the
basic question raised was: What is the probability that the random variable X takes
the value 0,1, 2... or n. A similar question makes no sense when asked in relation to a
continuous variable.
The reason being that the probability of a continuous variable taking a particular value,
as represented by a given point on a line segment, is so small that, for all practical
purposes, it can be treated as negligible. This may appear a little hard to accept.
However, even a routine example will make the point clear.
Consider the weight characteristic of human body as a continuous variable. Given the
precise scale of measurement, there are a large number of weights between, say, 55.5
and 56.5 kg. For example, 55.99 kg is one of the weights in this range. The number of
weight measurements close to 55.99 kg is so large that it is normally of no avail to
distinguish this particular weight from other weights in its close proximity.
In fact, as weight measurements can be recorded with maximum possible accuracy,
persons with exactly 55.99 kg weight are extremely uncommon to find. The probability
of finding such a person so small is that it can safely be treated as zero and ignored.
Obviously, the probability distribution of a continuous variable, such is the one being
considered, cannot be expressed in a tabular form as was possible in the case of a
discrete probability distribution.
Importantly, however, a continuous random variable has a probability distribution of its own,
which may be called continuous probability distribution. Thus, when X is a continuous
variable, its density function, designated as f(x), may take any shape depicted by the
continuous curves shown in Fig 1. These are so drawn that the area under each curve
above the relevant range on the X-axis is 1.
For reasons explained above, no continuous probability function can be used to obtain the
probability of X taking an exact value represented by a particular point on the X-axis.
Instead, it gives the probability that X takes a value spread over a specified range bound
by any two points, say x1 and x2 where x1 < x2 . Denoted as P ( x1 < X < x2 ), it is the
range probability represented by the shaded area between the two ordinates drawn at x1
and x2 , as shown in Fig. 2..
An exact calculation of any such shaded area requires the use of integral calculus. To avoid it
for being cumbersome, ready-made area tables have been developed for a typical bell-
shaped curve as in Fig. 2. It represents a probability distribution, which we frequently come
across in real life, and which best describes the behavior of a large majority of business and
economic variables.
In essence, it follows that the probability distribution of a continuous random variable X is
defined by a continuous curve having the following two properties:
In essence, it follows that the probability distribution of a continuous random variable X is
defined by a continuous curve having the following two properties:
* That the area under the curve above the relevant range on the X-axis is 1.
* That the ordinates drawn at any two points on the X-axis x1 and x2 (such that x1 < x2 )
bind an area, which represents the probability of X assuming a value between these points.

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 f(X)

f(X)

d f e

Fig. 1: Various Forms of Continuous Probability Function

To obtain the range probabilities in the manner stated above and below, it is necessary
to identify the particular shape a continuous distribution takes. This can be done by
obtaining a frequency distribution of the given data on a continuous variable and
converting the class frequencies into relative frequencies so that these add to 1.

Fig. 2: Range Probability P ( x1 < X < x2 )

The relative frequencies for each class may then be plotted on the y-axis against the
corresponding class mid-points measured on the X-axis, and the various points joined by a
free hand line. The shape of the resultant relative frequency polygon gives a fairly good
idea as to what possible shape among those identified in Figure 1 a continuous
distribution takes.
Probability Density Function (pdf): To assign the probability of a continuous

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probability distribution called pdf is used. If a random variable assumes a
x
continuous set of values x1, 2 ,K , xn in the range (− ∞, + ∞) , then its pdf must
satisfy the following conditions:
(i) f ( x) ≥ 0 ; for all values of x, (ii) ∫ f ( x)dx = 1 for all values of x.
Condition (i) indicates that a random variable cannot assume negative value and
condition (ii) shows that the probability of the entire range space must equal 1.
In general, the probability of the continuous random variable is determined by
finding the area under the pdf between the values a and b. Mathematically, the
area under pdf between a and b is given by
b
f (a ≤ x ≤ b) = f (b) − f (a) = ∫ f ( x)dx.
a
We can express f (a ≤ x ≤ b) in terms of a distribution, f ( x), provided it is
differentiable. That is,

d  
b
d
[ f ( x)] =  ∫ f ( x)dx  .
dx dx  a 
 
 a ;0 ≤ x ≤ 5
Illustration: Consider the function, f ( x) = 
0 otherwise
For f ( x) to be a pdf, the condition, ∫ f ( x)dx = 1 must be satisfied, which is true
if
5
∫0 adx = 1, i.e. a=1.
5
Since a>0, the equation, f ( x) ≥ 0. Thus f(x) satisfies both the conditions for a
pdf.
Expected value of a continuous random variable: For the continuous
random variable, the expected value is given by E ( x) = ∫ xf ( x)dx .
Example 1: A doctor recommends a patient to take a particular diet for two
weeks and there is equal chance for the patient to lose weight between 2 kgs
and 4 kgs. What is the average amount the patient is expected to lose on this
diet?
Solution: If x is the random variable, then the pdf is defined as
1
,2≤ x≤4
f ( x) =  2 .
0, otherwise

Hence, the amount the patient is expected to lose on the diet is:
4 4
1  x2  1
E ( x) = ∫ x × dx =   = (4)2 − (2)2  = 3 kgs.
2  4  4 
2 2
Example 2: Under an employment promotion programme, it is proposed to
allow sale of newspapers inside buses during off – peak hours. The vendor can
purchase newspapers at a special concessional rate of Taka 7.50 per copy
against the selling price of Taka 8.00. Any unsold copies are, however, a dead
loss. A vendor has estimated the following probability distribution for the number
of copies demanded.

