Discrete Probability Distributions

Prof(Dr.) Harsh Vardhan

11-17/08/2023
 Session Objective

 To Distinguish between Discrete and Continuous Random Variables

 To understand how a Random Variable is characterized by its
Probability Distribution
 To identify when a random variable will be Binomially distributed
 To identify when a random variable will be Poisson distributed

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Content

 Random Variable - Discrete & Continuous

 Introduction to Probability Distributions
 Discrete Probability Distribution.
 Bernoulli Process & Bernoulli Distribution
 Binomial Probability Distribution
 Use of Binomial Table [Table A.2, page 765] & Excel to calculate Binomial
probabilities
 Poisson Probability Distribution
 Use of Poisson Table [Table A.3, page 772] & Excel to calculate Poisson
probabilities

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 Random Variables
 A Random Variable is a variable that takes on different values
as a result of the outcome of an experiment.
 A random variable can be classified as being either Discrete
or Continuous depending on the numerical values it
assumes.
 A Discrete Random Variable may assume to take on only a
limited number of values that can be listed.
 Number of bad feedbacks received by a restaurant
 Number of absent employees on a given day
 Number of new subscribers to a magazine

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 A Continuous Random Variable may assume any
numerical value within a given range.
 Elapsed time between arrivals of bank customers
 Percent of the labor force that is unemployed

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 Some Special Distributions
 Discrete
 Binomial
 Poisson
 Hypergeometric
 Continuous
 Normal
 Uniform
 Exponential
t
 Chi-square
F

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Discrete Random Variable
Definition
A random variable that assumes countable values is called a discrete
random variable.
Example
1. The number of cars sold at a dealership during a given month
2. The number of houses in a certain block
3. The number of fish caught on a fishing trip
4. The number of complaints received at the office of an airline on a
given day
5. The number of customers who visit a bank during any given hour
6. The number of heads obtained in three tosses of a coin

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 Example: LG
 Discrete random variable with a finite number of
values
Let x = number of TV sets sold at the store in one day
where x can take on 5 values (0, 1, 2, 3, 4)

 Discrete random variable with an infinite sequence of

values
Let x = number of customers arriving in the
departmental store one day where x can
take on the values 0, 1, 2, . . .
We can count the customers arriving, but there is no
finite upper limit on the number that might arrive.
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Continuous Random Variable
Definition
A random variable that can assume any value
contained in one or more intervals is called a
continuous random variable.

0 200

Every point on the above line represents a possible value of

x that denotes the life of the battery. There are infinite
number of points on this line . The values represented by
points on this line are uncountable.

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Examples of Continuous random variables

1. The height of a person

2. The time taken to complete an examination.
3. The weight of a fish
4. The price of a house

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Probability Distribution of a Discrete Random Variable

Definition
The probability distribution of a discrete random
variable lists all the possible values that the
random variable can assume and their
corresponding probabilities.

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 Discrete Probability Distributions
 The probability distribution for a random variable describes
how probabilities are distributed over the values of the
random variable.
 The probability distribution is defined by a probability
function, denoted by f(x) or p(x), which provides the
probability for each value of the random variable.
 The required conditions for a discrete probability function
are:
f(x) > 0
Sf(x) = 1
 We can describe a discrete probability distribution with a
table, graph, or equation.
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 Example :LG

 Using past data on TV sales (below left), a tabular

representation of the probability distribution for TV sales
(below right) was developed.
Number
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 BS/IIFT/Harsh/5 1.00 13
 Example: LG
 A graphical representation of the probability distribution
for TV sales in one day

.50

Probability
.40

.30

.20

.10

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

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Frequency & Relative frequency Distributions of the Vehicles
Owned by Families

Number of Relative
Vehicles Owned Frequency
Frequency
0 30 30/2000 = .015
1 470 470/2000 = .235
2 850 850/2000 = .425
3 490 490/2000 = .245
4 160 160/2000 = .080
N = 2000 Sum = 1.000

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Probability Distribution

Probability Distribution of the Number of Vehicles

Owned by Families

Number of Vehicles Owned Probability

x P(x)

0 .015
1 .235
2 .425
3 .245
4 .080
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ΣP(x) = 1.000 16
Graphical presentation of the probability distribution

P(x)
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
0 1 2 3 4 x
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 Example

 Each of the following table lists certain values of x

and their probabilities.
Determine whether or not each table represents
a valid probability distribution.

a) x P(x) b) x P(x) c) x P(x)

0 .08 2 .25 7 .70
1 .11 3 .34 8 .50
2 .39 4 .28 9 -.20
3 .27 5 .13
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Solution

a) Yes or No ?
b) Yes or No ?
c) Yes or No ?

