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Statistics



Alan D. Smith
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An Experiment ...
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An Experiment
100 Pennies
Random Toss ...

How many heads do you expect?
How many ways could they land?
What is the probability of getting all heads?
What is the probability of getting 50 heads &
50 tails?
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Analysis
Consider 4 pennies





Consider 100 pennies !!!
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Who Cares about Pennies?
Consider a situation where a manufacturer is
concerned about market share. Historically,
10% of the population uses the product. A
market survey of 1,000 people reveals that 120
people in the survey use the product. Has
market share increased? Should we expand
production? How certain are you?
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Discrete Probability
Distributions
Chapter 5
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TO DEFINE THE TERMS PROBABI LI TY
DI STRI BUTI ON AND RANDOM VARI ABLE.
TO DISTINGUISH BETWEEN A DI SCRETE AND
CONTI NUOUS PROBABILITY DISTRIBUTION.
TO CALCULATE THE MEAN, VARI ANCE, AND
STANDARD DEVI ATI ON OF A DISCRETE
PROBABILITY DISTRIBUTION.
TO DESCRIBE THE CHARACTERISTICS OF THE
BI NOMI AL DISTRIBUTION.
TO INTRODUCE THE POISSON DISTRIBUTION
WEEKS GOALS
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RANDOM VARIABLES
Definition: A random variable is a numerical
value determined by the outcome of an
experiment. (A quantity resulting from a random
experiment that, by chance, can assume different
values).
EXAMPLE : Consider a random experiment in
which a coin is tossed three times. Let X be the
number of heads. Let H represent the outcome
of a Head and T the outcome of a Tail.
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EXAMPLE (Continued)


TTT

TTH

THT

THH

HTT

HTH

HHT

HHH

0

1

1

2

1

2

2

3

Sample
Space
Number of
Heads = X
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PROBABILITY DISTRIBUTIONS
Definition: A probability distribution is a listing
of all the outcomes of an experiment and their
associated probabilities.

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Discrete Distribution
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CHARACTERISTICS OF A
PROBABILITY DISTRIBUTION
The probability of an outcome must always be
between 0 and 1.
EXAMPLE: P(0 head) = 0.125, P(1 head) = 0.375,
etc. in the coin tossing experiment.
The sum of the probabilities of all mutually
exclusive outcomes is always 1.
P(0) + P(1) + P(2) + P(3) = 1

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DISCRETE RANDOM VARIABLE
Definition: A discrete random variable is a
variable that can assume only certain clearly
separated values resulting from a count of some
item of interest.
EXAMPLE: Let X be the number of heads when
a coin is tossed 3 times. Here the values for X
are: 0, 1, 2 and 3.
EXAMPLE: Let X be the number of start-up
businesses that fail given a starting set of 100.
The values for X are: 0, 1, , 99, 100.

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CONTINUOUS RANDOM VARIABLE
Definition: A continuous random variable is a
variable that can assume one of an infinitely
large number of values (within certain
limitations).
EXAMPLE: (a) Average GPA for all Students
(b) Income
(c) ROI


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THE MEAN OF A DISCRETE
PROBABILITY DISTRIBUTION
The mean reports the central location of the data.
The mean is the long-run average value of the
random variable.
The mean of a probability distribution is also
referred to as its expected value, E(X).
The mean is a weighted average.
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MEAN of a PROBABILITY
DISTRIBUTION (continued)
The mean of a discrete probability distribution
is computed by the formula:

where (Greek letter, mu) represents the mean
and P(X) is the probability of the various outcomes
X.

= =

E X X P X ( ) [ ( )]
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The Variance (Standard Deviation)
of a Discrete Probability Distribution
The variance measures the amount of spread or
variation of a distribution.
The variance of a discrete distribution is denoted
by the Greek letter o
2
(sigma squared).
The standard deviation is obtained by taking the
square root of o
2
.
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The Variance (Standard Deviation)-
(continued)
The variance of a discrete probability
distribution is computed from the formula:



The standard deviation is computed from o = (o
2
)
1/2

(sigma).

( )
o
2
2
=

(
X P X ( )
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U-Rent-It is a car rental
agency specializing in
renting cars to families
who need an additional
car for a short period of
time. Pat Padgett,
President, has studied
her records for the last
20 weeks and reports
the following number of
cars rented per week.
# o f C a r s
r e n t e d
W e e k s
1 0 5
1 1 6
1 2 7
1 3 2
EXAMPLE
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Does the above data qualify as a probability
distribution?
Convert the number of cars rented per week to a
probability distribution. This is shown on the
next slide.
EXAMPLE (Continued)
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EXAMPLE (continued)
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Compute the mean number of cars rented per
week.
The mean = E(X) = E|XP(X)] =

Compute the variance of the number of cars
rented per week.
The variance o
2
= E|(X - )
2
P(X)] =


