APPLIED STATISTICS

What did you learn in the last Session?

cheap.buyessay.org
 Probability
• Probability is the basis for inferential statistics
• Assigning probabilities:
• The classical method

• Relative Frequency of Occurrence

• Subjective Probability
• based on the feelings or insights of the person determining
3
the probability
 Structure of Probability
• Experiment – a process that produces outcomes
• Event - an outcome of an experiment
• Elementary Events - events that cannot be decomposed or
broken down into other events
• Sample Space - a complete roster or listing of all elementary
events for an experiment
• Unions - combining elements from each of the sets
• Intersection - contains the elements common to both sets

4
 Structure of Probability
• Mutually Exclusive Events - the occurrence of one event
precludes the occurrence of the other event(s)
• Independent Events - the occurrence or nonoccurrence of
one of the events does not affect the occurrence or
nonoccurrence of the other event(s)
• Collectively Exhaustive Events - contains all possible
elementary events for an experiment
• Complementary Events - all the elementary events of an
experiment not in X comprise its complement

5
 Counting the Possibilities
• The mn Counting Rule - for an operation that can be done m
ways and a second operation that can be done n ways, the
two operations then can occur, in order, in mn ways
• Sampling from a Population with Replacement - Sampling n
items from a population of size N with replacement would
provide (N)n possibilities
• Sampling from a Population without Replacement - sampling
n items from a population of size N without replacement
provides
possibilities
6
 Probabilities
• Marginal Probability – P(E), computed by dividing some
subtotal by the whole
• Union Probability - P(E1 ∪ E2), the probability that E1 will
occur or that E2 will occur or that both E1 and E2 will occur
• Joint Probability - P(E1 ∩ E2), the joint probability of events E1
and E2 occurring
• Conditional Probability - P(E1|E2), the probability that E1 will
occur, given that E2 is known to have occurred

7
 Laws of Probabilities
• Additional laws
• General law

• Special law

• Multiplication laws
• General law P (X ∩ Y ) = P (X)⋅P (Y |X) = P (Y )⋅P (X|Y )
• Special law P (X ∩ Y ) = P (X)⋅P (Y )

8
(Probability-based)
Distributions
Week04

9
 Learning objectives
• Define a random variable in order to differentiate between a discrete
distribution and a continuous distribution
• Determine the mean, variance, and standard deviation of a
distribution.
• Solve problems involving different types of discrete and continuous
distributions

10
 Introduction
• A battery manufacturer randomly selects three batteries from a large
batch of batteries to be tested for quality
• Each selected battery is to be rated as good or defective.
• The batteries are numbered from 1 to 3, a defective battery is
designated with a D, and a good battery is designated with a G
 Random Variable
• A variable that contains the outcomes of a chance experiment
e.g., an experiment is to measure the arrivals of automobiles at a turnpike
tollbooth during a 30-second period.
The possible outcomes are 0 cars, 1 car, 2 cars, … , n cars
These numbers (0, 1, 2, … , n) are the values of a random variable

• Types of random variables:

i. discrete random variables -
ii. continuous random variables
 Random Variable
i. Discrete random variables
• if the set of all possible values is at most a finite or a countably infinite
number of possible values
• In most statistical situations, discrete random variables produce values
that are non-negative whole numbers
• E.g., six people are randomly selected from a population and how many
of the six are left-handed is to be determined.
The only possible numbers of left-handed people in the sample of six
are 0, 1, 2, 3, 4, 5, and 6
 Random Variable
ii. Continuous random variables
• take on values at every point over a given interval
• continuous random variables have no gaps or unassumed values
• E.g., if a person is assembling a product component, the time it takes to
accomplish that feat could be any value within a reasonable range.
such as 3 minutes 36.4218 seconds or 5 minutes 17.5169 seconds, and
so on

Note:
in actual practice, virtually all business data are discrete
 Random Variables
• The outcomes for random variables and their associated probabilities
can be organized into distributions:
• discrete distributions
• continuous distributions
• Determining the distribution of a body of data is important because
the type of analysis available to a business analyst depends upon the
characteristics of any given distribution
 Discrete Distribution
• The histogram is probably the most common graphical way to depict
a discrete distribution.
• x-axis of the histogram contains the possible outcomes of the experiment
• the y-axis contains the probabilities of these occurring
 Discrete Distribution
Mean or Expected Value
• the long-run average of occurrences
• if the process is repeated long enough, the average of the outcomes is
most likely to approach a long-run average, expected value, or mean
value
 Discrete Distribution
Mean or Expected Value
• E.g.,