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 Number of Copies 15 16 17 18 19 20
Probability 0.04 0.19 0.33 0.26 0.11 0.07
How many copies should be ordered so that his expected profit will be
maximum?
Solution: Profit per copy = Selling price – Purchasing price = 8.00 – 7.50= 0.50
Taka. Expected profit = Number of copies × Probability × Profit per
copy.
The calculations of expected profit are shown in the following table:

Calculation of Expected Profit

Number of copies Probabilit Profit per copy (in Expected profit (in
demanded y Taka) Taka)
15 0.04 0.50 30
16 0.19 0.50 152
17 0.33 0.50 280.50
18 0.26 0.50 234
19 0.11 0.50 104.50
20 0.07 0.50 70
The maximum profit of Taka 280.50 is obtained when he stocks 17 copies of the
newspaper.
Example 3: A bakery has the following schedule of daily demand for cakes. Find
the expected number of cakes demanded per day.
No of cakes 0 1 2 3 4 5 6 7 8 9
demanded
Probability 0.0 0.0 0.0 0.1 0.2 0.2 0.1 0.1 0.0 0.0
2 7 9 2 0 0 8 0 1 1
Solution: Calculating Table for finding expected number of cakes
X = No of cakes Probability = P(x) XP(x)
0 0.02 0
1 0.07 0.07
2 0.09 0.18
3 0.12 0.36
4 0.20 0.80
5 0.20 1.00
6 0.18 1.08
7 0.10 0.70
8 0.01 0.08
9 0.01 0.09

∑ xP( x) =4.36. Therefore, the expected number of cakes = 436.

Variance of continuous random variable: The expected value measures the
central tendency of a probability distribution, while variance determines the
dispersion or variability to which the possible random values differ among them.
The variance, denoted by Var (x) or σ X2 of a random variable X is the squared
deviation of the individual values from their expected value or mean. That is,
Var ( x) = E ( x − µ )2 = E ( x2 − 2 xµ + µ 2 ) = E ( x2 ) − µ 2 ,where
E ( x2 ) = ∫ x2 f ( x)dx , for continuous X.
E ( x2 ) = ∑ x2 p( x) , for discrete X.
X

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Properties of Expected value and Variance:
The following are the important properties of an expected value of a random
variable:
(1)The expected value of a constant c is constant. That is, E(c) = c, for every
constant c.
(2) E (cx) = c E (x).
(3) The expected value of a linear function of a random variable is same as the
linear function of its expectation. That is, E(a + bx) = a + b E(x).
(4)The expected value of the product of two independent random variables is equal
to the product of their individual expected values. That is, E (xy) = E (x) E (y).
(5) The expected value of the sum of the two independent random variables is
equal to individual expected values. That is, E (x + y) = E (x) + E (y).
(6) The variance of the product of a constant and a random variable X is equal to
the constant squared times the variance of the random variable X. That is, Var (c x)
= c 2 Var (x).
(7)The variance of the sum (or difference) of two independent random variables
equals the sum of their individual variances. That is, Var (x ±y) = Var (x) ± Var (y).

Normal Distribution: It has been observed that most business and economic variables
generate continuous data whose behavior is often best described by a bell-shaped
continuous curve. Since this is what we normally come across in the case of most
populations on these variables, a bell-shaped curve has come to be universally known
as a normal curve. Accordingly, the probability distribution described by a normal curve
is called the normal (probability) distribution.
The concept of normal distribution was initially developed by Abraham De Moivre (1667-
1754). His work was further refined by Pierre S. Laplace (1749-1827). But the latter
contribution remained unnoticed for long till it was given concrete shape by Karl Gauss
(1777-1855). That is why the normal distribution is sometimes also referred to as the
Gaussian distribution.
The normal distribution has since come to acquire a wide range of applications in many
areas of human knowledge. It is being used in almost all data - based research in the field of
agriculture, trade, business, and industry.
As mentioned, the probability of a particular value of random variable cannot be
calculated and is always zero. Therefore the probability that a random variable value lies
in a given interval can be calculated by finding the area under the probability density
function and within the boundaries of that interval. The probability density function of a
normal distribution is given by
− 1 ( x− µ )2
f ( x) = 1 e 2σ 2 ; −∞ < x < +∞ (1) ,
σ 2π
where,
π = constant 3.1416, e =constant 2.7183, µ = mean of the normal distribution, σ =
standard deviation of normal distribution.
In symbols, if a random variable X follows normal distribution with mean µ and variance
σ 2 , then it is also expressed as: X : N (μ , σ2 ) .
Characteristics of Normal Distribution:
A unique normal distribution may be defined by assigning specific values to the
mean µ and standard deviation σ in the normal density function given in (1). Figure 3
shows three normal distributions with different values of the| mean µ and a fixed
standard deviation σ , while in Figure 4 normal distributions are shown with different
values of the standard deviation σ and a fixed mean µ .

