Dr. Saeed A.

Dobbah Alghamdi

Department of Statistics
Faculty of Sciences
Building 90, Office 26F41
King Abdulaziz University
http://saalghamdy.kau.edu.sa

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 Statistics
for
Business & Economics

David R. Anderson
Dennis J. Sweeney
Thomas A. Williams
Copyright © South-Western Cengage Learning All rights reserved.

© All rights are preserved for Dr. Saeed A. Dobbah Alghamdi, Department of Statistics, Faculty of Sciences, KAU
 Discrete Probability
Distributions
Chapter 5

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 Learning Objectives
LO1 Distinguish between discrete and continuous random variable.

LO2 Identify the characteristics of a probability distribution.

LO3 Compute the mean, variance and standard deviation of a

probability distribution.

LO4 Describe and compute probabilities for a binomial distribution.

LO5 Describe and compute probabilities for a Poisson distribution.

LO6 Describe and compute probabilities for a hypergeometric

distribution.

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 Random Variables
RANDOM VARIABLE is a numerical description of the outcome of an experiment

DISCRETE RANDOM VARIABLE is a CONTINUOUS RANDOM VARIABLE is a

random variable that can assume only certain random variable that can assume any numerical
clearly separated values. It is usually the value in an interval or collection of intervals. It
result of counting something. is usually the result of some type of measurement

EXAMPLES EXAMPLES
1. The number of students in a class. 1. The time between customer arrivals in minutes.
2. The number of children in a family. 2. The weight of students in this class.
3. The number of cars entering a carwash daily. 3. The Percentage of project complete after six
4. Number of home mortgages approved by months.
Coastal Federal Bank last week. 4. The amount of money earned by each of the
players currently on a Major League.
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 What is a Probability Distribution?
PROBABILITY DISTRIBUTION is a listing of all the outcomes of an
experiment and the probability associated with each outcome.
CHARACTERISTICS OF A PROBABILITY DISTRIBUTION
1. The probability of a particular outcome is between 0 and 1 inclusive, 0 ≤ P(x) ≤ 1
2. The outcomes are mutually exclusive events.
3. The list is exhaustive. So the sum of the probabilities is equal to 1, ∑P(x) = 1.

Experiment
Toss a coin three times. Observe the number of heads. The possible results are:
Zero heads, One head, Two heads, and Three heads.
What is the probability distribution for the number of heads?

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 Discrete Probability Distribution
The Expected Value
The expected value or mean of a random variable is a measure of central
location of a random variable.
The formula for the expected value of a discrete random variable x
follows
E(x) = μ = ∑x P(x)
The VARIANCE and STANDARD DEVIATION
Even though the expected value provides the mean value for the random
variable, we often need a measure of variability, or dispersion. Variance is
used to summarize the variability in the values of a random variable.
Var(x) =σ² = ∑(x-μ)² P(x)
The standard deviation, σ, is the positive square root of the variance
σ = 𝜎2
The standard deviation is measured in the same units as the random
variable and therefore is used in describing the variability.
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 Discrete Probability Distribution - Example
John Ragsdale sells new cars for Pelican Ford.
John usually sells the largest number of cars
on Saturday. He has developed the following
probability distribution for the number of cars
he expects to sell on a particular Saturday.
Find the mean, variance and standard
deviation.
MEAN
VARIANCE

STANDARD
DEVIATION  =  2 = 1.290 = 1.136
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 Binomial Probability Distribution
◼ A Widely occurring discrete probability distribution
◼ Characteristics of a Binomial Probability Distribution
1. The experiment consists of a sequence of n identical trials.
2. There are only two possible outcomes on a particular trial of an experiment.
3. The probability of success remains the same from trial to another.
4. Each trial is independent of any other trial

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 Binomial Distribution - Examples
cumulative
EXAMPLE X P(X) probability
0 0.32768 0.32768
There are five flights daily from Pittsburgh via US Airways into 1 0.40960 0.73728
the Bradford, Pennsylvania, Regional Airport. Suppose the 2 0.20480 0.94208
3 0.05120 0.99328
probability that any flight arrives late is .20. 4 0.00640 0.99968
5 0.00032 1.00000
What is the probability that none of the flights are late today? 1.00000
What is the average number of late flights? What is the 1.000 expected value
0.800 variance
variance of the number of late flights? 0.894 standard deviation

