Guide to Using Excel For Basic

Statistical Applications

To Accompany
Business Statistics: A Decision Making
Approach, 6th Ed.
Chapter 5:
Discrete and Continuous Probability
Distributions
By
Groebner, Shannon, Fry, & Smith
Prentice-Hall Publishing Company
Copyright, 2005
Chapter 5 Excel
Examples
 BinomialMean -
Catalog Sales
 Poisson Distribution -
Heritage Tile

More Examples
Chapter 5 Excel
Examples (continued)
 Creating A Binomial Table

 Creating a Poisson Table

 Standard Normal Distribution –

State Bank and Trust

More Examples
Chapter 5 Excel
Examples (continued)
 ExponentialDistribution –
Haines Internet Services

 Creating A Standard Normal Table

 Binomial Mean-
Catalog Sales
Issue:
People who order items from catalogs can
return the items for a refund. Historical return
rate for one catalog has been 11 percent. Is this
rate still valid?
Objective:
Use Excel to compute binomial
probabilities based on a sample of 300
purchases.
 Binomial Mean – Catalog Sales

Situation
Sample Size is n=300
p = .11
Mean = np = 300(.11) = 33
44 returns were observed
P(X > 44) = 1 – P(X < 43)
Find P(X < 43) = ?
 Binomial Mean – Catalog Sales

Click on Function Wizard

– then select Statistical –
then Binomdist
 Binomial Mean – Catalog Sales

Binomial Probability
function

Enter required values.

Note, True indicates that
you want the cumulative
probability – False would
Binomial Probability indicate that you want
Result the exact probability.
 Poisson Distribution
Heritage Title
Issue:
The distribution for the number of defects
per tile made by Heritage Tile is Poisson
distributed with a mean of 3 defects per tile. The
manager is worried about the high variability
Objective:
Use Excel to generate the Poisson
distribution and histogram to visually see spread
in the distribution of possible defects.
 Poisson Distribution – Heritage Tile

Enter values of x
ranging from 0 to 10.
 Poisson Distribution – Heritage Tile

Click on the function

button, then select
Statistical and
Poisson.
Poisson Distribution – Heritage Tile

Enter the value of x (located in

cell a2), the value of the mean and
finally false.
 Poisson Distribution – Heritage Tile

Generate the remaining

probabilities, then click on the
Chart Wizard button.
 Poisson Distribution – Heritage Tile

Enter the correct range

of values in the chart
wizard.
 Poisson Distribution – Heritage Tile

Provide a title and label

the axes as desired.
 Poisson Distribution – Heritage Tile

Complete Histogram as
shown in tutorials for
Chapter 2.
 Creating A Binomial Table
Issue:
The binomial tables in this text contain
specific probabilities for certain values of n and
p. You may need to have more extensive tables.
Objective:
Use Excel to generate the Binomial table
for n = 25 and p value of .01 to .50 in increments
of .01
Creating A Binomial Table

Sample size (n) in cell B1

P values in row 3
X values in column A
Creating A Binomial Table

P(X =0) = .777821 for n = 25, p = .01

Notice the use of absolute cell

referencing – this allows you to copy
the function across and down to
complete this section of the binomial
table
Creating A Binomial Table

Values for X > 11 are all zero – can be

dropped from table to save space
Creating A Binomial Table

Expand the table to include more p values.

Note, make sure your cell referencing is
correct. – then copy cells
Creating A Binomial Table

Continue this process for all p values.

For different sample sizes, replace n in
cell B1
 Creating A Poisson Table
Issue:
The Poisson tables in this text contain
t
specific probabilities for certain values of .
You may need to have more extensive tables.
Objective:
Use Excel to generate the Poisson Table
t
table for = 6.0 to 7.0 in increments of .10
Creating A Poisson Table

t
values in row 2

Values of X in column A
Creating A Poisson Table

t
P(X = 0) for = 6.0 equals .00248
Notice the use of absolute cell
referencing – this allows you to copy
the function across and down to
complete this section of the binomial
table
Creating A Poisson Table

t
Continue this process for other
t
values as desired. As increases, the
possible values for X will have to
increase.
Standard Normal Distribution-
State Bank and Trust
Issue:
State bank managers have studied the
time customers spend at the bank on business.
They plan to offer a gift certificate to any
customer who is required to spend over 40
minutes on bank business.
Objective:
Use Excel to analyze to create histogram
and determine the probability that a certificate
will be given to any customer. The data file is
State Bank.xls.
Standard Normal – State Bank and Trust

Open Data File: State Bank.xls

Standard Normal – State Bank and Trust

Create Bins (Upper Limits of

each class)
Standard Normal – State Bank and Trust

Click on Tools – Data Analysis -

Histogram
Standard Normal – State Bank and Trust

Define Data and Bin ranges and

specify where you want the
output to go.

Check Chart
Output
 Standard Normal – State Bank and Trust

Close Gaps in
Histogram by
selecting chart
bars, right clicking
and selecting
Chart Object –
Options – and then
change Gap width
to 0
 Standard Normal – State Bank and Trust

Add labels and

format horizontal
axis.

Next, determine
probability of a service
time exceeding 30
seconds.
 Standard Normal – State Bank and Trust

Select Function
Wizard – Then
Click on Statistical
– then select
Normdist function
Standard Normal – State Bank and Trust

Enter X =30, mean

= 22.14, st dev =
6.09, and True for
cumulative
probability
P(X <30) = .9016
 Exponential Distribution-
Haines Internet Services
Issue:
The time between connect attempts
averages two minutes and the distribution of
time between attempts is assumed to be
exponential.
Objective:
Use Excel to compute the probability that
that the time between connect attempts will be
less than 45 seconds (.75 minutes).
 Exponential Distribution – Haines Internet Services

Click on Function Wizard

– then select Statistical –
then EXPONDIST
 Exponential Distribution – Haines Internet Services

EXPONDIST function
– note, that  =.50 is
used rather than the
mean = 1

Enter required values.

Note, True indicates that
you want the cumulative
Exponential Distribution probability – False would
Probability Result indicate that you want
P(X < .75) = .3127 the exact probability.
 Creating A Standard Normal
Distribution Table
Issue:
The Standard Normal tables in the
Appendix of this text were created using Excel.
Objective:
Use Excel to generate a standard normal
table for z values below zero.
Creating the Standard Normal Table

Z value second decimal

place

Z value integer and first

decimal place.
Creating the Standard Normal Table

Formula:
ABS function is for absolute value
Mean for NORMDIST function is -0.0 -
.01 = - .01
Notice use of absolute cell references
to allow formula to be copied across
and and down to finish the table
Creating the Standard Normal Table

Probabilities correspond to
area on the standard normal
table between the Z value
and the mean = 0.