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Fig 3: Normal Distributions with different mean values but fixed standard
deviation

σ 2 > σ1

Fig 4: Normal Distribution with fixed mean and variable standard deviation
From Figure 3 and 4 the following characteristics of a normal distribution may be
derived:
(1) For every pair of values of µ and σ , the curve of normal probability density is
bell shaped and symmetric.
(2) The normal curve is symmetrical around a vertical line erected at the mean
µ with respect to the area under it, that is, fifty per cent of the area of the curve
lies on both sides of the mean and reflect the mirror image of the shape of the
curve on both sides of the mean µ . This implies that the probability of any
individual outcome above or below the mean will be same. Thus, for any normal
random variable x,
P( x ≤ µ ) = P( x ≥ µ ) = 0.50
(3) Since the normal curve is symmetric, the mean, median, and mode for the
normal distribution are equal because the highest value of the probability
density function occurs when x = µ .
(4) The two tails of the normal curve extend to infinity in both directions and
theoretically never touch the horizontal axis.
(5) The mean of the normal distribution may be negative, zero, or positive.
(6) The mean µ determines the central location of the normal distribution, while
standard deviation σ determines its spread. The larger the value of the standard
deviation σ , the wider and flatter the normal curve, thus showing more
variability in the data, as shown in Figure 4. Thus deviation σ determines the
range of values that any random variable is likely to assume.
(7) The area under the normal curve represents probabilities for the normal
random variable, and therefore, the total area under the curve for the normal
probability distribution is 1.
Properties of the Normal distribution:
(1) If several independent random variables are normally distributed, then their
sum will also be normally distributed. The mean of the sum will be the sum of the
all the individual means, and by virtue of the independence, the variance of the
sum will be the sum of all the individual variances.
We can write this a algebraic form as

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If X1, X 2..., X n are independent random variables that are normally distributed,
then their sum S will also be normally distributed with
E  S  = E  X1  + E  X 2  + ... + E  X n  and V  S  = V  X1  +V  X 2  + ... +V  X n 
               
.
Example 4:Let X1, X 2 , and X 3 be independent random variables that are
normally distributed with means and variance as follows:
Mean Variance
X1 10 1
X2 20 2
X3 30 3

Find the distribution of the sum S = X1 + X2 + X3 . Report the mean, variance

and the standard deviation of S..
Solution: The sum S will be normally distributed with mean 10 + 20 + 30 = 60
and variance 1 + 2 + 3 = 6. The standard deviation of S = 6 = 2.45 .
Example 5:The weight of a module used in a spacecraft is to be closely
controlled. Since the module used a bolt-nut-washer assembly in numerous
places, a study was conducted to find the distribution of weights of these parts. It
was found that the three weights, in grams, are normally distributed with the
following means and variance
Mean Variance
Bolt 312.8 2.67
Nut 53.2 0.85
Washer 17.5 0.21

Find the distribution of the weight of the assembly. Report the mean, variance,
and standard deviation of the weight.
Solution: The weight of the assembly is the sum of the weights of the three
component parts, which are three normal random variables. Furthermore, the
individual weights are independent since the weight of any one-component part
does not influence the weight of the other two. Therefore, the weight of the
assembly will be normally distributed.
The mean weight of the assembly will be the sum of the mean weights of the
individual parts: 312.8 + 53.2 +17.5 = 383.5 grams.
The variance will be the sum of the individual variances: 2.67 + 0.85 + 0.21 =
3.73 gram
The standard deviation = 3.73 = 1.93 grams.
(2) Another interesting property of the normal distribution is that if X is normally
distributed, then a X + b will also be normally distributed with mean a E(X) + b
and variance a 2V X . ( )
For example, if X is normally distributed with mean 10 and variance 3, then 4X
+ 5 will be normally distributed with mean 4 × 10 + 5 = 45 and variance
42 × 3 = 48 .
(3) We can combine the above two properties and make the following statement:
If X1, X2..., Xn are independent random variables that are normally
distributed, then the random variable Q defined as
Q = a1X1 + a2X2 + ... + an Xn + b will also be normally distributed with

( ) ( ) ( )
E Q = a1E X1 + a2E X2 + ... + anE Xn + b ( )
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And V (Q ) = a12V ( X1) + a22V ( X2) + ... +an2V ( Xn ) .
Example 6:The four independent normal random variables X1, X 2 , X 3 and X 4
have the following means and variances:

X Mean Variance
X1 12 4
X2 -5 2
X3 8 5
X4 10 1

Find the mean and variance of Q = X1 − 2X2 + 3X3 − 4X 4 + 5 . Find also the
standard deviation of Q.
Solution:
( )
E Q = 12 − 2(−5) + 3(8) − 4(10) + 5 = 12 + 10 + 24 − 40 + 5 = 11.

2 2
V (Q ) = 4 + −2( ) ( 2) + 32 ( 5) + ( −4) (1) = 4 + 8 + 45 +16 =73.
( )
SD Q = 73 = 8.544.
Example 7: A cost accountant needs to forecast the unit cost of a product for
next year. He notes that each unit of the product requires 12 hours of labor and
5.8 pounds of raw material. In addition, each unit of the product is assigned an
overhead cost of $ 184.50. He estimates that the cost of an hour of labor next
year will be normally distributed with an expected value of $45.75 and standard
deviation of $1.80; the cost of the raw material will be normally distributed with
an expected value of $62.35 and a standard deviation of $2.52. Find the
distribution of the unit cost of the product. Report its expected value, variance
and standard deviation.
Solution: Let L be the cost of labor and M be the cost of the raw material.
Denote the unit cost of the product by Q. Then Q = 12L + 5.8M + 184.50.
Since the cost of labor L may not influence the cost of raw material M, we
can assume that the two are independent. This makes the unit cost of the
product Q a normal random variable. Then
( )
E Q = 12× 45.75 + 5.8 × 62.35 +184.50 = $1095.103.

