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Probability
Distribution

Random Variable:
 Random Variable: numerical description of
the outcome of an experiment
 Discrete Random Variable: Assume either
a finite number of values or an infinite
sequence of values
 Continuous Random Variable: Assume
any numerical value in an interval or
collection of intervals
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Random Variable:
Question Random Variable x Type

Family x = Number of dependents Discrete

size reported on tax return

Distance from x = Distance in miles from Continuous

home to store home to the store site
Own dog x = 1 if own no pet; Discrete
or cat = 2 if own dog(s) only;
= 3 if own cat(s) only;
= 4 if own dog(s) and cat(s)

Probability Distribution:
 Probability Distribution: For a random
variable it describes how probabilities are
distributed over the values of the random
variable

 How:
• Based on experimental outcomes
• Using special mathematical formula
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Probability Distribution:
 Probability Function - f(x) : Provides the
probability for each value of the random
variable

 Conditions:
f(x) > 0, f(x) = 1

Discrete Probability Distribution:

• Using past data on TV sales, …
• A tabular representation of the probability
distribution for TV sales was developed.
Number
80/200
Units Sold of Days x f(x)
0 80 0 .40
1 50 1 .25
2 40 2 .20
3 10 3 .05
4 20 4 .10
200 1.00
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Discrete Probability Distribution:

.50
.40
Probability
.30
.20
.10

0 1 2 3 4
Values of Random Variable x (TV sales)

Expected Value:
The expected value, or mean, of a random variable
is a measure of its central location.
E(x) =  = xf(x)

The expected value is a weighted average of the

values the random variable may assume. The
weights are the probabilities.

The expected value does not have to be a value the

random variable can assume.
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Expected Value:

x f(x) xf(x)
0 .40 .00
1 .25 .25
2 .20 .40
3 .05 .15
4 .10 .40
E(x) = 1.20

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Discrete Probability Distribution:

Random Variable: No of Heads

Probability Distribution: ? ? ?

Expected Value: ? ? ?
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Variance & Standard Deviation:

The variance summarizes the variability in the
values of a random variable.

Var(x) =  2 = (x - )2f(x)

The variance is a weighted average of the squared

deviations of a random variable from its mean.
The weights are the probabilities.

The standard deviation, , is defined as the

positive square root of the variance.

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Variance & Standard Deviation:

x x- (x - )2 f(x) (x - )2f(x)
0 -1.2 1.44 .40 .576
1 -0.2 0.04 .25 .010
2 0.8 0.64 .20 .128
3 1.8 3.24 .05 .162
4 2.8 7.84 .10 .784
Variance of daily sales =  2 = 1.660
Standard deviation of daily sales = 1.2884 TVs
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Binomial Probability
Distribution

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Binomial Probability Distribution:

Four Properties
1. The experiment consists of a sequence of n
identical trials.

2. Two outcomes, success and failure, are possible

on each trial.

3. The probability of a success, denoted by p, does

not change from trial to trial.
stationarity
4. The trials are independent. assumption
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Binomial Probability Distribution:

Probability Function
n!
f (x) = p x (1 − p )( n − x )
x !(n − x )!
where:
x = the number of successes
p = the probability of a success on one trial
n = the number of trials
f(x) = the probability of x successes in n trials
n! = n(n – 1)(n – 2) ….. (2)(1)

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Binomial Probability Distribution:

Evans Electronics is concerned about a low
retention rate for its employees. In recent years,
management has seen a turnover of 10% of the
hourly employees annually.

Thus, for any hourly employee 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 at random, what is the

probability that 1 of them will leave the company this
year?
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Binomial Probability Distribution:

Let: p = .10, n = 3, x = 1
n!
f ( x) = p x (1 − p ) (n − x )
x !( n − x )!
3!
f (1) = (0.1)1 (0.9)2 = 3(.1)(.81) = .243
1!(3 − 1)!

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Binomial Probability Distribution:

1st Worker 2nd Worker 3rd Worker x Prob.
L (.1) 3 .0010
Leaves (.1)
S (.9) 2 .0090
Leaves
(.1) L (.1) 2 .0090
Stays (.9)
S (.9) 1 .0810
L (.1) 2 .0090
Leaves (.1)
Stays S (.9) 1 .0810
(.9) L (.1)
1 .0810
Stays (.9)
S (.9) 0 .7290
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Binomial Probability Distribution:

p
n x .05 .10 .15 .20 .25 .30 .35 .40 .45 .50
3 0 .8574 .7290 .6141 .5120 .4219 .3430 .2746 .2160 .1664 .1250
1 .1354 .2430 .3251 .3840 .4219 .4410 .4436 .4320 .4084 .3750
2 .0071 .0270 .0574 .0960 .1406 .1890 .2389 .2880 .3341 .3750
3 .0001 .0010 .0034 .0080 .0156 .0270 .0429 .0640 .0911 .1250

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Binomial Probability Distribution:

E(x) =  = np

Var(x) =  2 = np(1 − p)

 = np(1 − p )
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Binomial Probability Distribution:

E(x) = np = 3(0.1) = 0.3 employees of 3

Var(x) = np(1 – p) = 3(0.1)(0.9) = 0.27

 = 3(.1)(.9) = .52 employees

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Binomial Probability Distribution: