1 1 Slide © 2001 South-Western/Thomson Learning  Anderson  Sweeney  Williams Anderson  Sweeney  Williams  Slides Prepared by JOHN LOUCKS  CONTEMPORARYBUSINESSSTATISTICS WITH MICROSOFT  EXCEL CONTEMPORARYBUSINESSSTATISTICS

2 2 Slide Chapter 5 Discrete Probability Distributions n Random Variables n Discrete Probability Distributions n Expected Value and Variance n Binomial Probability Distribution n Poisson Probability Distribution n Hypergeometric Probability Distribution

3 3 Slide Random Variables n A random variable is a numerical description of the outcome of an experiment. n A random variable can be classified as being either discrete or continuous depending on the numerical values it assumes. n A discrete random variable may assume either a finite number of values or an infinite sequence of values. n A continuous random variable may assume any numerical value in an interval or collection of intervals.

4 4 Slide Example: JSL Appliances n Discrete random variable with a finite number of values Let x = number of TV sets sold at the store in one day where x can take on 5 values (0, 1, 2, 3, 4) where x can take on 5 values (0, 1, 2, 3, 4) n 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,... 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.

5 5 Slide Discrete Probability Distributions n The probability distribution for a random variable describes how probabilities are distributed over the values of the random variable. n The probability distribution is defined by a probability function, denoted by f ( x ), which provides the probability for each value of the random variable. n The required conditions for a discrete probability function are: f ( x ) > 0 f ( x ) > 0  f ( x ) = 1  f ( x ) = 1 n We can describe a discrete probability distribution with a table, graph, or equation.

6 6 Slide Example: JSL Appliances n Using past data on TV sales (below left), a tabular representation of the probability distribution for TV sales (below right) was developed. Number Number Units Sold of Days x f ( x ) Units Sold of Days x f ( x )

7 7 Slide Example: JSL Appliances n Graphical Representation of the Probability Distribution Values of Random Variable x (TV sales) ProbabilityProbability

8 8 Slide Discrete Uniform Probability Distribution n The discrete uniform probability distribution is the simplest example of a discrete probability distribution given by a formula. n The discrete uniform probability function is f ( x ) = 1/ n f ( x ) = 1/ nwhere: n = the number of values the random n = the number of values the random variable may assume variable may assume n Note that the values of the random variable are equally likely.

9 9 Slide Expected Value and Variance n The expected value, or mean, of a random variable is a measure of its central location. Expected value of a discrete random variable:Expected value of a discrete random variable: E ( x ) =  =  xf ( x ) n The variance summarizes the variability in the values of a random variable. Variance of a discrete random variable:Variance of a discrete random variable: Var( x ) =  2 =  ( x -  ) 2 f ( x ) Var( x ) =  2 =  ( x -  ) 2 f ( x ) The standard deviation, , is defined as the positive square root of the variance. The standard deviation, , is defined as the positive square root of the variance.

10 Slide Example: JSL Appliances n Expected Value of a Discrete Random Variable xf ( x ) xf ( x ) = E ( x ) 1.20 = E ( x ) The expected number of TV sets sold in a day is 1.2

11 Slide n Variance and Standard Deviation of a Discrete Random Variable of a Discrete Random Variable xx -  ( x -  ) 2 f ( x )( x -  ) 2 f ( x ) =   =   The variance of daily sales is 1.66 TV sets squared. The standard deviation of sales is TV sets. Example: JSL Appliances

12 Slide Using Excel to Compute the Expected Value, Variance, and Standard Deviation n Formula Worksheet

13 Slide Using Excel to Compute the Expected Value, Variance, and Standard Deviation n Value Worksheet

14 Slide Binomial Probability Distribution n Properties of a Binomial Experiment The experiment consists of a sequence of n identical trials.The experiment consists of a sequence of n identical trials. Two outcomes, success and failure, are possible on each trial.Two outcomes, success and failure, are possible on each trial. The probability of a success, denoted by p, does not change from trial to trial.The probability of a success, denoted by p, does not change from trial to trial. The trials are independent.The trials are independent.