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Example

The following table lists the probability distribution of

the number of breakdowns per week for a machine
based on past data.

Breakdowns per week 0 1 2 3

Probability 0.15 0.20 0.35 0.30

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Example

a) Present this probability distribution graphically.

b) Find the probability that the number of breakdowns
for this machine during a given week is
i. exactly 2 ii. 0 to 2
iii. more than 1 iv. at most 1

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 Solution

Probability Distribution of the Number of Breakdowns

x P(x)
0 .15
1 .20
2 .35
3 .30
ΣP(x) = 1.00

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Graphical presentation of the probability distribution

P(x)
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
0 1 2 3 x

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Solution

(b)
i. P (exactly 2 breakdowns) =
ii. P (0 to 2 breakdowns) =
iii. P (more than 1 breakdown) =
iv. P (at most one breakdown) =

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Example

According to a survey, 60% of all students at a large

University suffer from QT anxiety. Two students are
randomly selected from this university. Let X denote the
number of students in this sample who suffer from QT
anxiety. Develop the probability distribution of X.

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Tree Diagram.

First Student Second Student Final Outcomes

P(NN) = (.40)(.40) = .16
N
.40
M
N .60 P(NM) = (.40)(.60) = .24
.40

N P(MN) = (.60)(.40) = .24

M
.40
.60

M
P(MM) = (.60)(.60) = .36
.60
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Solution

Let us define the following two events:

N = the student selected does not suffer from
math anxiety
M = the student selected suffers from math
anxiety

P (x = 0) = P(NN) = .16
P (x = 1) = P(NM or MN) = .48
P (x = 2) = P(MM) =.36

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Probability Distribution of the Number of Students with Math
Anxiety in a Sample of Two Students

x P(x)
0 .16
1 .48
2 .36
ΣP(x) = 1.00

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 Expected Value and Variance

 The expected value, or mean, of a random variable

is a measure of its central location.
 Expected value of a discrete random variable:
E(x) = m = Sxf(x)
 The variance summarizes the variability in the
values of a random variable.
 Variance of a discrete random variable:
Var(x) = s2 = S(x - m)2f(x)
 The standard deviation, s, is defined as the positive
square root of the variance.

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 Example: LG
 Expected Value of a Discrete Random Variable

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

The expected number of TV sets sold in a day is 1.2

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 Example : LG
 Variance and Standard Deviation of a Discrete Random Variable
x x - m (x - m)2 f(x) (x - m)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
1.660 = s 2
The variance of daily sales is 1.66 TV sets.
The standard deviation of sales is 1.29 TV sets.

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 Example

ABC Electronics manufactures computer parts that are

supplied to many computer companies. Despite the fact
that two quality control inspectors at ABC Electronics
check every part for defects before it is shipped to
another company, a few defective parts do pass through
these inspections undetected.
Let x denote the number of defective computer parts in a
shipment of 400.The following table gives the probability
distribution of x.

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Example

x 0 1 2 3 4 5
P(x) .02 .20 .30 .30 .10 .08

Compute the standard deviation of x.

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Solution

Table Computations to Find the Standard Deviation

x P(x) xP(x) x² x²P(x)
0 .02 .00 0 .00
1 .20 .20 1 .20
2 .30 .60 4 1.20
3 .30 .90 9 2.70
4 .10 .40 16 1.60
5 .08 .40 25 2.00
ΣxP(x) = BS/IIFT/Harsh/5
2.50 Σx²P(x) = 7.70 34
Solution

m   xPx   2.50 defective computer parts in 400

σ  x 2
P  x   m 2
 7.70  ( 2.50) 2
 1.45
 1.204 defective computer parts

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Example
XYZ Corporation is planning to market a new makeup product.
According to the analysis made by the financial department of the
company, it will earn an annual profit of ₹ 4.5 million if this
product has high sales and an annual profit of ₹ 1.2 million if the
sales are mediocre, and it will lose ₹ 2.3 million a year if the sales
are low.
The probabilities of these three scenarios are 0.32, 0.51 and 0.17
respectively.

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Example

a) Let x be the profits (in millions of Rs.) earned per

annum by the company from this product. Write the
probability distribution of x.
b) Calculate the mean and the standard deviation of x.

