The Binomial Distribution

 Introduction and Concept

 Characteristics
 Binomial Formula
 Applications
 Binomial Tables
 Applications
Random Variables

A random variable is a numerical description of the

outcome of an experiment.

A discrete random variable may assume either a

finite number of values or an infinite sequence of
values.

A continuous random variable may assume any

numerical value in an interval or collection of
intervals.
 Example: JSL Appliances

 Discrete random variable with a finite number of values

Let x = number of TVs sold at the store in one day,

where x can take on 5 values (0, 1, 2, 3, 4)
 Example: JSL Appliances

 Discrete random variable with an infinite sequence

of values

Let x = number of customers arriving in one day,

where x can take on the values 0, 1, 2, . . .

We can count the customers arriving, but there is no

finite upper limit on the number that might arrive.
 Random Variables

Question Random Variable x Type

Family x = Number of dependents Discrete
size reported on tax return

Distance from x = Distance in miles from Continuous

home to store home to the store site
Own dog x = 1 if own no pet; Discrete
or cat = 2 if own dog(s) only;
= 3 if own cat(s) only;
= 4 if own dog(s) and cat(s)
Discrete Probability Distributions

The probability distribution for a random variable

describes how probabilities are distributed over
the values of the random variable.

We can describe a discrete probability distribution

with a table, graph, or equation.
Discrete Probability Distributions

The probability distribution is defined by a

probability function, denoted by f(x), which provides
the probability for each value of the random variable.

The required conditions for a discrete probability

function are:
f(x) > 0

f ( x) = 1
Discrete Probability Distributions

 Using past data on TV sales, …

 a tabular representation of the probability
distribution for TV sales was developed.

Number 80/200
Units Sold of Days x f ( x)
0 80 0 .40
1 50 1 .25
2 40 2 .20
3 10 3 .05
4 20 4 .10
200 1.00
Discrete Probability Distributions

 Graphical Representation of Probability Distribution

.50
.40
Probability

.30
.20
.10

0 1 2 3 4
Values of Random Variable x (TV sales)
Discrete Uniform Probability Distribution

The discrete uniform probability distribution is the

simplest example of a discrete probability
distribution given by a formula.

The discrete uniform probability function is

the values of the
f(x) = 1/n random variable
are equally likely
where:
n = the number of values the random
variable may assume
Expected Value and Variance
The expected value, or mean, of a random variable
is a measure of its central location.
E(x) =  = xf(x)

The variance summarizes the variability in the

values of a random variable.

Var(x) = 2 = (x - )2f(x)

The standard deviation, , is defined as the positive

square root of the variance.
Expected Value and Variance
 Expected Value
x f(x) xf(x)
0 .40 .00
1 .25 .25
2 .20 .40
3 .05 .15
4 .10 .40
E(x) = 1.20

expected number of
TVs sold in a day
Expected Value and Variance
 Variance and Standard Deviation

x x- (x - )2 f(x) (x - )2f(x)

0 -1.2 1.44 .40 .576

1 -0.2 0.04 .25 .010
2 0.8 0.64 .20 .128
3 1.8 3.24 .05 .162
4 2.8 7.84 .10 .784 TVs
squared
Variance of daily sales = 2 = 1.660
Standard deviation of daily sales = 1.2884 TVs
 Introduction and Concept

 Based on Bernoulli Process.

 Is a discrete-time stochastic process consisting of a sequence of

independent random variables taking values over two symbols

 We are not dealing with samples but with population values so dealing with
parameters.

 Consider tossing a coin twice. The possible outcomes are:

no heads: P (m = 0) = q2
one head: P (m = 1) = qp + pq
(toss 1 is a tail, toss 2 is a head or toss 1 is head, toss 2 is a tail) = 2pq
two heads: P(m = 2) = p2
Now recalling square of Binomial (p + q) is equal to the same as if added
above.
 Characteristics
 Experiment consist of n identical trials

 Each trial has only two outcomes

 The probability of one outcome is p and the other is q=1-p

 The probability stays the same from one trail to the next.

 The trials are statistically independent

 We are interested in r, the number of success observed during

the n trials.
 Binomial Formula
 Binomial distribution: the probability of r success out of N trials

N!
P(r , N , p)  C N ,r p r q N  r  rN p r q N  r  p r q N r
r!( N  r )!

