BUS 232

Data and Decisions |

(Business Statistics)
Instructor: Negar Ganjouhaghighi
 Week 5 – Chapter 5
Discrete Distributions
 Discrete vs continuous distributions

Random Variable: a variable that contains the outcomes of a chance

experiment
Number of Number of The outcome
Completion Height of
arrivals to ED cars in a can be: 1, 2,
time of a task students
in a day parking lot 3.5, 4.25, or 5

Counted variables
Discrete Continuous Measured variables

Random random
variable variable
Distributions

Discrete Continuous
Binomial Uniform

Poisson Normal

Hypergeometric Exponential

T distribution

Chi square distribution

F distribution
 Describing a discrete distribution

Histogram: most common graphical way

Canada Household size (2016 Census) Probability

1 person 3,969,790 0.28
2 persons 4,834,605 0.34
3 persons 2,140,640 0.15
4 persons 1,946,275 0.14
5 or more persons 1,180,770 0.08
Total 14,072,080
 Describing a discrete distribution

Mean or expected value: repeating the experiment enough times so that

the average approaches a long-run average.
 Describing a discrete distribution

Variance and standard deviation.

 Lets solve Problem 5.3

The following data are the result of a historical study of the number of
flaws found in a porcelain cup produced by a manufacturing firm. Use
these data and the associated probabilities to compute the expected
number of flaws and the standard deviation of flaws.
 Binomial Distribution

The most widely known discrete distribution

In n trials, only x successes are possible, so discrete.

In a sample of 5 parts only 0,1,2,3,4, or 5 parts can be defective (success)
 Binomial Distribution, sample size

Each trial should be independent. If the sample size is less than 5% of the
population, the independent assumption is not of great concern:
The acceptable sample size:
 Binomial Distribution, sample size

Suppose 10% of the population of the world is left-handed

Sample of 20 people selected randomly without replacement.
The probability of 10% is unaffected: 20 is much smaller than the
population.
 Binomial Distribution, example

70% of all Canadians believe cleaning up the environment is an

important issue. What is the probability of a randomly sampling 4
Canadians and having exactly 2 of them say that they believe cleaning up
is an important issue?
Binomial Distribution formula
 Lets solve Problem 5.5

Solve the following problems by using the binomial formula.

a. If n = 4 and p = 0.10, find P(x = 3).

b. If n = 7 and p = 0.80, find P(x = 4).
c. If n = 10 and p = 0.60, find P(x ≥ 7).
d. If n = 12 and p = 0.45, find P(5 ≤ x ≤ 7).
Binomial Probability Distribution Table
 Mean and SD of binomial distribution

If we repeat a trial n times and the probability of success in each trial is

p: the expected number of successes for the n trial is n.p:
If n=10 and p=0.4: .
 Graphing Binomial distribution

Graphing all the possible values of x and their associated probabilities.

Graphing Binomial distribution
 Lets solve Problem 5.8

Use the binomial probability tables in Table A.2 and sketch the graph of the following
binomial distribution. Note on the graph where the mean of the distribution falls.

a. n = 6 and p = 0.70
 Lets solve Problem 5.14

22% of certified financial planners (CFPs) earn between $100,000 and $149,999 per
year. Thirty-two percent earn $150,000 or more. Suppose a complete list of all CFPs is
available and 18 are randomly selected
a. What is the expected number of CFPs who earn between $100,000 and $149,999 per
year? What is the expected number who earn $150,000 or more per year?
b. What is the probability that at least eight CFPs earn between $100,000 and $149,999
per year?
c. What is the probability that two, three, or four CFPs earn more than $150,000 per
year?
d. What is the probability that none of the CFPs earn between $100,000 and $149,999
per year? What is the probability that none earn $150,000 or more per year? Which
probability is higher and why?