cumulative
EXAMPLE X P(X) probability
0 0.73509 0.73509
Five percent of the worm gears produced by an automatic, 1 0.23213 0.96723
2 0.03054 0.99777
high-speed Carter-Bell milling machine are defective. 3 0.00214 0.99991
4 0.00008 1.00000
What is the probability that out of six gears selected at random 5 0.00000 1.00000
none will be defective? Exactly one? Exactly two? Exactly 6 0.00000 1.00000
1.00000
three? Exactly four? Exactly five? Exactly six out of six? 0.300 expected value
0.285 variance
0.534 standard deviation
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 Binomial Distribution - Example
Binomial distribution
A study by the Illinois Department of
12 n
Transportation concluded that 76.2% of front
0.762 p
seat occupants used seat belts. A sample of
cumulative
12 vehicles is selected.
X P(X) probability
What is the probability the front seat 0 0.00000 0.00000
occupants in exactly 7 of the 12 vehicles are 1 0.00000 0.00000
wearing seat belts? 2 0.00002 0.00002
3 0.00024 0.00026
4 0.00172 0.00198
5 0.00880 0.01078
6 0.03287 0.04366 1-0.04366=0.95634
What is the probability the front seat 7 0.09022 0.13387
occupants in at least 7 of the 12 vehicles are 8 0.18053 0.31441
wearing seat belts? 9 0.25689 0.57130
10 0.24674 0.81804
11 0.14364 0.96168
12 0.03832 1.00000
1.00000
9.144 expected value
2.176 variance
1.475 standard deviation
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 Poisson Probability Distribution
The Poisson probability distribution describes the number of times some event
occurs during a specified interval. The interval may be time, distance, area, or volume.
Assumptions of the Poisson Distribution
(1) The probability is proportional to the length of the interval.
(2) The intervals are independent.
• The Poisson probability distribution is always positively skewed and the random
variable has no specific upper limit.
• As µ becomes larger, the Poisson distribution becomes more symmetrical.
Examples include:
• The number of misspelled words per page in a newspaper.
• The number of calls per hour received a company.
• The number of vehicles sold per day at a car lot.
• The number of goals scored in a college soccer game.

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 Poisson Probability Distribution - Example
Assume baggage is rarely lost by Northwest Poisson distribution
Airlines. Suppose a random sample of
1,000 flights shows a total of 300 bags were
0.3 mean rate of occurrence
lost. Thus, the arithmetic mean number of
lost bags per flight is 0.3 (300/1,000). If the
number of lost bags per flight follows a cumulative
Poisson distribution with u = 0.3, X P(X) probability
find the probability of not losing any bags, 0 0.74082 0.74082
1 0.22225 0.96306
2 0.03334 0.99640
3 0.00333 0.99973
4 0.00025 0.99998

what is the probability exactly one bag will 5 0.00002 1.00000

be lost on a particular flight? 6 0.00000 1.00000
7 0.00000 1.00000
8 0.00000 1.00000
… …. …

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 Hypergeometric Probability Distribution
Characteristics of a Hypergeometric Probability Distribution
1. An outcome on each trial of an experiment is classified into one of two
mutually exclusive categories—a success or a failure.
2. The probability of success and failure changes from trial to trial.
3. The trials are not independent, meaning that the outcome of one trial
affects the outcome of any other trial.
Note: Use hypergeometric distribution if an experiment is binomial, but
sampling is without replacement from a finite population where n/N is
more than 0.05.

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 Hypergeometric Probability Distribution
EXAMPLE
PlayTime Toys, Inc., employs 50 people in the Assembly Department. Forty of the
employees belong to a union and ten do not. Five employees are selected at random
to form a committee to meet with management regarding shift starting times.
What is the probability that four of the five selected for the committee belong to a
union?
Hypergeometric distribution
50 N, population size

Here’s what’s given: 40

S, number of possible
occurrences
5 n, sample size
N = 50 (number of employees) cumulative
X P(X) probability
S = 40 (number of union employees)
0 0.00012 0.00012
x = 4 (number of union employees selected) 1 0.00396 0.00408

n = 5 (number of employees selected) 2 0.04418 0.04826

3 0.20984 0.25810
4 0.43134 0.68944
5 0.31056 1.00000
1.00000
4.000 expected value
0.735 variance
0.857 standard deviation

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 Summary
Random variable A numerical description of the outcome of an
experiment.
Discrete random variable A random variable that may assume either a
finite number of values or an infinite sequence of values.
Continuous random variable A random variable that may assume any
numerical value in an interval or collection of intervals.
Probability distribution A description of how the probabilities are
distributed over the values of the random variable.
Probability function A function, denoted by P(x) or f (x), that provides
the probability that x assumes a particular value for a discrete random
variable.
Discrete uniform probability distribution A probability distribution for
which each possible value of the random variable has the same probability.
Expected value A measure of the central location of a random variable.
Variance A measure of the variability, or dispersion, of a random variable.
Standard deviation The positive square root of the variance.
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 Summary
Binomial probability distribution A probability distribution showing the
probability of x successes in n trials of a binomial experiment.
Binomial probability function The function used to compute binomial
probabilities.
Poisson probability distribution A probability distribution showing the
probability of x occurrences of an event over a specified interval of time or
space.
Poisson probability function The function used to compute Poisson
probabilities.
Hypergeometric probability distribution A probability distribution
showing the probability of x successes in n trials from a population with r
successes and N - r failures.
Hypergeometric probability function The function used to compute
hypergeometric probabilities.

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