Poisson Distribution

• Describes the number of times an event

occurs in a finite observation space.

• For example, a Poisson distribution can

describe the number of defects in the
mechanical system of an airplane or the
number of calls to a call center.

• The Poisson distribution is often used in

quality control, reliability/survival studies,
and insurance.
A variable follows a Poisson
distribution if the following
conditions are met:
Data are counts of events (non-
negative integers with no upper
bound).
All events are independent.
 Average rate does not change over
the period of interest.
Poisson distribution models a finite
Binomial Distribution
Used to describe a process where
the outcomes can be labelled as an
event or non-event if, for example,
an item passes or fails inspection
or a political party wins or loses.
Often used in quality control, public
opinion surveys, medical research,
and insurance.
The number of events (X) in n trials
follows a binomial distribution if the
following conditions are met:
The binomial distribution is used
when you are interested in the
occurrence of an event and not in
its magnitude.
For example, you are interested in
the number of defective items and
not the degree of the
defectiveness. Suppose a process
produces 2% defective items. You
are interested in knowing how
likely is it to get 3 or more