Concept of Random Variable:

For example, in a random experiment of tossing 3 coins, we get the following outcomes
Sample Points

HHH

HHT

HTH

THH

HTT

THT

TTH

TTT

For random variable, we are not interested in a particular sample point/ outcome of a random
experiment but we are interested to the numerical description of the outcome.
Suppose we are interested only in the number of heads which appear for the above example;
we assign one of the numbers (0, 1, 2, 3) to each non-numerical outcome corresponding to
the number of heads appearing.
Sample Points
X

HHH
3

HHT
2

HTH
2

THH
2

HTT
1

THT TTH
1
1

TTT
0

Such a numerical quantity, whose value is determined by the outcomes of the random
experiment is called a random variable or stochastic variable or chance variable.
OR
A random variable is a real valued function that takes a defined value for every point in the
sample space.
Example: Suppose two balls are selected at random from a bag consisting red and green balls.

Assume the random variable X represents the no: of green balls.

If R and G represent red and green balls respectively, then the elements of the
sample space and the corresponding values of the random variable X will be:
Sample Points
X

RR
0

RG
1

GR
1

GG
2

A Sample Space, which contains a finite no: of sample points, is called a Discrete Sample
Space. A random variable defined over a discrete sample space is known as
Discrete Random Variable.
Discrete random variables represent countable data; e.g. no: of patients in a hospital, no: of
bomb blasts in a particular year, no of vehicles crossing Kotri Barrage on a certain day, etc.
If the elements in a Sample Space are uncountable infinite, the sample space is called a
Continuous Sample Space. A random variable defined over a continuous sample space is
known as Continuous Random Variable.
Continuous random variables represent measurable data; e.g. weight, distance, temperature
height, pressure, etc.

(Page No: 1)

By: Muhammd Memon

Discrete Probability Distribution: The set of ordered pairs (x, f(x)) is called the
probability distribution of the discrete random variable x.
A discrete probability distribution may take the form of a table or a formula listing all
possible values that a discrete random variable can take on along with the associated
probabilities.
The probability function for a discrete random variable must possesses following properties:
1. 0 < f(xi) < 1
2. f(xi) = 1
Two of the most important features of a random variable are:
The values it can assume, and
The probabilities which are associated with each of these possible values.
In case of tossing a coin 3 times, the variable X represents number of heads:
Sample Points
X

HHH
3

HHT
2

HTH
2

THH
2

HTT
1

THT TTH
1
1

TTT
0

the random variable X can assume the values 0,1,2,3

the probabilities which are associated with each of these values:
o for value 3 (i.e. 3 head occurs), the probability is 1/8, because 1 of the 8
equally likely sample points results in 3 heads.
o for value 2 (i.e. 2 head occurs), the probability is 3/8, because 3 of the 8
equally likely sample points result in 2 heads and 1 tail.

Assume equal probabilities for the possible outcomes in the above table, then
P(HHH) = 1/8 , P(HHT)= 1/8, . P(TTT)=1/8

For instance, the probability that no head occurs is 1/8 i.e. P(X=0)=P(TTT) = 1/8

The possible values x of X and their probabilities P(x) are shown below:
X
P(x)

0
1/8

1
3/8

2
3/8

3
1/8

Example: Find the probability distribution of the sum of numbers when a pair of fair dice is
rolled.
Solution: Pair of dice can result in (6) (6) =36 outcomes, each of with probability 1/36.
The points in sample space and their corresponding sums are:
(1,1)
(1,2)
(1,3)
(1,4)
(1,5)
(1,6)

=2
=3
=4
=5
=6
=7

(2,1)
(2,2)
(2,3)
(2,4)
(2,5)
(2,6)

=3
=4
=5
=6
=7
=8

(3,1)
(3,2)
(3,3)
(3,4)
(3,5)
(3,6)

=4
=5
=6
=7
=8
=9

(4,1)
(4,2)
(4,3)
(4,4)
(4,5)
(4,6)

=5
=6
=7
=8
=9
=10

(Page No: 2)

(5,1)
(5,2)
(5,3)
(5,4)
(5,5)
(5,6)

=6
=7
=8
=9
=10
=11

(6,1)
(6,2)
(6,3)
(6,4)
(6,5)
(6,6)

=7
=8
=9
=10
=11
=12

By: Muhammd Memon

In this random experiment, the sum of numbers are the values 2,3,4, , 12 assumed by the
variable X, so in the probability distribution, we write the possible values of random variable
X and their corresponding probabilities:
X
f(x)

2
3
4
5
6
7
8
9
10
1/36 2/36 3/36 4/36 5/36 6/36 5/36 4/36 3/36

11
2/36

12
1/36

Question: Find a formula for the probability distribution of the number of boys in a family
with four children assuming equal probabilities for boys and girls.
Solution: Child may be either girl or boy
Four children, therefore there are 24 = 16 sample points in the sample space
respecting equally likely outcomes; the denominator for all probabilities will be
16.
To obtain the number of ways of getting 2 boys, for example, we divide 4
outcomes/ children into two cells; 2 boys assigned to one cell and two girls
assigned to other.
4
This can be done in ways.
2
It means the number of ways of getting 2 boys out of 4 children is
4
4!
4 3 2!

