Business Statistics, 5

th
ed.
by Ken Black



Chapter 6

Continuous
Distributions
Discrete Distributions
PowerPoint presentations prepared by Lloyd Jaisingh,
Morehead State University

Learning Objectives
Understand concepts of the uniform
distribution.
Appreciate the importance of the normal
distribution.
Recognize normal distribution problems, and
know how to solve them.
Decide when to use the normal distribution to
approximate binomial distribution problems,
and know how to work them.
Decide when to use the exponential distribution
to solve problems in business, and know how to
work them.
Uniform Distribution
f x
b a
for a x b
for
( ) =

s s

1
0 all other values
Area = 1
f x ( )
x
1
b a
a
b
Uniform Distribution of Lot Weights
f x
for x
for
( ) =

s s

1
47 41
41 47
0 all other values
Area = 1
f x ( )
x
1
47 41
1
6
=
41 47
Uniform Distribution Probability
P X
b a
x x
x x
( )
1 2
2 1
s s =

P X ( ) 42 45
45 42
47 41
1
2
s s =

=
42
45
f x ( )
x
41 47
45 42
47 41
1
2

=
Area
= 0.5
Uniform Distribution
Mean and Standard Deviation
Mean
=
+

a b
2
Mean
=
+

41 47
2
88
2
44 = =
Standard Deviation
o =
b a
12
Standard Deviation
o =

= =
47 41
12
6
3 464
1 732
.
.
Uniform Distribution of Assembly of
Plastic Modules

s s =

=
es other valu all 0
39 27
12
1
27 39
1
) (
f or
x f or
x f
Area = 1
f x ( )
x 27 39
12
1
27 39
1
=

Uniform Distribution
Mean and Standard Deviation
Mean
=
+

a b
2
33
2
7 2 + 9 3
=
Mean
=
Standard Deviation
o =
b a
12
464 . 3
464 . 3
12
12
27 39
Deviation Standard
= =

= o
Uniform Distribution of Assembly of
Plastic Modules
4167 . 0
12
5
27 39
30 35
) 35 30 ( = =

= s s X P
42
45
f x ( )
x 27 39
4167 . 0
27 39
30 35
=

30
35
Uniform Distribution of Assembly of
Plastic Modules
2500 . 0
12
3
27 39
27 30
) 30 ( = =

= < X P
f x ( )
x 27 39 30
4167 . 0
27 39
30 35
=

Normal Distribution
Probably the most widely known and used of
all distributions is the normal distribution.
It fits many human characteristics, such as
height, weigh, length, speed, IQ scores,
scholastic achievements, and years of life
expectancy, among others.
Many things in nature such as trees, animals,
insects, and others have many characteristics
that are normally distributed.
Normal Distribution
Many variables in business and industry are
also normally distributed. For example
variables such as the annual cost of household
insurance, the cost per square foot of renting
warehouse space, and managers satisfaction
with support from ownership on a five-point
scale, amount of fill in soda cans, etc.
Because of the many applications, the normal
distribution is an extremely important
distribution.
Normal Distribution
Discovery of the normal curve of errors is
generally credited to mathematician and
astronomer Karl Gauss (1777 1855), who
recognized that the errors of repeated
measurement of objects are often normally
distributed.
Thus the normal distribution is sometimes
referred to as the Gaussian distribution or the
normal curve of errors.
In addition, some credit were also given to
Pierre-Simon de Laplace (1749 1827) and
Abraham de Moivre (1667 1754) for the
discovery of the normal distribution.
Properties of the Normal Distribution
The normal distribution exhibits the following
characteristics:
It is a continuous distribution.
It is symmetric about the mean.
It is asymptotic to the horizontal axis.
It is unimodal.
It is a family of curves.
Area under the curve is 1.
It is bell-shaped.

Graphic Representation of the Normal
Distribution
Probability Density of the Normal
Distribution
Family of Normal Curves
Standardized Normal Distribution
Since there is an infinite number of
combinations for and o, then we can generate
an infinite family of curves.
Because of this, it would be impractical to deal
with all of these normal distributions.
Fortunately, a mechanism was developed by
which all normal distributions can be
converted into a single distribution called the
z distribution.
This process yields the standardized normal
distribution (or curve).
Standardized Normal Distribution
The conversion formula for any x value of a
given normal distribution is given below. It is
called the z-score.





A z-score gives the number of standard
deviations that a value x, is above or below the
mean.
o

=
x
z
Standardized Normal Distribution
If x is normally distributed with a mean of
and a standard deviation of o, then the z-score
will also be normally distributed with a mean
of 0 and a standard deviation of 1.
Since we can covert to this standard normal
distribution, tables have been generated for this
standard normal distribution which will enable
us to determine probabilities for normal
variables.
The tables in the text are set up to give the
probabilities between z = 0 and some other z
value, z
0
say, which is depicted on the next
slide.
Standardized Normal Distribution
Z Table
Second Decimal Place in Z
Z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09

0.00 0.0000 0.0040 0.0080 0.0120 0.0160 0.0199 0.0239 0.0279 0.0319 0.0359
0.10 0.0398 0.0438 0.0478 0.0517 0.0557 0.0596 0.0636 0.0675 0.0714 0.0753
0.20 0.0793 0.0832 0.0871 0.0910 0.0948 0.0987 0.1026 0.1064 0.1103 0.1141
0.30 0.1179 0.1217 0.1255 0.1293 0.1331 0.1368 0.1406 0.1443 0.1480 0.1517