V ( Q ) = 122 ×1.802 + 5.82 × 2.522 = 680.19.

SD ( Q ) = 6.80.19 = $26.08.
Standard Normal Distribution: The computation of P( x1 < X < x2 ) requires
that we either make use of integral calculus or construct separate probability
tables for each normal curve. But an efficient method of obtaining range
probabilities of the type stated above requires that the whole family of normal
curves is transformed into a standard normal curve. This facilitates construction
of a standard normal distribution, whatever be the values of µ and σ for
different normal distributions.
So deal with problems more simply, it is necessary to compute a value of Z by
applying the following formula corresponding to a particular value of the random
variable X. The variable Z is also called standardized normal random
variable.

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Thus any normal distribution with any set of µ and σ values can be translated
into a particular normal curve called standard normal distribution with mean
equal to zero and standard deviation equal to one.
x −µ
Here z= .
σ
x −µ
In the figure 5 it is given that z= = -3 ⇒ x − µ = −3σ ⇒ x = µ − 3σ .
σ
Similarly other x and z values are calculated.

Figure 5: Standard Normal Distribution

The standardized variate Z represents the number of standard deviations that an
x-value lies away from the mean of any normal distribution. For example z = ± 2
implies that the value x is 2 standard deviations above or below the mean.
Figure 5 shows the graph of the probability density function of z with mean zero
and standard deviation one. This curve is symmetric, bell- shaped and is
centered around the mean equal to zero has most of the area contained within
the range ± 3.
Table1: Area under the Normal Curve

x −µ Area under normal curve between x

z= and µ
σ
1.0 0.34134
2.0 0.47725
3.0 0.49875
4.0 0.49997

Since the normal distribution is symmetrical, Table 1 and figure 5 indicate that
about 68.26 per cent of the normal distribution lies within the range µ - σ to µ
+ σ . The other relationships derived from Table 1 are shown and in Figure 5.

Table 2: Percentage of the area of the normal distribution lying within the given
range

Number of standard deviations from Approximate percentage of area under

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 mean normal curve
x ±σ 68.26
x ± 2σ 95.45
x ± 3σ 99.75

Area under the Normal Curve: Since the range of normal distribution is
infinite in both the directions away from µ , the pdf function f (x) is never equal
to zero. As X moves away from µ , f (x) approaches x – axis but never actually
touches it.
The Normal Table: The following table is a table of cumulative areas under the
standard normal curve. This table is also called cumulative normal table or Z
table. The areas under the normal curve are given in the body of the table,
accurate to four decimal places.
Table: Cumulative Areas under the Standard Normal Curve
z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09
-3.4 .0003 .0003 .0003 .0003 .0003 .0003 .0003 .0003 .0003 .0002
-3.3 .0005 .0005 .0005 .0004 .0004 .0004 .0004 .0004 .0004 .0003
-3.2 .0007 .0007 .0006 .0006 .0006 .0006 .0006 .0005 .0005 .0005
-3.1 .0010 .0009 .0009 .0009 .0008 .0008 .0008 .0008 .0007 .0007
-3.0 .0013 .0013 .0013 .0012 .0012 .0011 .0011 .0011 .0010 .0010
-2.9 .0019 .0018 .0018 .0017 .0016 .0016 .0015 .0015 .0014 .0014
-2.8 .0026 .0025 .0024 .0023 .0023 .0022 .0021 .0021 .0020 .0019
-2.7 .0035 .0034 .0033 .0032 .0031 .0030 .0029 .0028 .0027 .0026
-2.6 .0047 .0045 .0044 .0043 .0041 .0040 .0039 .0038 .0037 .0036
-2.5 .0062 .0060 .0059 .0057 .0055 .0054 .0052 .0051 .0049 .0048
-2.4 .0082 .0080 .0078 .0075 .0073 .0071 .0069 .0068 .0066 .0064
-2.3 .0107 .0104 .0102 .0099 .0096 .0094 .0091 .0089 .0087 .0084
-2.2 .0139 .0136 .0132 .0129 .0125 .0122 .0119 .0116 .0113 .0110
-2.1 .0179 .0174 .0170 .0166 .0162 .0158 .0154 .0150 .0146 .0143
-2.0 .0228 .0222 .0217 .0212 .0207 .0202 .0197 .0192 .0188 .0183
-1.9 .0287 .0281 .0274 .0268 .0262 .0256 .0250 .0244 .0239 .0233
-1.8 .0359 .0351 .0344 .0336 .0329 .0322 .0314 .0307 .0301 .0294
-1.7 .0446 .0436 .0427 .0418 .0409 .0401 .0392 .0384 .0375 .0367
-1.6 .0548 .0537 .0526 .0516 .0505 .0495 .0485 .0475 .0465 .0455
-1.5 .0668 .0655 .0643 .0630 .0618 .0606 .0594 .0582 .0571 .0559
-1.4 .0808 .0793 .0778 .0764 .0749 .0735 .0721 .0708 .0694 .0681
-1.3 .0968 .0951 .0934 .0918 .0901 .0885 .0869 .0853 .0838 .0823
-1.2 .1151 .1131 .1112 .1093 .1075 .1056 .1038 .1020 .1003 .0985
-1.1 .1357 .1335 .1314 .1292 .1271 .1251 .1230 .1210 .1190 .1170
-1.0 .1587 .1562 .1539 .1515 .1492 .1469 .1446 .1423 .1401 .1379
-0.9 .1841 .1814 .1788 .1762 .1736 .1711 .1685 .4660 .1635 .1611
-0.8 .2119 .2090 .2061 .2033 .2005 .1977 .1949 .1922 .1894 .1867
-0.7 .2420 .2389 .2358 .2327 .2296 .2266 .2236 .2206 .2177 .2148
-0.6 .2743 .2709 .2676 .2643 .2611 .2578 .2546 .2514 .2483 .2451
-0.5 .3085 .3050 .3015 .2981 .2946 .2912 .2877 .2843 .2810 .2776
-0.4 .3446 .3409 .3372 .3336 .3300 .3264 .3228 .3192 .3156 .3121
-0.3 .3821 .3783 .3745 .3707 .3669 .3632 .3594 .3557 .3520 .3483
-0.2 .4207 .4168 .4129 .4090 .4052 .4013 .3974 .3936 .3897 .3859
-0.1 .4602 .4562 .4522 .4483 .4443 .4404 .4364 .4325 .4286 .4247
-0.0 .5000 .4960 .4920 .4880 .4840 .4801 .4761 .4721 .4681 .4641
0.0 .5000 .5040 .5080 .5120 .5160 .5199 .5239 .5279 .5319 .5359
0.1 .5398 .5438 .5478 .5517 .5557 .5596 .5636 .5675 .5714 .5753
0.2 .5793 .5832 .5871 .5910 .5948 .5987 .6026 .6064 .6103 .6141
0.3 .6179 .6217 .6255 .6293 .6331 .6368 .6406 .6443 .6480 .6517
0.4 .6554 .6591 .6628 .6664 .6700 .6736 .6772 .6808 .6844 .6879
0.5 .6915 .6950 .6985 .7019 .7054 .7088 .7123 .7157 .7190 .7224
0.6 .7257 .7291 .7324 .7357 .7389 .7422 .7454 .7486 .7517 .7549
0.7 .7580 .7611 .7642 .7673 .7704 .7734 .7764 .7794 .7823 .7852
0.8 .7881 .7910 .7939 .7967 .7995 .8023 .8051 .8078 .8106 .8133