6
=
2!2!
2 2!(4 2)!

4

6 2

and the probability of 2 boys out of 4 children is

16 16
4
In general, x boys and 4 x girls can occur in ways,
x
Where x can be 0, 1,2,3,4
Thus the required probability distribution f ( x) P( X x) is
4

x
f ( x) , for x = 0, 1,2,3,4
16

(Page No: 3)

By: Muhammd Memon

The administration of a sugar testing clinic uses past patients records of 100 days which
indicate that the daily range of the patients from 100 to 115 come for the test.
Number of
Patients Tested
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115

Number of days
This level was observed
1
2
3
5
6
7
9
10
12
11
9
8
6
5
4
2
100

Suppose the administration of a sugar testing clinic wants to know that how many patients to
come tomorrow for the test.
This is the expected value regarding the patients to come for test, but not sure.
Expected Value is a weighted average of the outcomes someone expects in future. Expected
Value weights each possible outcome by the frequency with which it is expected to occur.
To obtain the expected value of a discrete random variable, multiply each value that a
random variable can assume by the probability of occurrence of that value and then sum these
products.
Probability that the
Number of
random variable will
Patients Tested
(1) (2)
take on these values
(1)
(2)
100
0.01
1.00
101
0.02
2.02
102
0.03
3.06
103
0.05
5.15
104
0.06
6.24
105
0.07
7.35
106
0.09
9.54
107
0.10
10.70
108
0.12
12.96
109
0.11
11.99
110
0.09
9.90
111
0.08
8.88
112
0.06
6.72
113
0.05
5.65
114
0.04
4.56
115
0.02
2.30
Expected Value
108.02

(Page No: 4)

By: Muhammd Memon

Expected value of the random variable is 108.02 and noted that it can have significant value
to decision makers.
Use of Expected Value in Decision Making:
Suppose a fruit and vegetable wholesaler who sells tomatoes. This product has a very limited
useful life. If not sold on day of delivery, it is worthless. In a case, it costs Rs. 20 per peti and
selling price is Rs. 50 per peti. He has to decide how many peti of tomatoes per day he may
purchase for sale in order to get optimal result.
He can not specify the number of peti customers will call for on any one day, but his analysis
of past records has produced the information in the following table:
Sales during 100 days:
Daily Sales
(Peti)

15
20
40
25

Probability of
each number
being sold
0.15
0.20
0.40
0.25

100

1.00

No of days
sold

10
11
12
13

Optimal Solution: is that action, which can minimize expected losses or maximize expected
profits.
Obsolescence and opportunity losses
Obsolescence losses, caused by stocking too much tomato on any one day and having to
throw it (spoiled tomatoes) away the next day
Opportunity losses, caused by being out of tomatoes any time that customers call for them.
Conditional Loss Table:
Possible
requests (Peti)
10
11
12
13

Possible Stock Options

10
11
12
13
Rs. 0
20
40
60
30
0
20
40
60
30
0
20
90
60
30
0

(Page No: 5)

By: Muhammd Memon

Calculating Expected Losses:

Examining each possible stock action, we can compute the expected loss.
Expected loss from stocking 10 Peti
Possible
requests (Peti)
10
11
12
13

Conditional
Loss

Rs. 0
30

60
90

Prob of this
Expected
many requests
Loss
0.15
=
Rs. 0.00
0.20
=
6.00
0.40
=
24.00
0.25
=
22.50
1.00
52.50

Expected loss from stocking 11 Peti

Possible
requests (Peti)
10
11
12
13

Conditional
Loss

Rs. 20

30

60

Prob of this
Expected
many requests
Loss
0.15
=
Rs. 3.00
0.20
=
0.00
0.40
=
12.00
0.25
=
15.00
1.00
30.00

Expected loss from stocking 12 Peti

Possible
requests (Peti)
10
11
12
13

Conditional
Loss

Rs. 40

20

30

Prob of this
Expected
many requests
Loss
0.15
=
Rs. 6.00
0.20
=
4.00
0.40
=
0.00
0.25
=
7.50
1.00
17.50

Expected loss from stocking 13 Peti

Possible
requests (Peti)
10
11
12
13

Conditional
Loss

Rs. 60

40

20

Prob of this
Expected
many requests
Loss
0.15
=
Rs. 9.00
0.20
=
8.00
0.40
=
8.00
0.25
=
0.00
1.00
25.00

On the basis of this analysis, he may decide to stock 12 peti of tomatoes each day, because at
this point the expected loss is minimized at Rs. 17.50.
-

This problem can be solved by taking an alternative approach, that is, maximizing
expected gain (Rs. 50 Rs. 20) instead of minimizing expected loss.
The answer, 12 peti have been the same.

(Page No: 6)

By: Muhammd Memon