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Topic 2 Probability Distributions

Advanced Mathematics for Business

Advanced Mathematics for


Business
Topic 2:
Probability Distributions

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Probability Distributions Topic 2 - 2.2

Scope and Coverage


This topic will cover:
Simple probability revision
Probability distributions
Standard scores (z-scores)

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Probability Distributions Topic 2 - 2.3

Learning Outcomes
By the end of this topic students will be able to:
recall the rules of simple probability
use key probability distributions:
-

Binomial distribution
Poisson distribution
Exponential distribution
Normal distribution

calculate z-scores

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Topic 2 Probability Distributions

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Probability Distributions Topic 2 - 2.4

Probability

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Probability Distributions Topic 2 - 2.5

Definitions and Properties - 1


Sample space
- Set of all possible outcomes

Event
- One or more outcomes

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Probability Distributions Topic 2 - 2.6

Rules of Probability
Mutually exclusive events
- events that cannot occur
together

E1

E2

P(E1 or E2) = P(E1) + P(E2)

Non-mutually exclusive events

E1 E1 E2 E2

P(E1 or E2) = P(E1) + P(E2) P(E1 E2)

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Topic 2 Probability Distributions

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Probability Distributions Topic 2 - 2.7

Rules of Probability

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Probability Distributions Topic 2 - 2.8

Probability Distribution
Discrete
- Number of customers per hour
Number

Frequency

Empirical
Probability

0
1
2
3
4
5

10
17
42
34
12
5
120

0.0833
0 1417
0.1417
0.3500
0.2833
0.1000
0.0417
1

- Therefore seek model Probability Mass Functions


that give P(X = x)

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Probability Distributions Topic 2 - 2.9

Probability Distribution
Continuous
- height of customers

Height
163 -165
166 -168
169 -171
172 -174
175 -177
178 -180
181 -183
184 -186
187 -189
190 -192

Frequency
1
4
14
29
44
46
35
18
7
2
200

Empirical
Probability
0.005
0.020
0.070
0.145
0.220
0 230
0.230
0.175
0.090
0.035
0.010
1

- therefore seek model probability density


functions that lead to P(xl < X < xh)
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Topic 2 Probability Distributions

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Probability Distributions Topic 2 - 2.10

Definitions and Properties - 2

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Probability Distributions Topic 2 - 2.11

Binomial Distribution (motivation)


A TRIAL has two possible outcomes
- P(success) = p, P(failure) = 1 - p
- Pass or fail training, medical treatment works or not,
aeroplane engine works or not, meet SLA or not etc.

Number of such trials


trials, n,
n takes place
- 10 workers undergo training how many might pass?
- 1000 patients are treated, how many may recover?
- 4 working engines on aeroplane, how many will fail?

Q ~ B(n, p)

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Probability Distributions Topic 2 - 2.12

The Binomial Distribution

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Probability Distributions Topic 2 - 2.13

Binomial Distribution - Example

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Probability Distributions Topic 2 - 2.14

Binomial Distribution Approach - 1

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Probability Distributions Topic 2 - 2.15

Binomial Distribution Approach - 2


Probability distribution X ~ B(10,0.6)
x
0
1
2
3
4
5
6
7
8
9
10

P(X = x)
0.0001
0.0016
0.0106
0.0425
0.1115
0.2007
0.2508
0.2150
0.1209
0.0403
0.0060

P(X x)
0.0001
0.0017
0.0123
0.0548
0.1662
0.3669
0.6177
0.8327
0.9536
0.9940
1.0000

P(X 8) = 1- P(X 7) = 1 0.8327 = 0.1673

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Topic 2 Probability Distributions

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Probability Distributions Topic 2 - 2.16

Binomial Distribution and

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Probability Distributions Topic 2 - 2.17

The Poisson Distribution


Rare event A in background of not A
- Large n and small p, np =

Probability of a number of independent, randomly


occurring successes (or failures) within a specified
interval
- Number of customers arriving at end of queue
- Number of print errors per area
- Number of machine breakdowns per year

A ~ Po ()

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Probability Distributions Topic 2 - 2.18

Poisson Distribution

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Topic 2 Probability Distributions

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Probability Distributions Topic 2 - 2.19

Poisson Distribution - Example

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Probability Distributions Topic 2 - 2.20

Poisson Distribution - Example


Probability Distribution X ~ Po(6)
x
0
1
2
3
4
5
6
7
8

P(X = x)
0.0025
0.0149
0.0446
0.0892
0.1339
0.1606
0.1606
0.1377
0.1033

P(X x)
0.0025
0.0174
0.0620
0.1512
0.2851
0.4457
0.6063
0.7440
0.8472

P(x > 8) = 1 0.8472 = 0.1528

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Probability Distributions Topic 2 - 2.21

The Exponential Distribution

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Topic 2 Probability Distributions

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Probability Distributions Topic 2 - 2.22

Exponential Distribution - Example

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Probability Distributions Topic 2 - 2.23

Exponential Distribution - Example

= 0.1474

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Probability Distributions Topic 2 - 2.24

The Normal Distribution - 1

=1

=0
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Topic 2 Probability Distributions

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Probability Distributions Topic 2 - 2.25

The Normal Distribution - 2


Either tables or
software can then give
partial areas under the
curve which indicate
probabilities of
particular values of z
occurring.

P(Z < z)

P(0 < Z < z) P(Z > z)

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Probability Distributions Topic 2 - 2.26

Example

-2.5

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Probability Distributions Topic 2 - 2.27

Recap
By the end of this topic students will be able to:
recall the rules of simple probability
use key probability distributions;
-

Binomial distribution
Poisson distribution
Exponential distribution
Normal distribution

calculate z-scores

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Topic 2 Probability Distributions

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Probability Distributions Topic 2 - 2.28

Topic 2 Probability Distributions


Any Questions?

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