CHAPTER3 Continuous Probability Distribution

Chapter 3, Part B
Continuous Probability Distributions

 Uniform Probability Distribution
 Normal Probability Distribution
 Exponential Probability Distribution
f (x) Exponential
Uniform
f (x)
f (x) Normal
x
x
© 2006 Thomson South-Western. All Rights Reserved. Slide

1
 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.

2
 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)
f (x)
Normal
x
x x11 xx1122 x22
x11 x22
x
x11 x22

3
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:
ff (x)
(x) == 1/(b
1/(b –– a)
a) for
for aa << xx << bb
== 00 elsewhere
elsewhere
where: a = smallest value the variable can assume

b = largest value the variable can assume

4
Uniform Probability Distribution
 Expected Value of x
E(x)
E(x) == (a
(a ++ b)/2
b)/2
 Variance of x
Var(x)
Var(x) = (b - a) /12
= (b - a) 22
/12

5
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.

6
 Uniform Probability Density Function
f(x) == 1/10
f(x) 1/10 for
for 55 << xx << 15
15
== 00 elsewhere
elsewhere
where:
x = salad plate filling weight

7
 Expected Value of x
E(x)
E(x) == (a
(a ++ b)/2
b)/2
== (5
(5 ++ 15)/2
15)/2
== 1010
 Variance of x
Var(x)
Var(x) == (b
(b -- a)
a)22/12
/12
== (15
(15 –– 5)
5)22/12
/12
== 8.33
8.33

8

for Salad Plate Filling Weight
f(x)
1/10
x
5 10 15
Salad Weight (oz.)

9
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.)

10
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.

11
 It has been used in a wide variety of applications:
Heights
Heights
of
ofpeople
people Scientific
Scientific
measurements
measurements

12
 It has been used in a wide variety of applications:
Test
Test
scores
scores Amounts
Amounts
of
of rainfall
rainfall

13
 Normal Probability Density Function
1 ( x )2 /2 2
f (x)  e
 2
where:
 = mean
 = standard deviation
 = 3.14159
e = 2.71828

14
 Characteristics
The
The distribution
distribution is
is symmetric,
symmetric, and
and is
is bell-shaped.
bell-shaped.

15
 Characteristics
The
The entire
entire family
family of
of normal
normal probability
probability
distributions
distributions is
is defined
defined by
by its mean  and
its mean and its
its
standard deviation  ..
standard deviation
Standard Deviation 
x
Mean 

16
 Characteristics
The
The highest
highest point
point onon the
the normal
normal curve
curve is
is at
at the
the
mean,
mean, which
which is
is also
also the
the median
median and
and mode.
mode.

17
 Characteristics
The
The mean
mean can
can be
be any
any numerical
numerical value:
value: negative,
negative,
zero,
zero, or
or positive.
positive.
x
-10 0 20

18
 Characteristics
The
The standard
standard deviation
deviation determines
determines thethe width
width of
of the
the
curve:
curve: larger
larger values
values result
result in
in wider,
wider, flatter
flatter curves.
curves.
 = 15
 = 25

19
 Characteristics
Probabilities
Probabilities forfor the
the normal
normal random
random variable
variable are
are
given
given by by areas
areas under
under the the curve.
curve. TheThe total
total area
area
under
under the the curve
curve is
is 11 (.5
(.5 to
to the
the left
left of
of the
the mean
mean andand
.5
.5 to
to the
the right).
right).
.5 .5
x

20
 Characteristics
68.26%
68.26% of
of values
values of
of aa normal
normal random
random variable
variable
are
are within
within +/-
+/- 11 standard deviation of
standard deviation of its
its mean.
mean.
95.44%
95.44% of
of values
values ofof aa normal
normal random
random variable
variable
are
are within
within +/-
+/- 22 standard deviations of
standard deviations of its
its mean.
mean.
99.72%
99.72% of
of values
values ofof aa normal
normal random
random variable
variable
are
are within
within +/-
+/- 33 standard deviations of
standard deviations of its
its mean.
mean.

21
 Characteristics
99.72%
95.44%
68.26%

x
 – 3  – 1  + 1  + 3
 – 2  + 2

22
Standard Normal Probability Distribution
AArandom
randomvariable
variablehaving
havingaanormal
normaldistribution
distribution
with
withaamean
meanof of00and
andaastandard
standarddeviation
deviationofof11isis
said
saidto
tohave
haveaastandard
standardnormal
normalprobability
probability
distribution.
distribution.