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0.9 .8159 .8186 .8212 .8238 .8264 .8289 .8315 .8340 .8365 .8389
1.0 .8413 .8438 .8461 .8485 .8508 .8531 .8554 .8577 .8599 .8621
1.1 .8643 .8665 .8686 .8708 .8729 .8749 .8770 .8790 .8810 .8830
1.2 .8849 .8869 .8888 .8907 .8925 .8944 .8962 .8980 .8997 .9015
1.3 .9032 .9049 .9066 .9082 .9099 .9115 .9131 .9147 .9162 .9177
1.4 .9192 .9207 .9222 .9236 .9251 .9265 .9279 .9292 .9306 .9319
1.5 .9332 .9345 .9357 .9370 .9382 .9394 .9406 .9418 .9429 ° z
.9441
1.6 .9452 .9463 .9474 .9484 .9495 .9505 .9515 .9525 .9535 .9545
1.7 .9554 .9564 .9573 .9582 .9591 .9599 .9608 .9616 .9625 .9633
1.8 .9641 .9649 .9656 .9664 .9671 .9678 .9686 .9693 .9699 .9706
1.9 .9713 .9719 .9726 .9732 .9738 .9744 .9750 .9756 .9761 .9767
2.0 .9772 .9778 .9783 .9788 .9793 .9798 .9803 .9808 .9812 .9817
2.1 .9821 .9826 .9830 .9834 .9838 .9842 .9846 .9850 .9854 .9857
2.2 .9861 .9864 .9868 .9871 .9875 .9878 .9881 .9884 .9887 .9890
2.3 .9893 .9896 .9898 .9901 .9904 .9906 .9909 .9911 .9913 .9916
2.4 .9918 .9920 .9922 .9925 .9927 .9929 .9931 .9932 .9934 .9936
2.5 .9938 .9940 .9941 .9943 .9945 .9946 .9948 . .9951 .9952
2.6 .9953 .9955 .9956 .9957 .9959 .9960 .9961 . .9963 .9964
2.7 .9965 .9966 .9967 .9968 .9969 .9970 .9971 . .9973 .9974
2.8 .9974 .9975 .9976 .9977 .9977 .9978 .9979 . .9980 .9981
2.9 .9981 .9982 .9982 .9983 .9984 .9984 .9985 . .9986 .9986
3.0 .9987 .9987 .9987 .9988 .9988 .9989 .9989 . .9990 .9990
3.1 .9990 .9991 .9991 .9991 .9992 .9992 .9992 . .9993 .9993
3.2 .9993 .9993 .9994 .9994 .9994 .9994 .9994 . .9995 .9995
3.3 .9995 .9995 .9995 .9996 .9996 .9996 .9996 . .9996 .9997
3.4 .9997 .9997 .9997 .9997 .9997 .9997 .9997 . .9997 .9998