0.40 0.14
Expectation Value
Expectation Value 0.12  = np = 50 * 1/3 = 16.667...
0.30  = np = 7 * 1/3 = 2.333...
0.10

P (k , 50, 1/3)
P (k , 7, 1/3)

0.08
0.20
0.06

0.04
0.10
0.02

0.00 0.00
0 2 4 6 8 10 0 5 10 15 20 25 30
k k
Binomial Distribution

 Binomial Probability Function

n!
f (x)  p x (1  p )( n  x )
x !(n  x )!

where:
f(x) = the probability of x successes in n trials
n = the number of trials
p = the probability of success on any one trial
 Binomial Formulas

Mean

  N N m N m 
 m p q
p m  0   0
N
m
m0
 p
N
m
m 1 N  m
q  
N

m0
 p
N
m
m
( N  m)(1  p ) N  m 1  0
N
p 1  m
m 0
 p
N
m
m N m
q  N (1  p) 1 
m 0
N
 p
N
m
m
N
(1  p ) N  m  (1  p) 1  m
m0
 p
N
m
m
(1  p ) N  m

p 1  N (1  p ) 1  1  (1  p ) 1 
  Np
Standard Deviation
N
2
 (m   ) P(m, N, p)
2  m0
N
 Npq
 P(m, N, p)
m0
Binomial Distribution

 Binomial Probability Function

n!
f (x)  p x (1  p)( n  x )
x !(n  x )!

Probability of a particular
Number of experimental sequence of trial outcomes
outcomes providing exactly with x successes in n trials
x successes in n trials
Binomial Distribution

 Example: Evans Electronics

Evans is concerned about a low retention rate
for employees. In recent years, management has seen
a turnover of 10% of the hourly employees annually.
Thus, for any hourly employee chosen at random,
management estimates a probability of 0.1 that the
person will not be with the company next year.
Binomial Distribution

 Using the Binomial Probability Function

Choosing 3 hourly employees at random, what
is the probability that 1 of them will leave the
company this year?

Let: p = .10, n = 3, x = 1
n!
f ( x)  p x (1  p ) (n  x )
x !( n  x )!
3!
f (1)  (0.1)1 (0.9)2  3(.1)(.81)  .243
1!(3  1)!
Binomial Distribution
 Tree Diagram
1st Worker 2nd Worker 3rd Worker x Prob.
L (.1) 3 .0010
Leaves (.1)
S (.9) 2 .0090
Leaves
(.1) L (.1) 2 .0090
Stays (.9)
S (.9) 1 .0810
L (.1) 2 .0090
Leaves (.1)
Stays S (.9) 1 .0810
(.9) L (.1)
1 .0810
Stays (.9)
S (.9) 0 .7290
Binomial Distribution

 Using Tables of Binomial Probabilities

p
n x .05 .10 .15 .20 .25 .30 .35 .40 .45 .50
3 0 .8574 .7290 .6141 .5120 .4219 .3430 .2746 .2160 .1664 .1250
1 .1354 .2430 .3251 .3840 .4219 .4410 .4436 .4320 .4084 .3750
2 .0071 .0270 .0574 .0960 .1406 .1890 .2389 .2880 .3341 .3750
3 .0001 .0010 .0034 .0080 .0156 .0270 .0429 .0640 .0911 .1250
Binomial Distribution
 Expected Value

E(x) =  = np

 Variance
Var(x) = 2 = np(1  p)

 Standard Deviation

  np(1  p )
Binomial Distribution
 Expected Value

E(x) =  = 3(.1) = .3 employees out of 3

 Variance

Var(x) = 2 = 3(.1)(.9) = .27

 Standard Deviation

  3(.1)(.9)  .52 employees

 Applications

 A committee consisting of 5 members votes on

whether or not to hire a new manager. The
probability that each member’s vote for
candidate A is 0.6. Only if over half of the
committee agrees to hire her does candidate A
receive the offer.
 1) What is the probability that the candidate A
gets an offer.
 2) What is the probability that the candidate A
does not get the offer
Answer
 Selected = 0.3456+ 0.2592+ 0.0778
=0.6826
 Not Selected = 1-0.6826 = 0.3174
 Binomial Tables
 Binomial Tables are used to same time
 Binomial Tables ..\Binom_Tab.pdf
 Applications