In the long run, the mean or expected number of crises on a

given Friday is 1.15 crises
 Discrete Distribution
Variance and Standard Deviation of a Discrete Distribution
 Discrete Distribution
Variance and Standard Deviation of a Discrete Distribution
 Discrete Distribution
Variance and Standard Deviation of a Discrete Distribution
• E.g.,
 Discrete Distribution
Binomial Distribution
• any single trial that contains only two possible outcomes
• E.g., a quality-control analyst is looking for defective products.
(He would consider finding a defective product a success, even though
the company would not consider a defective product a success)
 Discrete Distribution
Binomial Distribution
• Assumptions:
• The experiment involves n identical trials
• Each trial has only two possible outcomes denoted as success or as failure
• Each trial is independent of the previous trials
n < 5% N
• The terms p and q remain constant throughout the experiment, where
the term p is the probability of getting a success on any one trial and
the term q = (1 − p) is the probability of getting a failure on any one trial
 Discrete Distribution
Binomial Distribution
• E.g., Gallup survey found that 65% of all financial consumers were very
satisfied with their primary financial institution.
Suppose that 25 financial consumers are sampled.
If the Gallup survey result still holds true today, what is the probability
that exactly 19 are very satisfied with their primary financial institution?
 Discrete Distribution
Binomial Distribution
 Discrete Distribution
Binomial Distribution
• E.g., Gallup survey found that 65% of all financial consumers were very
satisfied with their primary financial institution.
Suppose that 25 financial consumers are sampled.
If the Gallup survey result still holds true today, what is the probability
that exactly 19 are very satisfied with their primary financial institution?
The value of p is .65 (very satisfied),
the value of q = 1 − p = 1 − .65 = .35 (not very satisfied),
n = 25, and x = 19.
 Discrete Distribution
Binomial Distribution
• E.g., Gallup survey found that 65% of all financial consumers were very
satisfied with their primary financial institution.
Suppose that 25 financial consumers are sampled.
If the Gallup survey result still holds true today, what is the probability
that exactly 19 are very satisfied with their primary financial institution?
C (.65)19(.35)6 = (177,100)(.00027884)(.00183827) = .0908
25 19

If 65% of all financial consumers are very satisfied, about 9.08% of the
time the researcher would get exactly 19 out of 25 financial consumers
who are very satisfied with their financial institution.
 Discrete Distribution
Poisson Distribution
• Derived from the binomial distribution
• focuses on the number of discrete occurrences over some interval or
continuum.
e.g., the occurrence of serious accidents at a chemical plant over a
particular month
• Poisson formula has been referred to as the law of improbable events
 Discrete Distribution
Poisson Distribution
• Characteristics:
• It is a discrete distribution.
• It describes rare events.
• Each occurrence is independent of
the other occurrences.
• It describes discrete occurrences over
a continuum or interval.
• The occurrences in each interval can
range from zero to infinity.
• The expected number of occurrences
must hold constant throughout the
experiment
 Discrete Distribution
• E.g,
• Suppose bank customers arrive randomly on weekday afternoons at an
average of 3.2 customers every 4 minutes
• What is the probability of exactly 5 customers arriving in a 4-minute
interval on a weekday afternoon?
• The lambda for this problem is 3.2 customers per 4 minutes.
• The value of x is 5 customers per 4 minutes.

• If a bank averages 3.2 customers every 4 minutes, the probability of exactly 5

customers arriving during any one 4-minute interval is .1140
 Discrete Distribution
Hypergeometric Distribution
• complement the types of analyses that can be made by using the
binomial distribution
• The hypergeometric distribution applies only to experiments in which
the trials are done without replacement
• Characteristics:
• It is a discrete distribution.
• Each outcome consists of either a success or a failure.
• Sampling is done without replacement.
• The population, N, is finite and known.
• The number of successes in the population, A, is known
 Discrete Distribution
Hypergeometric Distribution
• the hypergeometric distribution should be used instead of the binomial
distribution when the following conditions are present
• Sampling is being done without replacement
• n≥5%N
 Discrete Distribution
• E.g.,
Twenty-four people, of whom 8 are women, apply for a job.
If 5 of the applicants are sampled randomly, what is the probability that
exactly 3 of those sampled are women?
This problem contains a small, finite population of 24, or N = 24.
A sample of 5 applicants is taken, or n = 5.
the population breakdown is A = 8 women (successes) and N − A = 24 − 8 = 16 men
 Continuous Distribution
• The probability is the area under the
curve for the interval being considered
• the probability or total area under the
curve is 1.
 Continuous Distribution
The Uniform Distribution
• A continuous distribution in which the same height is obtained
over a range of values
• Or, rectangular distribution
 Continuous Distribution
The Uniform Distribution
 Continuous Distribution
The Uniform Distribution
e.g., Suppose the amount of time it takes to assemble a plastic
module ranges from 27 to 39 seconds and that assembly times are
uniformly distributed.
What is the probability that a given assembly will take between 30
and 35 seconds?

Fewer than 30 seconds?

 Continuous Distribution
The Normal Distribution
• Probably the most widely known and
used of all distributions
• It is a continuous distribution.
• It is a symmetrical distribution about its
mean.
• It is asymptotic to the horizontal axis.
• It is unimodal.
• It is a family of curves.
• Area under the curve is 1.
 Continuous Distribution
The Normal Distribution
• The normal distribution is described or
characterized by two parameters:
• the mean, μ, and
• the standard deviation, σ.
• E.g.
1. μ = 50 and σ = 5
2. μ = 80 and σ = 5
3. μ = 50 and σ = 10
 Continuous Distribution
The Normal Distribution
• Standardized normal distribution (or
curve).

• A z score is the number of standard

deviations that a value, x, is above or
below the mean
• The z distribution is a normal distribution
with a mean of 0 and a standard
deviation of 1
 Continuous Distribution
The Normal Distribution
• E.g.,
According to EPA data, on average there is
4.43 pounds of waste generated per person in
the United States per day.
Suppose waste generated per person per day
in the United States is normally distributed
with a standard deviation of 1.32 pounds
What is the probability that the person
generates more than 6.00 pounds of waste per
day?
 Continuous Distribution
The Normal Distribution
• solving for the z value

• The probability that a randomly selected

person in the United States generates more
than 6.00 pounds of waste per day is .1170 or
11.70%.
 Weekly assignment - 04

44
 Weekly assignment - 04

45
 Weekly assignment - 04

Email your work with subject line: STAT-Assigment04

to adoditmbae@gmail.com, by Sunday, 26 March 2023
(23.59 WIB)

46