0
-Z-

For Negative Values of Z

11
How to find probabilities:
As an example, suppose that we wish to find the area under the standard normal
curve at or below a z value of 1.00. This area is illustrated in Figure 6. To find this area,
we scan down the far left column of the table (starting at the top) until we find the
value 1.0. We now scan across the row in the table corresponding to the z value 1.0
until we find the column corresponding to the heading 0.00. The desired area (which
we have shaded blue) is in the row corresponding to the z value 1.0 and in the column
headed .00. This area, which equals 0.8413, is the probability that the random
variable z is less than or equal to 1.00. That is, we have found that P (z ≤ 1.00) =
0.8413. As another example, the area under the standard normal curve at or below the
z value 2.53 is found in the row corresponding to 2.5 and in the column corresponding
to 0.03. We find that this area is 0.9943—that is,
P(z ≤ 2.53) =0.9943.
We now show how to use the cumulative normal table to find several other kinds of
normal curve areas. First, suppose that we wish to find the area under the standard
normal curve at or above a z value of 2—that is, we wish to find P(z ≥ 2). This area is
illustrated in Figure 7 and is called a right-hand tail area. Since the total area under
the normal curve equals 1, the area under the curve at or above 2 equals 1 minus the
area under the curve at or below 2. That is, we find that P (z ≤ 2) = 1 - P(z ≤ 2) = 1
- 0.9772 =0 .0228.
Next, suppose that we wish to find the area under the standard normal curve at or
below a z value of — 1. That is, we wish to find P (z ≤ -1). This area is is called a
left-hand tail area. The needed area is found in the row of the cumulative normal
table corresponding to -1 and in the column headed by .00. We find that P (z ≤ — 1)
= 0.1587. Notice that the area under the standard normal curve at or below — 1 is
equal to the area under this curve at or above 1. This is true because of the
symmetry of the normal curve. Therefore, P (z ≥ 1) = 0.1587.
Finally, suppose that we wish to find the area under the standard normal curve
between the z values of — 1 and 1. we can see that this area equals the area under the
curve at or below 1 minus the area under the curve at or below -1. Referring to Table
5.3, we see that P(-l ≤ z ≤ 1) = P(z ≤ 1) - P(z ≤ -1) = 0.8413 - 0.1587 = 0.6826.

P (z ≤ 1) =0.8413

12
 Figure 6: Finding P (z ≤ 1)
0.9772

Figure 7: Finding P (z ≥ 2)

The table of areas gives the proportion of the area under the curve, which lies
between the vertical lines, erected at two points along the x-axis. A portion of
the table is shown in Table 1. For example, as shown in Figure 5, if x is σ away
from µ , that is, the distance between x and µ is one standard deviation or
x −µ µ.
=1, then 34.134 per cent of the distribution lies between x and
σ
µ, x −µ
Similarly, if x is at 2 σ away from that is, = 2, then the area will
σ
include 47.725 per cent of the distribution, and so on, as shown in Table 1.
The standard normal distribution is a symmetrical distribution and therefore
P (0 ≤ z ≤ a) = P (−a ≤ z ≤ 0) for any value a.
P (1 ≤ z ≤ 2) = P (z ≤ 2) − P (z ≤ 1) = 0.9772 − 0.8413 = 0.1359 , which is also shown
in Figure 5.

Illustration: Let us consider our random variable X with mean 50 and S.D. 10
i.e. X : N (50,100). Suppose we want to find the probability that X is greater than
60, i.e. we want to find P (X>60). We cannot evaluate this probability directly,
but we can transform x to Z and then we will be able to find the probability
directly from the normal table. As stated the required transformation is
X −µ
Z = . Hence
σ
X − µ 60 − µ 60 − 50
P (X > 60) = P ( > ) = P (Z > ) = P (Z > 1).
σ σ 10
P (X > 60) = P (Z > 1) = 0.5000 − 0.3413 = 0.1587.
Example 8: Suppose that the time it takes the electronic device in the car to
respond to the signal from the toll plaza is normally distributed with mean 160
microseconds and S.D. 30 microseconds. What is the probability that device in
the car will respond to a given signal within 100 to 180 microseconds?

13
Solution: Let X denote the time to take. Then we can write X : N (160,302). Our
required probability is
100 − µ X − µ 180 − µ 100 − 160 180 − 160
P (100 < X < 180) = P ( < < ) = P( <Z < )
σ σ σ 30 30
= P (−2 < Z < 0.6666) = 0.4772 + 0.2475 = 0.7247.
Example 9: Fluctuations in the prices of precious metals such as gold have been
empirically shown to be well approximated by a normal distribution when
observed over short intervals of time. In May 1995, the daily price of gold (1 troy
ounce, where one troy ounce = 31.10 grams and 3.75 troy ounces = 10 tolas)
was believed to have a mean of $383 and a S.D. of $12. A broker, working under
these assumptions, wanted to find the probability that the price of gold the next
day would be between $394 and $399 per troy ounce. In this eventuality, the
broker had an order from a client to sell the gold in the client’s portfolio. What is
the probability that the client’s gold will be sold the next day?
Solution: Let X denote the price of gold. Then X : N (383,122). Then the
required probability is
394 − µ X − µ 399 − µ 394 − 383 399 − 383
P (394 < X < 399) = P ( < < ) = P( <Z < )
σ σ σ 12 12
= P (0.9166 < Z < 1.3333) = 0.4088 − 0.3203 = 0.0885.

Example 10: 1000 light bulbs with a mean life of 120 days are installed in a new
factory and their length of life is normally distributed with standard deviation of
20 days.
(a) How many bulbs will expire in less than 90 days?
(b) If it is decided to replace all the bulbs together, what interval should be
allowed between replacements if not more than 10% should expire before
replacement.

Solution: (a) For µ =120, σ =20, and x = 90, z = x − µ =

90 − 120
= −1.5 .
σ 20
The area under the curve between z = 0 and z = - 1.5 is 0.4332 ( found from the
normal table). Therefore area to the left of – 1.5 is 0.5 – 0.4332 = 0.0668. Thus
the expected number of bulbs to expire in less than 90 days will be 0.0668 ×
1000=67 (approx).
(b) The value of Z corresponding to an area 0.4 (0.5 – 0.10), under the normal
x −µ
curve is 1.28. Therefore, z= =
σ
x − 120
= −1.28 ⇒ x = 120 − 20 × −1.28 = 94.
20
Hence, the bulbs will have to be replaced after 94 days.
Example 11: In a certain examination, the percentage of passes and distinctions
are 46 and 9 respectively. (i) Estimate the average marks obtained by the
candidates, (ii) the minimum pass and distinction marks being 40 and 75
respectively (assume the distribution of marks to be normal). (iii) Also determine
what would have been the minimum qualifying marks for admission to a re-
examination of the failed candidates, had it been desired that the best 25 per
cent of them should be given another opportunity of being examined.
Solution: (i) Let X be the marks scored by the candidates. The area to the right
of the ordinate at x = 40 is 0.46 and hence the area between the mean and the
ordinate at x = 40 is 0.04.
Now from the normal table, corresponding to 0.04, the standard normal variate,
z = 0.1. Therefore, we have

14
40 − µ
= 0.1 ⇒ 40 − µ = 0.1σ .
σ
75 − µ
Similarly, = 1.34 ⇒ 75 − µ = 1.34σ .
σ
Solving these two equations, we get σ = 28.23 and µ = 37.18 ≈ 37.
Hence, the average marks obtained by the students = 37.
(ii) Let us assume that y is the minimum qualifying marks for re-examination of
the failed candidates.
The area to the right of x = 40 is 46 percent. Thus the percentage of students
failing = 54 and this is the area to the left of 40. We want that the best 25 per
cent of these failed candidates should be given a chance to reappear. Suppose
thus area is equal to the shaded area in the diagram. This area is, 25 per cent of
54 = 13.5 per cent = 0.1350.
The area between mean and ordinate at y = - (0.1350 – 0.04) = -0.0950
(negative sign is included because the area lies to the left of the mean
ordinates).
Corresponding to this area, the standard normal variate z = -0.0378. Thus, we
write
y −µ
= −0.0378 ⇒ y = µ − 0.0378σ = 37.2 − 0.0378× 28.23 = 36.133 ≈ 36.
σ
Therefore, the minimum qualifying marks = 36.
Example 12: The income of a group of 10000 persons was found to be normally
distributed with mean Taka 1750 and S.D. Taka 50. Show that of this group 95%
had income exceeding Taka 1668 and only 5 per cent had income exceeding
Taka 1832. What was the lowest income among the richest 100?
Solution: (a) Given that x = 1668, µ = 1750 and σ = 50. Therefore, the standard
x − µ 1668 − 1750
normal variate corresponding to x = 1668, is z = = = −1.64.
σ 50
The area to the right of the ordinate at z = - 1.64 ( or x = 1668) is (0.4495 +
0.5000) = 0.9495 ( because z = - 1.64 to its right covers 95 per cent area).
The expected number variate corresponding to x = 1832 is
1832 − 1750
z= = 1.64.
50
The area to the right of ordinate at Z = 1.64 is : 0.5000 – 0.4495 = 0.0505.
The expected number of persons getting above Taka 1832 is:
10000 × 0.0505 = 505. This is about 5 per cent of the total of 10000 persons.
100
This probability of getting richest 100 out of 10000 is = 0.01.
10000
The standard normal variate having 0.01 area to its right is, Z = 2.33. Hence,
x − 1750
2.33 = ⇒ x = 2.33 × 50 + 1750 = Taka 1866 (Approx).
50
This implies that the lowest among the richest 100 is getting Taka 1866 per
month.

Uniform Distribution: The uniform distribution is the simplest of continuous

distributions. The probability density function is
1
f (x ) = ; a ≤ x ≤ b. Where a is the minimum possible value and b is the
b −a
maximum possible value of X. The graph of f (x) is shown in the following figure.

f (x)

15
 0 a b X
Because the curve of f (x) is flat line, the area under it between any two points
x and x , where a ≤ x ≤ x ≤ b , will be rectangle with height 1
1 2 1 2 and
b −a
x − x1
width ( x2 - x1). Thus P (x1 ≤ X ≤ x2 ) = 2 . If X is uniformly distributed
b −a
between a and b, we shall write X : U (a , b ) .
a +b
The mean of the distribution is the midpoint between a and b which is and
2
(b − a)2
variance of the distribution is .
12
A common instance of uniform distribution is waiting time for a facility that goes
in cycles. Two good examples are a shuttle bus and an elevator, which move,
roughly, in cycles with some cycle time. If a user comes to a stop at a random
time and waits till the facility arrives, the waiting time will be uniformly
distributed between a minimum of zero and a maximum equal to the cycle time.
In other words, if a shuttle bus has a cycle time of 20 minutes, the waiting time
would be uniformly distributed between 0 and 20 minutes.

