BINOMIAL, NORMAL, AND POISSON DISTRIBUTIONS

RELATION BETWEEN BINOMIAL AND NORMAL DISTRIBUTIONS

If N is large and if neither p nor q is too close to zero, the binomial distribution can
be closely approximated by a normal distribution with standardized variable given by 𝑧 =
X−𝑁p
.
√𝑁𝑝𝑞

The approximation becomes better with increasing N, and in the limiting case is exact. This
is indicated in Tables 7.1 and 7.2 where it is clear that as N increases, the skewness and
kurtosis for the binomial distribution approaches that of the normal distribution. In practice
the approximation is very good if both Np and Nq are greater than 5.

THE POISSON DISTRIBUTION. The discrete probability distribution

λ𝑥 𝑒 −𝑥
Ῥ(X) = (x = 0,1,2, . . .)
𝑋!

Where e = 2. 718 28 . . . and 𝜆 is a given constant, is called the Poisson distribution, after
Poisson who discovered it in the early part of the 19th century.

The values of p(X) can be computed by using the table on Page 348 which gives
values of 𝑒 −λ for various values of λ , or by using logarithms.

SOME PROPERTIES OF THE DISTRIBUTION

Some properties of the Poisson distribution are listed in the following table.

Table 7.3

Mean µ =𝜆
Variance 𝜎2 = 𝜆
Standard deviation 𝜎 = √λ
Moment coefficient of skewness α3 = 1/ √λ
Moment coefficient of kurtosis α4 = 3+ 1/ √λ
RELATION BETWEEN BINOMIAL AND POISSON DISTRIBUTION

In the binomial distribution (l), if N is large while the probability p of occurrence of

an event is close to zero so that q= (1 – p) is close to l, the event is called a rare event. In
practice we shall consider an event as rare if the number of trials is at least 50 (N ≧ 50) while
Np is less than 5. In such case the binomial distribution (l) is very closely approximated by
the poisson distribution (5) with 𝜆 = Np. This is indicated by comparing Tables 7.1 and 7.3
above, for by placing 𝜆 = Np ; 𝑞 ≈1 and p ≈ 0 in Table 7.1 we get the results in the Table
7.3.

Since there is a relation between the binomial and normal distributions, it follows
that there also is a relation between the poisson distribution approaches a normal distribution
with standardized variable (X – 𝜆) / √𝜆 as 𝜆 increase indefinitely.