The Poisson distribution probability for x occurrences of the desired event in a given time

period is:

x
−μ π
P ( X=x ) =e Where x=0 , 1 , 2, …
x!

Where μ is the mean number of times the event occurs in the time period and e is a constant,
called the exponential number. The number e has the value 2.7183 correct to four decimal
places.

Suppose we have found that, on overage, four people enter a shop in a five-minute period.
The manager would like to know the probability of not more than five customers entering the
shop in a five-minute period because the shop assistants cannot cope with more than five
customers in this time. Using the information given we have μ= 4, since this in the mean
number of customers entering in a five-minute period is:

−4 x
e x4
P ( X=x ) =
x!

There are several ways of evaluatinge−4 :

(i) Some calculators have the facility to work out e− x directly. Others have a y x facility
so you key in y=e, that is, 2.7183 and x=−4, to evaluate e−4 .
(ii) Some books of tablets give you the value of e− x directly (see Table E. In fact tablets
of Poison probabilities are published although these aere not usually a available for
use examinations. From Table E, e−4 =0.01832.

−4
1
(iii) e Can be rewritten as 4 . The value of e is 2.7183 so:
e

1
−4
e =
( 2.7183 )4

1
¿ using a calculator
54.5996

¿ 0.0183 to 3 significant figures

If no calculator is available, then logarithm tables can be used to work out the power of e .
This procedure has the advantage that is can be used even when μis not a whole number.
To find e−4 using logarithms.

We can now evaluation the Poisson probabilities:

−4 −4
e × 4 e ×1
P ( X=0 )= = =0.0183
0! 1
−4 1 −4
e ×4 e × 4
P ( X=1 )= = =0.0732
1! 1
−4 2 −4
( ) e ×4 e × 16
P X=2 = = =0.1464
2! 2
−4 3 −4
e × 4 e ×64
P ( X=3 )= = =0.1952
3! 6

Thus, the probability of not more than five customers entering the shop in a five-minute
period is the sum of these probabilities, which is 0.78 to two decimal places. We are not
justified in writing down any further places of decimals as we have used a rounded value
ofe−4 . The manager has some cause of concern since the assistants are only able to cope
for about 78% of the time. It might be beneficial to employ a further assistant, although
the cost of this would have to be weighed against the cost of possible orders lost when too
many customers enter the shop at any one time and decide to leave before making a
purchase.

The Poison distribution occurs in many real life situations. If can be used to describe the
distribution of rare events such as floods, accidents and strikes which can be considered
to occur randomly in time. For the Poisson distribution to be applicable, the mean number
of occurrences of these events in a given period of time remain constant. Note that there
is no upper limit to the number of events that could occur in any one period of time
although as x became very large, the Poisson probabilities became negligible.

The relationship between the Normal, Binomial and Poisson Distributions

The Normal Approximation to the Poisson Distribution

When μ, the mean of a Poisson distribution, becomes large, the Poisson distribution
approaches a normal distribution and it is easier to work out the normal probabilities than
the Poisson probabilities. The normal distribution is a