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Solution

a) The following table lists the probability distribution

of x.

x P(x)
4.5 0.32
1.2 0.51
-2.3 0.17

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 x P(x) xP(x) x² x²P(x)
4.5 .32 1.440 20.25 6.4800
1.2 .51 .612 1.44 0.7344
-2.3 .17 -.391 5.29 0.8993
Σ xP(x) = 1.661 Σ x²P(x) = 8.1137

Computations to Find the Mean and Standard deviation

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Solution

m   xPx   Rs.1.661 million

σ  x Px   m
2 2
 8.1137  (1.661) 2

 Rs.2.314 million

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 Bernoulli Process

 Bernoulli Process is a process in which each trial

has only two possible outcomes, the probability
of the outcome of any trial remains fixed over
time , and trials are statistically independent.

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 Bernoulli Process - Example
 Out comes of a fixed number of tosses of a fair coin is an
example of Bernoulli process.
 Each trial (toss of coin) has two possible out comes-Head or Tail,
Yes or No, Success or Failure.
HHTHTTH…….SFSSF
 The probability of out come of any trial(toss) remains fixed over
time. The probability of Head =1/2 irrespective of number of times
the coin is tossed .
 The trials are statistically independent ,the outcome one toss does
not affect outcome of any other toss.
 If p is probability of success than q=1-p is probability of failure;
where p+q=1.

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Bernoulli Distribution

 A random variable X which takes value 1 and 0 with probability p and

q respectively i.e P(X=1) =p and P(X=0)=q, q=1-p is called Bernoulli
Variate and is said to follow Bernoulli distribution.
 E(X) =p
 V(X)=pq

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 Binomial Probability Distribution
 Properties of a Binomial Experiment
 The experiment consists of a sequence of n identical Bernoulli trials.
 Two outcomes, Success and Failure, are possible for each trial.
 The probability of a success, denoted by p, does not change from trial to
trial.
 The trials are independent.
 Consider series of n independent Bernoulli trials with probability of success p
in any trail and q=1-p probability of failure.
 The probability of x success and n-x failures in n independent trials =P(SFS FFS
FFFS …FS) =P(S) P(F) P(S)….. P(F) P(S)=pppp…p.qq…q
 x factors (n-x) factors
 x success in n trials can happen in 𝑛𝑥𝐶 ways with probability 𝑝 𝑥 𝑞 𝑛−𝑥 ways

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 Binomial Probability Distribution
 Binomial Probability Function p ( x) nC x p x q n  x
n!
p( x)  p x (1  p) ( n  x )
x!(n  x)!
where, x=0,1,2,……..n, 0≤p≤1, 0≤q≤1,p+q=1
 p(x) = the probability of x successes in n trials;
 n = the number of trials;
 x = number of successes in n trials;
 n - x = number of failures in n trials;
 p = the probability of success on any one trial;
 q = 1 – p = probability of failure.
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Binomial Distribution
 A random variable X is said to follow Binomial distribution if it assumes
only non negative values and its probability mass function is given by
𝑥 𝑛−𝑥
 P(X=x) = p(x) = 𝑛𝐶𝑥 𝑝 𝑞 , x=0,1,2…..n, q=1-p
= 0 otherwise
 X~ B(n, p), Random variable X follows Binomial distribution with
parameters n & p

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 The Binomial Probability Distribution
11/08/23

 Expected Value
E(X) = m = np
 Variance
Var(X) = s2 = np(1 - p)
 Standard Deviation
s  np(1  p)

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Binomial Distribution

=BINOMDIST(numbers, trials, probability, cumulative)

x,4,0.5,false
x=0,1,2,3,4

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Binomial Table –Table A.2 page765 n=4,p=0.5,x=0,1,2,3,4

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BS/IIFT/Harsh/5 50
Binomial Table –Table A.2 page765

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Binomial Distribution

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Bar Diagram Binomial Distribution

0.4 0.375

0.35

0.3
0.25 0.25
0.25

p(x) 0.2

0.15

0.1
0.0625 0.0625
0.05

0
1 2 3 4 5
X

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 Example: Evans Electronics
 Binomial Probability Distribution
Evans is concerned about a low retention rate for
employees. On the basis of past experience, management
has seen a turnover of 10% of the hourly employees
annually. Thus, for any hourly employees 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?