0.90 0.3159 0.3186 0.3212 0.3238 0.3264 0.3289 0.3315 0.3340 0.3365 0.3389
1.00 0.3413 0.3438 0.3461 0.3485 0.3508 0.3531 0.3554 0.3577 0.3599 0.3621
1.10 0.3643 0.3665 0.3686 0.3708 0.3729 0.3749 0.3770 0.3790 0.3810 0.3830
1.20 0.3849 0.3869 0.3888 0.3907 0.3925 0.3944 0.3962 0.3980 0.3997 0.4015

2.00 0.4772 0.4778 0.4783 0.4788 0.4793 0.4798 0.4803 0.4808 0.4812 0.4817

3.00 0.4987 0.4987 0.4987 0.4988 0.4988 0.4989 0.4989 0.4989 0.4990 0.4990
3.40 0.4997 0.4997 0.4997 0.4997 0.4997 0.4997 0.4997 0.4997 0.4997 0.4998
3.50 0.4998 0.4998 0.4998 0.4998 0.4998 0.4998 0.4998 0.4998 0.4998 0.4998

Applying the Z Formula
X is normally distributed with = 485, and =105 o
P X P Z ( ) ( . ) . 485 600 0 1 10 3643 s s = s s =
For X = 485,
Z =
X-
o
=

=
485 485
105
0
For X = 600,
Z =
X-
o
=

=
600 485
105
1 10 .
Z 0.00 0.01 0.02

0.00 0.0000 0.0040 0.0080
0.10 0.0398 0.0438 0.0478

1.00 0.3413 0.3438 0.3461

1.10 0.3643 0.3665 0.3686

1.20 0.3849 0.3869 0.3888
Applying the Z Formula
7123 . ) 56 . 0 ( ) 550 (
100 = and 494, = with d distribute normally is X
= s = s Z P X P
o
56 . 0
100
494 550 - X
= Z
550 = X For
=

=
o

0.5 + 0.2123 = 0.7123

Applying the Z Formula
0197 . ) 06 . 2 ( ) 700 (
100 = and 494, = with d distribute normally is X
= > = > Z P X P
o
06 . 2
100
494 700 - X
= Z
700 = X For
=

=
o

0.5 0.4803 = 0.0197

Applying the Z Formula
94 . 1
100
494 300 - X
= Z
300 = X For
=

=
o

8292 . ) 06 . 1 94 . 1 ( ) 600 300 (

100 = and 494, = with d distribute normally is X
= s s = s s Z P X P
o
0.4738+ 0.3554 = 0.8292
06 . 1
100
494 600 - X
= Z
600 = X For
=

=
o

These types of problems can be solved quite

easily with the appropriate technology. The
output shows the MINITAB solution.

Demonstration Problem 6.9
Normal Approximation
of the Binomial Distribution
The normal distribution can be used to
approximate binomial probabilities.
Procedure
Convert binomial parameters to normal
parameters.
Does the interval 3o lie between 0 and n?
If so, continue; otherwise, do not use the
normal approximation.
Correct for continuity.
Solve the normal distribution problem.
Conversion equations

Conversion example:
Normal Approximation of Binomial:
Parameter Conversion

o
=
=
n p
n p q
Given that X has a binomial distribution, find
and P X n p
n p
n p q
( | . ).
( )(. )
( )(. )(. ) .
> = =
= = =
= = =
25 60 30
60 30 18
60 30 70 3 55

o
Normal Approximation of Binomial:
Interval Check
o
o
o
= =
=
+ =
3 18 3 355 18 10 65
3 7 35
3 28 65
( . ) .
.
.
0 10 20 30 40 50 60
n
70
Graph of the Binomial Problem:
n = 60, p = 0.3
x
P
(
x
)
30 25 20 15 10
0.12
0.10
0.08
0.06
0.04
0.02
0.00
Normal Approximation of Binomial:
Correcting for Continuity
Values
Being
Determined
Correction
X>
X>
X<
Xs
sXs
<X<
+.50
-.50
-.50
+.05
-.50 and +.50
+.50 and -.50
The binomial probability,
and
is approximated by the normal probability
P(X 24. 5| and
P X n p ( | . )
. ).
> = =
> = =
25 60 30
18 3 55 o
Normal Approximation of Binomial:
Computations
25
26
27
28
29
30
31
32
33
Total
0.0167
0.0096
0.0052
0.0026
0.0012
0.0005
0.0002
0.0001
0.0000
0.0361
X P(X)
( )
The normal approximation,
P(X 24.5| and > = =
= >

|
\

|
.
|
= >
= s s
=
=
o 18 355
24 5 18
355
183
5 0 183
5 4664
0336
. )
.
.
( . )
. .
. .
.
P Z
P Z
P Z
Exponential Distribution
Continuous
Family of distributions
Skewed to the right
X varies from 0 to infinity
Apex is always at X = 0
Steadily decreases as X gets larger
Probability function
f X X
X
e
( ) , = > >

for 0 0
Different Exponential Distributions
Exponential Distribution:
Probability Computation
0.0
0.2
0.4
0.6
0.8
1.0
1.2
0 1 2 3 4 5
= 1.2
( )
( )
P X X
X
P X
e
e
> =

> = =

=
0
0
2 12
12 2
0907

| .
( . )( )
.
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