 A committee consisting of 5 members votes on

whether or not to hire a new professor. The
probability that each member’s vote for
candidate A is 0.6. Only if over half of the
committee agrees to hire her does candidate A
receive the offer.
 1) What is the probability that the candidate A
gets an offer. (Hint: 0.6=0.4)
 2) What is the probability that the candidate A
does not get the offer
Poisson Distribution

A Poisson distributed random variable is often

useful in estimating the number of occurrences
over a specified interval of time or space

It is a discrete random variable that may assume

an infinite sequence of values (x = 0, 1, 2, . . . ).
Poisson Distribution

Examples of a Poisson distributed random variable:

the number of knotholes in 14 linear feet of

pine board

the number of vehicles arriving at a toll

booth in one hour
Poisson Distribution

 Two Properties of a Poisson Experiment

1. The probability of an occurrence is the same
for any two intervals of equal length.

2. The occurrence or nonoccurrence in any

interval is independent of the occurrence or
nonoccurrence in any other interval.
Poisson Distribution
 Poisson Probability Function
 x e
f ( x) 
x!
where:
f(x) = probability of x occurrences in an interval
 = mean number of occurrences in an interval
e = 2.71828
Poisson Distribution
 Example: Mercy Hospital
Patients arrive at the emergency room of Mercy
Hospital at the average rate of 6 per hour on
weekend
evenings.
What is the probability of 4 arrivals in 30
minutes on a weekend evening?
Poisson Distribution

 Using the Poisson Probability Function

 = 6/hour = 3/half-hour, x = 4
34 (2.71828)3
f (4)   .1680
4!
Poisson Distribution

 Poisson Distribution of Arrivals

Poisson Probabilities
0.25

0.20
Probability

0.15 actually,
the sequence
0.10 continues:
11, 12, …
0.05

0.00
0 1 2 3 4 5 6 7 8 9 10
Number of Arrivals in 30 Minutes
Poisson Distribution

A property of the Poisson distribution is that

the mean and variance are equal.

  = 2
Poisson Distribution

 Variance for Number of Arrivals

During 30-Minute Periods

=2=3
Example
Arrivals at a bus-stop follow a
Poisson distribution with an average
of 4.5 every quarter of an hour.
Obtain a barplot of the distribution
(assume a maximum of 20 arrivals in
a quarter of an hour) and calculate
the probability of fewer than 3 arrivals
in a quarter of an hour.
The probabilities of 0 up to 2 arrivals can
be calculated directly from the formula
 x
e  with  =4.5
p( x ) 
x!
4.5 0
e 4.5
p(0)  So p(0) = 0.01111
0!
Similarly p(1)=0.04999 and p(2)=0.11248

So the probability of fewer than 3 arrivals

is 0.01111+ 0.04999 + 0.11248 =0.17358
 Continuous Probability Distributions
 Uniform Probability Distribution
 Normal Probability Distribution
 Normal Approximation of Binomial Probabilities
 Exponential Probability Distribution

f (x) Exponential
Uniform
f (x)
Normal
f (x )

x
x

x
Continuous Probability Distributions
 A continuous random variable can assume any value
in an interval on the real line or in a collection of
intervals.
 It is not possible to talk about the probability of the
random variable assuming a particular value.
 Instead, we talk about the probability of the random
variable assuming a value within a given interval.
 Continuous Probability Distributions

 The probability of the random variable assuming a

value within some given interval from x1 to x2 is
defined to be the area under the graph of the
probability density function between x1 and x2.
f (x) Exponential
Uniform
f (x)
Normal
f (x )

x
x x1 xx12 x2
x1 x2
x
x1 x2
Uniform Probability
Distribution
 A random variable is uniformly distributed
whenever the probability is proportional to the
interval’s length.
 The uniform probability density function is:

f (x) = 1/(b – a) for a < x < b

=0 elsewhere

where: a = smallest value the variable can assume

b = largest value the variable can assume
Uniform Probability
Distribution
 Expected Value of x