Let: p = 0.10, n = 3, x = 1

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Example: Evans Electronics
 Using the Binomial Probability Function

n! ( n x )
f ( x)  p (1  p)
x

x!(n  x)!
3!
f (1)  ( 0.1)1 ( 0. 9 ) 2
1!( 3  1)!

= (3)(0.1)(0.81)

= 0.243
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 Binomial Table
 Using the Tables of Binomial Probabilities See
Table A.2 of Black page 765 or A3 of Levin
p
n x .10 .15 .20 .25 .30 .35 .40 .45 .50
3 0 .7290 .6141 .5120 .4219 .3430 .2746 .2160 .1664 .1250
1 .2430 .3251 .3840 .4219 .4410 .4436 .4320 .4084 .3750
2 .0270 .0574 .0960 .1406 .1890 .2389 .2880 .3341 .3750
3 .0010 .0034 .0080 .0156 .0270 .0429 .0640 .0911 .1250

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 Example: Evans Electronics
 Using a Tree Diagram
First Second Third Value
Worker Worker Worker of x Probab.
L (.1) 3 .0010
Leaves (.1)
S (.9) 2 .0090
Leaves (.1)
L (.1)
2 .0090
Stays (.9)
1 .0810
S (.9)
L (.1) 2 .0090
Leaves (.1)
S (.9) 1 .0810
Stays (.9) L (.1)
1 .0810
Stays (.9) .7290
S (.9) 0
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Example

Example: Evans Electronics

E(x) = m = np= 3(.1) = 0.3 employees out of 3
Var(x) = s 2 = npq=3(.1)(.9) = 0.27

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Problem

 10 coins are thrown simultaneously. Find the

probability of getting at least 7 heads.

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Solution
x= number of Heads,=0,1,….10
p=1/2,
P(X> 7) = P(X=7)+P(X=8)+P(X=9)+P(X=10)=
1- P(X<6) =0.1719 [Table A.2 page 766]

[P(X<6) =BINOMDIST(6,10,0.5,TRUE)=0.828125
1-0.828125 = 0.171875]

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 Example

Five percent of all mobiles manufactured by a large electronics company are

defective. A quality control inspector randomly selects three mobiles from the
production line.
What is the probability that exactly one of these three mobiles is defective?

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Figure Tree diagram for selecting three Mobiles.

First VCR Second VCR Third VCR D DDD

.05
D
G
.05
.95 DDG

D DGD
D G
.05
.05 .95
G
.95 DGG
D GDD
.05
G
D
G
.05
.95 .95 GDG
D GGD
G .05
.95
G
BS/IIFT/Harsh/5 .95 GGG 62
Solution

Let
D = a selected Mob is defective
G = a selected Mob is good

P (DGG ) = P (D )P (G )P (G )

P (GDG ) = P (G )P (D )P (G )

P (GGD ) = P (G )P (G )P (D )

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Solution

Therefore,
P (1 mobile is defective in 3)
= P (DGG or GDG or GGD )
= P (DGG ) + P (GDG ) + P (GGD )
= .0451 + .0451 + .0451
= .1353

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 Solution
n = total number of trials = 3 mobiles
x = number of successes = number of defective mobiles = 1
n–x=3-1=2
p = P (success) = .05
q = P (failure) = 1 – p = .95

Therefore, the probability of selecting exactly

one defective mobile.

P( x  1)  3 C1 (.05)1 (.95) 2  (3)(.05)(.9025 )  .1354

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Example
At the Express House Delivery Service, providing high-
quality service to customers is the top priority of the
management. The company guarantees a refund of all
charges if a package it is delivering does not arrive at
its destination by the specified time.
It is known from past data that despite all efforts, 2%
of the packages mailed through this company do not
arrive at their destinations within the specified time.
Suppose a corporation mails 10 packages through
Express House Delivery Service on a certain day.

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Example

a) Find the probability that exactly 1 of these 10

packages will not arrive at its destination within the
specified time.
b) Find the probability that at most 1 of these 10
packages will not arrive at its destination within the
specified time.

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 Solution
 n = total number of packages mailed = 10 ,
 p= P (success) = 0.02,
 q = P (failure) = 1 – 0.02 =0.98

a)

x = number of successes = 1
n – x = number of failures = 10 – 1 = 9
10!
P( x  1)10C1 (.02)1 (.98) 9  (.02)1 (.98) 9
1!(10  1)!
 (10)(.02)(.83374776)  .1667
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Solution

b)

P( x  1)  P( x  0)  P( x  1)
10C0 (.02) 0 (.98)10 10C1 (.02)1 (.98) 9
 (1)(1)(.81707281)  (10)(.02)(.83374776)
 .8171  .1667  .9838

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Example
According to Survey, 56% of a call centre employees are making
payments on the car loans and the remaining are not. Assume
that this result holds true for the current population of call
centre.
Let x denote the number in a random sample of 3 of call centre
employees who are making payments on their car loans.
Write the probability distribution of x and draw a bar graph for
this probability distribution.

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Solution

 n = total employee in the sample = 3

 p = P (an employee is making car loan payments) = 0.56
 q = P (an employee not making car loan payments) = 1 - 0.56 = 0.44

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Solution

P( x  0) 3C0 (.56 ) 0 (0.44 ) 3  (1)(1)(.085184 )  .0852

P( x  1)3C1 (.56)1 (.44) 2  (3)(.56)(.1936)  .3252

P( x  2) C2 (.56) (.44)  (3)(.3136)(.44)  .4140

3 2 1

P( x  3) 3C3 (.56 ) 3 (.44 ) 0  (1)(.175616 )(1)  .1756

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Probability Distribution of x

x P (x)
0 .0852
1 .3252
2 .4140
3 .1756

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Bar graph of the probability distribution

P(x)
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0 x
0 1 2 3

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Problem

 If X~B(n,p)
and given E(X)=4, V(X)=3
 Find parameters of the distribution
 E(X)=np =4, V(X)= npq=3,
 Then q=3/4,
 p=1/4, n=16
 X~B(16,1/4)

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Problem

 The incidence of occupational disease in an industry is such

that the workers have 20% chance of suffering from it.
 What is the probability that out of six workers 4 or more will
come in contact of disease?

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Solution

p = Probability of worker suffering =0.20,

q = 0.80,n=6
P(X≥4)=P(X=4)+P(X=5)+P(X=6)
= 0.0154+0.0015+0.0001
=0.0170

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 Poisson Distribution
 The Poisson distribution focuses only on the number of discrete
occurrences over some interval or continuum
 A discrete distribution
 Describes rare events
 Each occurrence is independent of any other occurrences.
 The number of occurrences in each interval can vary from zero to infinity.
 The expected number of occurrences must hold constant throughout the
experiment.
 Poisson does not have a given number of trials (n) as a binomial experiment does
 Occurrences occur over an interval

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 Variables having Poisson Distribution
 The number of people who arrive at a bank or fast food restaurant in a
specified time interval (during time period 1, 2, 3, etc.)
 The number of cars arriving /accidents at an intersection.
 The number of planes landing at an airport.
 In each case, “chances are” the number of people, cars, planes, etc will
be, say 0, 1, 2, 3… but there is no upper limit.
 Arrivals at queuing systems
 airports -- people, airplanes, automobiles, baggage
 banks -- people, automobiles, loan applications
 Defects in manufactured goods
 number of errors per typed page
BS/IIFT/Harsh/5 79
 Poisson Process
 Poisson Process
 The probability of an occurrence is the same for any two intervals of equal length.
 The occurrence or non-occurrence in any interval is independent of the occurrence
or non-occurrence in any other interval.
 Discrete Events in an ‘Interval’
 The Probability of One Success in Interval is Stable
 The Probability of More than One Success in this Interval is 0
 Probability of Success is Independent from Interval to Interval .
 # Customers arriving in 15 min.
 # Defects per case of Light Bulbs.

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 Poisson Distribution

 If Poisson distribution is studied over a long period

of time, a long run average can be determined
 The average is denoted by lambda (λ)
 Each Poisson distribution contains a lambda value from which the
probabilities are determined
 A Poisson distribution can be described by λ alone
 X∼P(λ )

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 Poisson Probability Distribution
 Poisson Probability Function is given by:
𝑒 −λ λ𝑥
 p(x) = , x= 0,1,2…….∞
x!
where;
x = number of occurrence per interval for which probability is being computed.
p(x) = probability of x occurrences in an interval;
l = mean number of occurrences in an interval ;
e = 2.71828.
The Mean and Variance of Poisson distribution are:
µ=l;
 σ2 = l
BS/IIFT/Harsh/5 82
 Problem: RML Hospital-1
 Covid - 19 patients arrive at the emergency room of RML Hospital, New
Delhi at the average rate of 6 per hour on weekend evenings.
 What is the probability of 4 arrivals in 30 minutes on a weekend evening?
 Using the Poisson Probability Function
λ = 6/hour = 3/half-hour, x = 4

34 ( 2. 71828) 3
f ( 4)  .1680
4!

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 RML Hospital

 Using the Tables of Poisson Probabilities(A.3 ,page 772 Black)

λ
x 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 3.0
0 .1225 .1108 .1003 .0907 .0821 .0743 .0672 .0608 .0550 .0498
1 .2572 .2438 .2306 .2177 .2052 .1931 .1815 .1703 .1596 .1494
2 .2700 .2681 .2652 .2613 .2565 .2510 .2450 .2384 .2314 .2240
3 .1890 .1966 .2033 .2090 .2138 .2176 .2205 .2225 .2237 .2240
4 .0992 .1082 .1169 .1254 .1336 .1414 .1488 .1557 .1622 .1680
5 .0417 .0476 .0538 .0602 ..0668 .0735 .0804 .0872 .0940 .1008
6 .0146 .0174 .0206 .0241 .0278 .0319 .0362 .0407 .0455 .0504
7 .0044 .0055 .0068 .0083 .0099 .0118 .0139 .0163 .0188 .0216
8 .0011 .0015 .0019 .0025 .0031 .0038 .0047 .0057 .0068 .0081
9 .0003 .0004 .0005 .0007 .0009 .0011 .0014 .0018 .0022 .0027
10 .0001 .0001 .0001 .0002 .0002 .0003 .0004 .0005 .0006 .0008
11 .0000 .0000 .0000 .0000 .0000 .0001 .0001 .0001 .0002 .0002
12 .0000 .0000 .0000 .0000 .0000 .0000 .0000 .0000 .0000 .0001

BS/IIFT/Harsh/5 84
Create Poisson Probability Table page 151

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 Difference from a Binomial Distribution
The Poisson distribution differs from the Binomial distribution in these
fundamental ways:
 The Binomial distribution describes a distribution of two possible outcomes of
a trail by Success & Failure. The Poisson distribution focuses only on the
number of discrete occurrence over interval.
 The Binomial distribution is affected by the sample size n and the probability
p, whereas the Poisson distribution is affected only by the mean λ. It does not
give number of trials n as in Binomial distribution.
 In a Binomial distribution the possible values of the random variable are x are
0, 1, . . . n, but a Poisson distribution has possible x values of 0, 1,2 . . . , with
no upper limit.

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 Binomial tends to Poisson for n>20 & p<0.05

 Poisson Distribution is a good approximation of Binomial Distribution

when n>20 and p is < 0.05.
 In cases these conditions are met ,we substitute the mean of
Binomial distribution np in place of the mean l of the Poisson
distribution.
𝑒 −𝑛𝑝 (𝑛𝑝)𝑥
 p(x) = , x =0,1,2,……
x!

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Problem-2

 A manufacturer who produces medicines bottles, finds that 0.1% of

bottles are defective. The bottles are packed in boxes containing 500
bottles. A manufacturer buys 100 boxes from the producer of bottles.
Using Poisson distribution find how many boxes will contain:
 No defectives
 At least two defectives

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 Solution
 Given n=500,p= 0.1/100= 0.001, therefore λ=np=500*0.001= 0.5.
 Probability of no defectives =
P(X=0)= 𝑒 −0.5 =0.6065
 P(X≥2)=1-P(X≤1)=1-[P(x=0)+P(x=1)] =1-[𝑒 −λ + λ𝑒 −λ ]
=1 -[𝑒 −0.5 +0.5𝑒 −0.5 ]
=1-[ 0.6065+0.5(0.6065)]=0.0902
Therefore required # of boxes = 100* 0.0902≈10

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Problem-3

 Suppose a Life Insurance company insures lives of 5,000 people

aged 42. If the study shows the probability that any 42 years old
person will die in a given year to be 0.001, find the probability that
the company will have to pay at least two claims during a given year.

BS/IIFT/Harsh/5 90
Solution
 Given n=5,000,p=0.001,therefore λ=np=5,000*0.001=5.
 Probability that the company has to pay at least 2 claims during a
given year is given by
 P(X≥2)=1-P(X<2)=1-[P(x=0)+P(x=1)] =1-[𝑒 −λ + λ𝑒 −λ ]
=1-[𝑒 −5 +5𝑒 −5 ]=1-𝑒 −5 [1 + 5]
=1-6*0.0067
=0.9596

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Thanks

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