Appendix I Normal Probability Plot

The standard normal random variable is a normal variable with mean () = 0 and standard deviation ( ) = 1. Its value is represented by the symbol, z. =0 and =1 All normal random variables can be converted to the standard normal variable, z.

At any z value of the standard normal probability distribution the reference table gives the cumulative probability (area under the curve) up to that value. Example, the probability of z = -3.01 from the table is 0.000967671.

Steps for Constructing Normal Probability Plot: y Arrange the data in ascending order from i=1 to i=n, y Find the value of P(z) for each each data value i=1 .n, find zi such that:     

y Obtain the Percentage values for each P(Z>zi). y Plot these values against the data to obtain the normal probability plot. Example: We know use Excel to plot our Normal probability plot of residuals in our project.
e=y2.275 -0.825 -0.425 -0.725 -0.675 -0.975 -0.975 2.125 -1.625 -0.125 0.475 0.975 1.225 0.725 -0.275 -1.175 Residual -1.625 -1.175 -0.975 -0.975 -0.825 -0.725 -0.675 -0.425 -0.275 -0.125 0.475 0.725 0.975 1.225 2.125 2.275 I 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 P(Z>zi) 0.042397 0.102811 0.163917 0.225023 0.286129 0.347235 0.408341 0.469447 0.530553 0.591659 0.652765 0.713871 0.774977 0.836083 0.897189 0.957603 %P(Z>zi) 4.239672 10.28109 16.39169 22.50229 28.61289 34.7235 40.8341 46.9447 53.0553 59.1659 65.2765 71.38711 77.49771 83.60831 89.71891 95.76033

120 100 80 60 40 20 0 -2 -1.5 -1 -0.5 0 0.5 1 1.5 2 2.5

Probability

Residuals

We can see in the table that we first arrange the residuals in ascending order and then follow each step to plot the normal probability graph. What does normal probability graph show? The sample values are plotted against what we would expect to see if it was strictly consistent with the normal distribution. If the data is consistent with a sample from a normal distribution the points should lie close to a straight line. As a reference, a straight line can be fit to the points. The further the points vary from this line, the greater the indication of departure from normality. If the sample has mean 0, standard deviation 1 then a line through 0 with slope 1 could be used. What does it mean that residuals are normally distributed? The error term in our first order model, we have assumed it to be normally distributed meaning the majority of error lie near the mean i.e. 0 and that very few error terms are far away. So, we can say that the model we assumed is fit and has error term or residuals normally distributed. The value of probability P(Z) obtained gives the measure of its location with reference to the mean i.e zero .Probability near 50% means value is near mean and high probability or very low probability shows value lies toward end of the probability density curve .