E(x) = (a + b)/2

 Variance of x

Var(x) = (b - a)2/12
Uniform Probability
Distribution
 Example: Slater's Buffet
Slater customers are charged for the amount
of
salad they take. Sampling suggests that the amount
of salad taken is uniformly distributed between 5
ounces and 15 ounces.
Uniform Probability Distribution

 Uniform Probability Density Function

f(x) = 1/10 for 5 < x < 15

=0 elsewhere

where:
x = salad plate filling weight
Uniform Probability Distribution

 Expected Value of x

E(x) = (a + b)/2
= (5 + 15)/2
= 10

 Variance of x

Var(x) = (b - a)2/12
= (15 – 5)2/12
= 8.33
Uniform Probability
Distribution
 Uniform Probability Distribution
for Salad Plate Filling Weight
f(x)

1/10

x
5 10 15
Salad Weight (oz.)
Uniform Probability Distribution

What is the probability that a customer

will take between 12 and 15 ounces of salad?

f(x)

P(12 < x < 15) = (1/10)(3) = .3

1/10

x
5 10 12 15
Salad Weight (oz.)
Normal Probability Distribution
 The normal probability distribution is the most
important distribution for describing a continuous
random variable.
 It is widely used in statistical inference.
 It has been used in a wide variety of applications:
• Heights of people
• Scientific measurements
• Test scores
• Amounts of rainfall
Normal Probability Distribution
 Normal Probability Density Function
1  ( x   )2 /2 2
f (x)  e
 2

where:
 = mean
 = standard deviation
 = 3.14159
e = 2.71828
Normal Probability Distribution

 Characteristics

The distribution is symmetric; its skewness

measure is zero.

x
Normal Probability Distribution

 Characteristics

The entire family of normal probability

distributions is defined by its mean  and its
standard deviation  .

Standard Deviation 

x
Mean 
Normal Probability Distribution

 Characteristics

The highest point on the normal curve is at the

mean, which is also the median and mode.

x
Normal Probability Distribution

 Characteristics

The mean can be any numerical value: negative,

zero, or positive.

x
-10 0 20
Normal Probability Distribution

 Characteristics

The standard deviation determines the width of the

curve: larger values result in wider, flatter curves.

 = 15

 = 25

x
Normal Probability Distribution

 Characteristics
Probabilities for the normal random variable are
given by areas under the curve. The total area
under the curve is 1 (.5 to the left of the mean and
.5 to the right).

.5 .5
x
Normal Probability Distribution

 Characteristics

68.26% of values of a normal random variable

are within +/- 1 standard deviation of its mean.

95.44% of values of a normal random variable

are within +/- 2 standard deviations of its mean.

99.72% of values of a normal random variable

are within +/- 3 standard deviations of its mean.
Normal Probability Distribution

 Characteristics
99.72%
95.44%
68.26%

 x
 – 3  – 1  + 1  + 3
 – 2  + 2
Standard Normal Probability Distribution

A random variable having a normal distribution

with a mean of 0 and a standard deviation of 1 is
said to have a standard normal probability
distribution.
Standard Normal Probability Distribution

The letter z is used to designate the standard

normal random variable.



z
0
Standard Normal Probability Distribution

 Converting to the Standard Normal Distribution

x
z


We can think of z as a measure of the number of

standard deviations x is from .
Standard Normal Probability Distribution
 Example: Pep Zone
Pep Zone sells auto parts and supplies
including
a popular multi-grade motor oil. When the stock of
this oil drops to 20 gallons, a replenishment order is
placed.
Standard Normal Probability Distribution

 Example: Pep Zone

The store manager is concerned that sales are being
lost due to stockouts while waiting for an order. It ha
been determined that demand during replenishment
lead-time is normally distributed with a mean of 15
gallons and a standard deviation of 6 gallons.
The manager would like to know the probability
of
a stockout, P(x > 20).
Standard Normal Probability Distribution

 Solving for the Stockout Probability

Step 1: Convert x to the standard normal distribution.

z = (x - )/
= (20 - 15)/6
= .83

Step 2: Find the area under the standard normal

curve to the left of z = .83.

see next slide

Standard Normal Probability Distribution

 Cumulative Probability Table for

the Standard Normal Distribution
z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09
. . . . . . . . . . .
.5 .6915 .6950 .6985 .7019 .7054 .7088 .7123 .7157 .7190 .7224
.6 .7257 .7291 .7324 .7357 .7389 .7422 .7454 .7486 .7517 .7549
.7 .7580 .7611 .7642 .7673 .7704 .7734 .7764 .7794 .7823 .7852
.8 .7881 .7910 .7939 .7967 .7995 .8023 .8051 .8078 .8106 .8133
.9 .8159 .8186 .8212 .8238 .8264 .8289 .8315 .8340 .8365 .8389
. . . . . . . . . . .