EXAMPLE (continued)
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CALCULATIONS FOR IN TABLE
FORM
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CALCULATIONS FOR o
2
in TABLE
FORM
N u m b e r
o f C a r s
R e n t e d , X
P r o b .
P ( X )
( X - ) ( X - )
2
( X - )
2
P ( X )
1 0 0 . 2 5 1 0 - 1 1 . 3 1 . 6 9 0 . 4 2 2 5
1 1 0 . 3 0 1 1 - 1 1 . 3 0 . 0 9 0 . 0 2 7 0
1 2 0 . 3 5 1 2 - 1 1 . 3 0 . 4 9 0 . 1 7 1 5
1 3 0 . 1 0 1 3 - 1 1 . 3 2 . 8 9 0 . 2 8 9 0
o
2
= 0 . 9 1 3 5
= 1 1 . 3 o = 0 . 9 5 5 8 .
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BINOMIAL PROBABILITY DISTRIBUTION
The binomial distribution has the following
characteristics:
An outcome of an experiment is classified into
one of two mutually exclusive categories -
success or failure.
The data collected are the results of counts.
The probability of a success stays the same for
each trial. So does the probability of failure.
The trials are independent, meaning that the
outcome of one trial does not affect the outcome
of any other trial.
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BINOMIAL PROBABILITY
DISTRIBUTION (continued)
To construct a binomial distribution, we let
n be the number of trials.
r be the number of observed successes.
p be the probability of success on each trial.
q be the probability of failure, found by q =1-p.


4! = 4*3*2*1
0! = 1! = 1

P r
n
r n r
p
r
q
n r
( )
!
!( )!
=

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The Department of Labor Statistics for the state
of Kentucky reports that 20% of the workforce
in Treble County is unemployed. A sample of 14
workers is obtained from the county. Compute
the following probabilities (Binomial):
three are unemployed. (n = 14, p = 0.2).
P(r = 3) = ?
EXAMPLE
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P(r = 3) USING THE FORMULA
Given : (r = 3, n = 14, p = 0.2, q = 0.8)
Recall



so,
P(r = 3) =


=BINOMDIST(3, 14, 0.2, FALSE) via EXCEL
P r
n
r n r
p
r
q
n r
( )
!
!( )!
=

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at least one of the sampled workers is
unemployed.
P(r > 1) =

at most two of the sampled workers are
unemployed.
P(r s 2) =

three or more are unemployed.
P(r > 3) =
EXAMPLE (continued)
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Return to
Who Cares about Pennies?
Consider a situation where a manufacturer is
concerned about market share. Historically,
10% of the population uses the product. A
market survey of 1,000 people reveals that 120
people in the survey use the product. Has
market share increased? Should we expand
production? How certain are you?
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BINOMIAL PROBABILITY
DISTRIBUTION
To construct a binomial distribution, we let
n be the number of trials. (1000)
r be the number of observed successes. (120 ...)
p be the probability of success on each trial. (0.1)
q be the probability of failure, 1-p. (0.90)



P(120) + P(121) + + P(1000) = 0.017 =
1 - P(r<119) = Probability of 120 or more.
P r
n
r n r
p
r
q
n r
( )
!
!( )!
=

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A company manufactures ball bearings to be
used on mountain bikes. It is known that 5% of
the diameters of the bearings will be outside the
accepted limit (defective). If 6 bearings are
selected at random, what is the probability that:
Exactly zero will be defective? Exactly one?
Exactly two? Exactly three? Exactly four?
Exactly five? Exactly six?
(Note: Binomial n = 6, p = 0.05)
EXAMPLE
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Note that the binomial conditions are met:
There is a constant probability of success (0.05).
There is a fixed number of trials (6).
The trials are independent. (Why?)
There are only two possible outcomes (a bearing
is either defective or nondefective).
EXAMPLE (continued)
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Binomial Probability Distribution for n = 6 and p = 0.05
EXAMPLE (continued)
How would you use this table?
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MEAN & VARIANCE OF THE BINOMIAL
DISTRIBUTION
The mean is given by



The variance is given by

=np
o
2
1 = np p ( )
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EXAMPLE
For the previous example regarding defective
bearings, recall that:
p = 0.05 and n = 6.

Hence, = np =

o
2
= np(1 - p) =
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The binomial distribution of probabilities will
become more and more skewed to the right as
the probability of success become smaller.
The limiting form of the binomial distribution
where the probability of success p is very small
and n is large is called the Poisson probability
distribution.
The Poisson distribution can be described
mathematically using the formula:
POISSON PROBABILITY
DISTRIBUTION
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(mu) is the arithmetic mean number of occurrences
(successes) in a particular interval of time.
e is the constant 2.71828 (base of the Naperian
logarithmic system)
x number of occurrences (successes)
P(X) is the required probability.
=POISSON(x, , FALSE) via EXCEL
POISSON PROBABILITY
DISTRIBUTION
P X
e
x
x
( )
!
=

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The Maumee Urgent Care facility specializes in
caring for minor injuries, colds and flu. For the
evening hours of 6 - 10 PM the mean number of
arrivals is 4.0 per hour. Assume the arrivals
follow the Poisson distribution. Compute the
following probabilities.
What is the probability of exactly 4 arrivals in an
hour?
P(4) = 0.1954.
EXAMPLE
P X
e
x
x
( )
!
=

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What is the probability of less than 4 arrivals in
an hour?

What is the probability of at least 4 arrivals in
an hour?
EXAMPLE (continued)
P X
e
x
x
( )
!
=