The Exponential Distribution: This distribution is closely related with the

Poisson distribution. For example, if the Poisson random variable represents the
number of arrivals per unit time at a service window, the exponential random
variable will represent the time between two successive arrivals. Suppose that
the number of times that a particular event occurs over an interval of time or
space has a Poisson distribution. Furthermore, consider an arbitrary time or
space unit ( for example, minute, week, inch, square or the like) and let x denote
the number of time or space units between successive occurrences of the event.
Then x is described by an exponential distribution having parameter λ , where λ
is the mean number of events that occur per time or space unit.
When X is exponentially distributed with frequency λ , we shall write X : E (λ ).
The probability density function f(x) has the form
f (x ) = λe −λ x , where λ is the frequency with which the event occurs.
1
The mean and variance of x that has an exponential distribution are µ = and
λ
1
σ2 = .
λ
Example 13: Suppose that the number of people who arrive at a hospital
emergency room during a given time period has a Poisson distribution. It follows
that the time x, between successive arrivals of people to the emergency room
has an exponential distribution. Furthermore, historical records indicate that the
mean time between successive arrivals of people to the emergency room is

16
 1
seven minutes. Therefore µ = =7 which implies that λ = 0.14286.
λ
Example 14: A particular brand of handheld computers fails following an
exponential distribution with a µ of 54.82 months. The company gives a
warranty for 6 months.
(i) What percentage of the computers will fail within the warranty period?
(ii) If the manufacturer wants only 8% of the computers to fail during the
warranty period, what should be the average life?
Solution: (i) Here λ = 0.0182. (i) P (x ≤ 6) = 0.1037 . Thus, 10.37% of the
computers will fail within the warranty period.
(ii) Here λ = 0.0139, for which µ value is 71.96 months. Therefore, the average
life of the computers must be 71.96 months.
The density curve corresponding to any normal distribution is bell-shaped and
therefore symmetric. There are many practical situations in which the variable of
interest to an investigator might have a skewed distribution. One such
distribution is exponential distribution. This is also a continuous distribution. This
distribution is widely used in engineering and science disciplines.
This distribution is closely related with the Poisson distribution. For example, if
the Poisson random variable represents the number of arrivals per unit time at a
service window, the exponential random variable will represent the time
between two successive arrivals. Suppose that the number of times that a
particular event occurs over an interval of time or space has a Poisson
distribution. Furthermore, consider an arbitrary time or space unit (for example,
minute, week, inch, square or the like) and let x denote the number of time or
space units between successive occurrences of the event. Then x is described by
an exponential distribution having parameter λ , where λ is the mean number of
events that occur per time or space unit.
When X is exponentially distributed with frequency λ , we shall write X : E (λ ).
The probability density function f(x) has the form
 −λ x ;
f (x ) =  λe x ≥ 0, λ > 0
, (1)
 0 ; otherwise
Where λ is the frequency with which the event occurs. Here the parameter λ is
a real, positive constant.
Some sources write the exponential distribution in the form
1 −x / β 1
f (x ) = e , so that β = . (2)
β λ
1
The mean and variance of x that has an exponential distribution are µ = and
λ
1
σ2 = .
λ2
Example 13: Suppose that the number of people who arrive at a hospital
emergency room during a given time period has a Poisson distribution. It follows
that the time x, between successive arrivals of people to the emergency room
has an exponential distribution. Furthermore, a historical records indicate that
the mean time between successive arrivals of people to the emergency room is
1
seven minutes. Therefore µ = =7 which implies that λ = 0.14286.
λ
Example 14: A particular brand of handheld computers fails following an
exponential distribution with a µ of 54.82 months. The company gives a
warranty for 6 months.
(i) What percentage of the computers will fail within the warranty period?
(ii) If the manufacturer wants only 8% of the computers to fail during the

17
warranty period, what should be the average life?
Solution: (i) Here λ = 0.0182. (i) P (x ≤ 6) = 0.1037 . Thus, 10.37% of the
computers will fail within the warranty period.
(ii) Here λ = 0.0139, for which µ value is 71.96 months. Therefore, the average
life of the computers must be 71.96 months.
Example: The average time needed to send an e-mail from a cyber café is 5
minutes. Find the probability that an e-mail will be sent (i) after 10 minutes (ii)
by 10 minutes (iii) Within 5 to 10 minutes.
If a man is in queue for 25 minutes, what is the probability that he will be able to
send e-mail by 30 minutes?
Solution: let X be the time needed to send an e-mail. It is given that
1
E (X ) = β = = 5.
λ
1 −x / β
Here f (x ) = e ,x>0.
β
∞
(i ) P ( X > x ) = ∫ f (x )dx
x
∞
1 −x / 5
∴ P (X > 10) = ∫ 5e dx = e −10/ 5 = 0.1353.
10
10 10
1 −x / 5 −
(ii) P (X < 10) = ∫0 5 e dx = 1 − e 5 = 0.8647.
10 5 10
1 −x / 5 − −
(iii) P (5 < X < 10) = ∫ e dx = e − e 5 = 0.2326.
5

5
5
In the last example, the person is in queue for 25 minutes that is not the time to
send mail. Therefore, mail will be sent by (30 – 25) = 5 minutes.
5
−
P (X < 5) = 1 − e 5 = 0.63212.

18