15 Slide Example: Evans Electronics n Binomial Probability Distribution Evans is concerned about a low retention rate for employees. On the basis of past experience, management has seen a turnover of 10% of the hourly employees annually. Thus, for any hourly employees chosen at random, management estimates a probability of 0.1 that the person will not be with the company next year. Evans is concerned about a low retention rate for employees. On the basis of past experience, management has seen a turnover of 10% of the hourly employees annually. Thus, for any hourly employees chosen at random, management estimates a probability of 0.1 that the person will not be with the company next year. Choosing 3 hourly employees a random, what is the probability that 1 of them will leave the company this year? Choosing 3 hourly employees a random, what is the probability that 1 of them will leave the company this year? Let : p =.10, n = 3, x = 1 Let : p =.10, n = 3, x = 1

16 Slide Binomial Probability Distribution n Binomial Probability Function where: f ( x ) = the probability of x successes in n trials n = the number of trials n = the number of trials p = the probability of success on any one trial p = the probability of success on any one trial

17 Slide Example: Evans Electronics n Using the Binomial Probability Function = (3)(0.1)(0.81) = (3)(0.1)(0.81) =.243 =.243

18 Slide Example: Evans Electronics n Using the Tables of Binomial Probabilities

19 Slide n Using a Tree Diagram Example: Evans Electronics First Worker First Worker Second Worker Second Worker Third Worker Third Worker Value of x Value of x Probab. Leaves (.1) Stays (.9) Leaves (.1) S (.9) Stays (.9) S (.9) L (.1)

20 Slide Using Excel to Compute Binomial Probabilities n Formula Worksheet

21 Slide Using Excel to Compute Binomial Probabilities n Value Worksheet

22 Slide Using Excel to Compute Cumulative Binomial Probabilities n Formula Worksheet

23 Slide Using Excel to Compute Cumulative Binomial Probabilities n Value Worksheet

24 Slide Binomial Probability Distribution n Expected Value E ( x ) =  = np E ( x ) =  = np n Variance Var( x ) =  2 = np (1 - p ) Var( x ) =  2 = np (1 - p ) n Standard Deviation

25 Slide Example: Evans Electronics n Binomial Probability Distribution Expected ValueExpected Value E ( x ) =  = 3(.1) =.3 employees out of 3 E ( x ) =  = 3(.1) =.3 employees out of 3 VarianceVariance Var(x) =  2 = 3(.1)(.9) =.27 Var(x) =  2 = 3(.1)(.9) =.27 Standard DeviationStandard Deviation

26 Slide Poisson Probability Distribution n Properties of a Poisson Experiment The probability of an occurrence is the same for any two intervals of equal length.The probability of an occurrence is the same for any two intervals of equal length. The occurrence or nonoccurrence in any interval is independent of the occurrence or nonoccurrence in any other interval.The occurrence or nonoccurrence in any interval is independent of the occurrence or nonoccurrence in any other interval.

27 Slide Poisson Probability Distribution n Poisson Probability Function where: f(x) = probability of x occurrences in an interval  = mean number of occurrences in an interval  = mean number of occurrences in an interval e = e =

28 Slide Example: Mercy Hospital n Using the Poisson Probability Function 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?  = 6/hour = 3/half-hour, x = 4  = 6/hour = 3/half-hour, x = 4

29 Slide Example: Mercy Hospital n Using the Tables of Poisson Probabilities

30 Slide Using Excel to Compute Poisson Probabilities n Formula Worksheet Etc.

31 Slide Using Excel to Compute Poisson Probabilities n Value Worksheet Etc.

32 Slide Using Excel to Compute Cumulative Poisson Probabilities n Formula Worksheet Etc.

33 Slide Using Excel to Compute Cumulative Poisson Probabilities n Value Worksheet Etc.

34 Slide Hypergeometric Probability Distribution n The hypergeometric distribution is closely related to the binomial distribution. n With the hypergeometric distribution, the trials are not independent, and the probability of success changes from trial to trial.

35 Slide Hypergeometric Probability Distribution n Hypergeometric Probability Function for 0 < x < r where: f ( x ) = probability of x successes in n trials f ( x ) = probability of x successes in n trials n = number of trials n = number of trials N = number of elements in the population N = number of elements in the population r = number of elements in the population r = number of elements in the population labeled success labeled success

36 Slide Example: Neveready n Hypergeometric Probability Distribution Bob Neveready has removed two dead batteries from a flashlight and inadvertently mingled them with the two good batteries he intended as replacements. The four batteries look identical. Bob now randomly selects two of the four batteries. What is the probability he selects the two good batteries?

37 Slide Example: Neveready n Hypergeometric Probability Distribution where: x = 2 = number of good batteries selected x = 2 = number of good batteries selected n = 2 = number of batteries selected n = 2 = number of batteries selected N = 4 = number of batteries in total N = 4 = number of batteries in total r = 2 = number of good batteries in total r = 2 = number of good batteries in total

38 Slide Using Excel to Compute Hypergeometric Probabilities n Formula Worksheet

39 Slide Using Excel to Compute Hypergeometric Probabilities n Value Worksheet

40 Slide End of Chapter 5