P(z
< .83)
Standard Normal Probability Distribution

 Solving for the Stockout Probability

Step 3: Compute the area under the standard normal

curve to the right of z = .83.

P(z > .83) = 1 – P(z < .83)

= 1- .7967
= .2033

Probability
of a stockout P(x > 20)
Standard Normal Probability Distribution

 Solving for the Stockout Probability

Area = 1 - .7967
Area = .7967
= .2033

z
0 .83
Standard Normal Probability Distribution

 Standard Normal Probability Distribution

If the manager of Pep Zone wants the
probability of a stockout to be no more
than .05, what should the reorder point be?
Standard Normal Probability Distribution

 Solving for the Reorder Point

Area = .9500

Area = .0500

z
0 z.05
Standard Normal Probability Distribution

 Solving for the Reorder Point

Step 1: Find the z-value that cuts off an area of .05
in the right tail of the standard normal
distribution.
z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09
. . . . . . . . . . .
1.5 .9332 .9345 .9357 .9370 .9382 .9394 .9406 .9418 .9429 .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
We.9756
1.9 .9713 .9719 .9726 .9732 .9738 .9744 .9750 look up the .9767
.9761
complement of the
. . . . . . . . tail area
. (1 - ..05 = .95)
.
Standard Normal Probability Distribution

 Solving for the Reorder Point

Step 2: Convert z.05 to the corresponding value of x.

x =  + z.05
= 15 + 1.645(6)
= 24.87 or 25

A reorder point of 25 gallons will place the probability

of a stockout during leadtime at (slightly less than) .05.
Standard Normal Probability Distribution

 Solving for the Reorder Point

By raising the reorder point from 20 gallons to
25 gallons on hand, the probability of a stockout
decreases from about .20 to .05.
This is a significant decrease in the chance that Pep
Zone will be out of stock and unable to meet a
customer’s desire to make a purchase.
 Normal Approximation
of Binomial Probabilities
 When the number of trials, n, becomes large,
evaluating the binomial probability function by
hand or with a calculator is difficult
 The normal probability distribution provides an
easy-to-use approximation of binomial probabilities
where n > 20, np > 5, and n(1 - p) > 5.
Normal Approximation
of Binomial Probabilities
 Set  = np
  np(1  p )

 Add and subtract 0.5 (a continuity correction factor)

because a continuous distribution is being used to
approximate a discrete distribution. For example,
P(x = 10) is approximated by P(9.5 < x < 10.5).
Exponential Probability Distribution

 The exponential probability distribution is useful in

describing the time it takes to complete a task.
 The exponential random variables can be used to
describe:
• Time between vehicle arrivals at a toll booth
• Time required to complete a questionnaire
• Distance between major defects in a highway
Exponential Probability Distribution

 Density Function
1  x /
f ( x)  e for x > 0,  > 0


where:  = mean
e = 2.71828
Exponential Probability Distribution
 Cumulative Probabilities
P ( x  x0 )  1  e  xo / 

where:
x0 = some specific value of x
Exponential Probability Distribution
 Example: Al’s Full-Service Pump
The time between arrivals of cars at Al’s full-service
gas pump follows an exponential probability
distribution with a mean time between arrivals of
3 minutes. Al would like to know the probability that
the time between two successive arrivals will be 2
minutes or less.
Exponential Probability Distribution

f(x)

.4 P(x < 2) = 1 - 2.71828-2/3 = 1 - .5134 = .4866

.3
.2
.1
x
1 2 3 4 5 6 7 8 9 10
Time Between Successive Arrivals (mins.)
Relationship between the Poisson
and Exponential Distributions

The Poisson distribution

provides an appropriate description
of the number of occurrences
per interval

The exponential distribution

provides an appropriate description
of the length of the interval
between occurrences