23
The
The letter
letter zz is
is used
used to
to designate
designate the
the standard
standard
normal
normal random
random variable.
variable.
1
z
0

24
 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 .

25
Using Excel to Compute
Standard Normal Probabilities
 Excel has two functions for computing probabilities
and z values for a standard normal distribution:
NORM S DIST is
NORMSDIST
NORMSDIST is used
used toto compute
compute the
the cumulative
cumulative
probability
probability given
given aa zz value.
value.
NORMSINV
NORM
NORMSINV S INV is
is used
used to
to compute
compute the
the zz value
value
given
given aa cumulative
cumulative probability.
probability.
(The “S” in the function names reminds

us that they relate to the standard
normal probability distribution.)

26
 Formula Worksheet
A B
1 Probabilities: Standard Normal Distribution
2
3 P (z < 1.00) =NORMSDIST(1)
4 P (0.00 < z < 1.00) =NORMSDIST(1)-NORMSDIST(0)
5 P (0.00 < z < 1.25) =NORMSDIST(1.25)-NORMSDIST(0)
6 P (-1.00 < z < 1.00) =NORMSDIST(1)-NORMSDIST(-1)
7 P (z > 1.58) =1-NORMSDIST(1.58)
8 P (z < -0.50) =NORMSDIST(-0.5)
9

27
 Value Worksheet
A B
1 Probabilities: Standard Normal Distribution
2
3 P (z < 1.00) 0.8413
4 P (0.00 < z < 1.00) 0.3413
5 P (0.00 < z < 1.25) 0.3944
6 P (-1.00 < z < 1.00) 0.6827
7 P (z > 1.58) 0.0571
8 P (z < -0.50) 0.3085
9

28
A B
1 Finding z Values, Given Probabilities
2
3 z value with .10 in upper tail =NORMSINV(0.9)
4 z value with .025 in upper tail =NORMSINV(0.975)
5 z value with .025 in lower tail =NORMSINV(0.025)
6

29
 Value Worksheet
A B
1 Finding z Values, Given Probabilities
2
3 z value with .10 in upper tail 1.28
4 z value with .025 in upper tail 1.96
5 z value with .025 in lower tail -1.96
6

30
Example: Pep Zone
 Standard Normal Probability Distribution

Pep Zone sells auto parts and supplies
including a popular multi-grade motor
oil. When the stock of this oil drops to
Pep
20 gallons, a replenishment order is Zone
placed. 5w-20
Motor Oil

31
Example: Pep Zone
Pep
Zone
5w-20
Motor Oil

The store manager is concerned that sales are
being lost due to stockouts while waiting for an
order. It has been determined that demand during
replenishment leadtime 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).

32
Example: Pep Zone
Pep
Zone
5w-20
Motor Oil
 Solving for the Stockout Probability
Step
Step 1:
1: Convert
Convert xx to
to the
the standard
standard normal
normal distribution.
distribution.
(x -- )/
zz == (x )/
== (20
(20 -- 15)/6
15)/6
== .83
.83
Step
Step 2:
2: Find
Find the
the area
area under
under the
the standard
standard normal
normal
curve
curve between
between the
the mean
mean and
and zz == .83.
.83.
see
see next
next slide
slide

33
Example: Pep Zone
Pep
Zone
5w-20
Motor Oil
 Probability Table for the

Standard Normal Distribution
z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09
. . . . . . . . . . .
.5 .1915 .1695 .1985 .2019 .2054 .2088 .2123 .2157 .2190 .2224
.6 .2257 .2291 .2324 .2357 .2389 .2422 .2454 .2486 .2517 .2549
.7 .2580 .2611 .2642 .2673 .2704 .2734 .2764 .2794 .2823 .2852
.8 .2881 .2910 .2939 .2967 .2995 .3023 .3051 .3078 .3106 .3133
.9 .3159 .3186 .3212 .3238 .3264 .3289 .3315 .3340 .3365 .3389
. . . . . . . . . . .
P(0 < z < .83)

34
Example: Pep Zone
Pep
Zone
5w-20
Motor Oil
Step
Step 3:
3: Compute
Compute the the area
area under
under the the standard
standard normal
normal
curve
curve to
to the
the right
right of
of zz == .83.
.83.
P(z >> .83)

P(z .83) == .5
.5 –– P(0
P(0 << zz << .83)
.83)
== 1-
1- .2967
.2967
== .2033
.2033
Probability
of a stockout P(x > 20)

35
Example: Pep Zone
Pep
Zone
5w-20
Motor Oil
Area = .5 - .2967
Area = .2967
= .2033
z
0 .83

36
Example: Pep Zone
Pep
Zone
5w-20
Motor Oil

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

37
Example: Pep Zone
Pep
Zone
5w-20
Motor Oil
 Solving for the Reorder Point
Area = .4500
Area = .0500
z
0 z.05

38
Example: Pep Zone
Pep
Zone
5w-20
Motor Oil

Step
Step 1:1: Find
Find the z-value that
the z-value that cuts
cuts off
off an
an area
area of
of .05
.05
in
in the
the right
right tail
tail of
of the
the standard
standard normal
normal
distribution.
distribution.
z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09
. . . . . . . . . . .
1.5 .4332 .4345 .4357 .4370 .4382 .4394 .4406 .4418 .4429 .4441
1.6 .4452 .4463 .4474 .4484 .4495 .4505 .4515 .4525 .4535 .4545
1.7 .4554 .4564 .4573 .4582 .4591 .4599 .4608 .4616 .4625 .4633
1.8 .4641 .4649 .4656 .4664 .4671 .4678 .4686 .4693 .4699 .4706
1.9 .4713 .4719 .4726 .4732 .4738 .4744 .4750 .4756 .4761 .4767
We look up the area
. . . . . . . . . . .
(.5 - .05 = .45)

39
Example: Pep Zone
Pep
Zone
5w-20
Motor Oil
Step
Step 2:
2: Convert
Convert zz.05 to the corresponding value of x.
.05 to the corresponding value of x.
xx ==  ++ zz.05 
.05
== 15
15 ++ 1.645(6)
1.645(6)
== 24.87
24.87 or or 25
25
A reorder point of 25 gallons will place the probability

of a stockout during leadtime at (slightly less than) .05.

40
Example: Pep Zone
Pep
Zone
5w-20
Motor Oil

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.

41
Normal Probabilities
 Excel has two functions for computing cumulative
probabilities and x values for any normal
distribution:
NORMDIST
NORMDIST is is used
used to
to compute
compute the
the cumulative
cumulative
probability
probability given
given anan xx value.
value.
NORMINV
NORMINV is is used
used to
to compute
compute the
the xx value
value given
given
aa cumulative
cumulative probability.
probability.

42
Normal Probabilities Pep
Zone
5w-20
Motor Oil
A B
1 Probabilities: Normal Distribution
2
3 P (x > 20) =1-NORMDIST(20,15,6,TRUE)
4
5 Finding x Values, Given Probabilities
6
7 x value with .05 in upper tail =NORMINV(0.95,15,6)
8

43
Normal Probabilities Pep
Zone
5w-20
Motor Oil
 Value Worksheet
A B
1 Probabilities: Normal Distribution
2
3 P (x > 20) 0.2023
4
5 Finding x Values, Given Probabilities
6
7 x value with .05 in upper tail 24.87
8
Note: P(x > 20) = .2023 here using Excel, while our
previous manual approach using the z table yielded
.2033 due to our rounding of the z value.

44
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
Time between
between Time
Timerequired
required Distance
Distance between
between
vehicle
vehicle arrivals
arrivals to
tocomplete
complete major
major defects
defects
at
at aa toll
toll booth
booth aaquestionnaire
questionnaire in
in aa highway
highway
SL O W

45
 Density Function
1x/
) e
f(x for x > 0,  > 0

where:  = mean
e = 2.71828

46
 Cumulative Probabilities
P( x  x0 )  1  e xo / 
where:
x0 = some specific value of x

47
Exponential Probabilities
The
The EXPONDIST
EXPONDIST function
function can
can be
be used
used to
to compute
compute
exponential
exponential probabilities.
probabilities.
The
The EXPONDIST
EXPONDIST function
function has
has three
three arguments:
arguments:
1stst The value of the random variable x
nd 1/m
2nd
the inverse of the mean
number of occurrences
3rdrd “TRUE” or “FALSE” in an interval
we will always enter

“TRUE” because we’re seeking a
cumulative probability

48
A B
1 Probabilities: Exponential Distribution
2
3 P (x < 18) =EXPONDIST(18,1/15,TRUE)
4 P (6 < x < 18) =EXPONDIST(18,1/15,TRUE)-EXPONDIST(6,1/15,TRUE)
5 P (x > 8) =1-EXPONDIST(8,1/15,TRUE)
6

49
 Value Worksheet
A B
2
3 P (x < 18) 0.6988
4 P (6 < x < 18) 0.3691
5 P (x > 8) 0.5866
6

50
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.

51
Example: Al’s Full-Service Pump
f(x)
.4 P(x << 2)
P(x 2) == 11 -- 2.71828 -2/3 = 1 - .5134 = .4866
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.)

52
A B
2
3 P (x < 2) =EXPONDIST(2,1/3,TRUE)
4

53
 Value Worksheet
A B
2
3 P (x < 2) 0.4866
4

54
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

55
End of Chapter 3, Part B

56

CHAPTER3 Continuous Probability Distribution

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Chapter 3, Part B

Continuous Probability Distributions

© 2006 Thomson South-Western. All Rights Reserved. Slide

 A continuous random variable can assume any value

© 2006 Thomson South-Western. All Rights Reserved. Slide

 The probability of the random variable assuming a

© 2006 Thomson South-Western. All Rights Reserved. Slide

 A random variable is uniformly distributed

where: a = smallest value the variable can assume

© 2006 Thomson South-Western. All Rights Reserved. Slide

© 2006 Thomson South-Western. All Rights Reserved. Slide

 Uniform Probability Distribution

© 2006 Thomson South-Western. All Rights Reserved. Slide

 Uniform Probability Density Function

© 2006 Thomson South-Western. All Rights Reserved. Slide

© 2006 Thomson South-Western. All Rights Reserved. Slide

 Uniform Probability Distribution

© 2006 Thomson South-Western. All Rights Reserved. Slide

What is the probability that a customer

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

© 2006 Thomson South-Western. All Rights Reserved. Slide

 The normal probability distribution is the most

© 2006 Thomson South-Western. All Rights Reserved. Slide

 It has been used in a wide variety of applications:

© 2006 Thomson South-Western. All Rights Reserved. Slide

 It has been used in a wide variety of applications:

© 2006 Thomson South-Western. All Rights Reserved. Slide

 Normal Probability Density Function

© 2006 Thomson South-Western. All Rights Reserved. Slide

© 2006 Thomson South-Western. All Rights Reserved. Slide

© 2006 Thomson South-Western. All Rights Reserved. Slide

© 2006 Thomson South-Western. All Rights Reserved. Slide

© 2006 Thomson South-Western. All Rights Reserved. Slide

© 2006 Thomson South-Western. All Rights Reserved. Slide

© 2006 Thomson South-Western. All Rights Reserved. Slide

© 2006 Thomson South-Western. All Rights Reserved. Slide

© 2006 Thomson South-Western. All Rights Reserved. Slide

© 2006 Thomson South-Western. All Rights Reserved. Slide

© 2006 Thomson South-Western. All Rights Reserved. Slide

 Converting to the Standard Normal Distribution

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

© 2006 Thomson South-Western. All Rights Reserved. Slide

(The “S” in the function names reminds

© 2006 Thomson South-Western. All Rights Reserved. Slide

© 2006 Thomson South-Western. All Rights Reserved. Slide

© 2006 Thomson South-Western. All Rights Reserved. Slide

© 2006 Thomson South-Western. All Rights Reserved. Slide

© 2006 Thomson South-Western. All Rights Reserved. Slide

 Standard Normal Probability Distribution

© 2006 Thomson South-Western. All Rights Reserved. Slide

 Standard Normal Probability Distribution

© 2006 Thomson South-Western. All Rights Reserved. Slide

 Solving for the Stockout Probability

© 2006 Thomson South-Western. All Rights Reserved. Slide

 Probability Table for the

P(0 < z < .83)

© 2006 Thomson South-Western. All Rights Reserved. Slide

 Solving for the Stockout Probability

P(z >> .83)

© 2006 Thomson South-Western. All Rights Reserved. Slide

 Solving for the Stockout Probability

© 2006 Thomson South-Western. All Rights Reserved. Slide

 Standard Normal Probability Distribution