Section 5.

1
Main Concept: a discrete distribution given in a table Say you have the following probability distribution: calculate E(X), Var(X), and Stdev(X) Given X 1 2 3 4 Totals: Calculation Space P(X) X * P(X) Deviations Sq. Deviations Sq. Dev * P(X) 0.15 0.15 -1.7 2.89 0.4335 0.25 0.5 -0.7 0.49 0.1225 0.35 1.05 0.3 0.09 0.0315 0.25 1 1.3 1.69 0.4225 1 2.7 1.01

Answers:
E(X) = 2.7 Var(X) = 1.01 St. Dev(X) =

Section 5.2
Main Concept: Binomial Distribution. Binomial: You have an experiment with n trials (each of which could be either a success or a failure. The random variable X = # of successes you observe in n trials.
Notation and Formulas number of trials probability of success probability of failure the number of successes expected value variance standard deviation n p q X E(X) Var(X) STDEV(X)

q = 1-p np npq

Practice Problem: Say you lend out statistics books and require they be returned within 5 business days. Suppose there is a 5% chance that a book will be returned late. If you have lent out 15 books, what is the probability that less than 3 books will be returned late? What is the probability that exactly 2 books will be returned late? What is the probability that 14 of the 15 books will be retuned on time?

To practice Binomial Problems, please review your Chapter 5 take-home exam or work problems from 5.2 in the book.

Section 5.3
Main Concept: Poisson and Hypergeometric Distributions Notation and Formulas for the Poisson Distribution
(lambda) t E(X) = t Var(X) = t STDEV(X) = rate, like calls per hour or weeds per sq foot interval of interest, space or time (ie 2 hours or 100 sq feet) expected value = t (in compatible units!!!) variance equals the expected value for this distribution just take the sqrt of the var. to get the standard dev.

Practice Problem: Say you run a customer service call center and have found that historically you have received an average of 12 calls per hour. What is the probability that in a 30 minute segment of time, you would receive less than 4 calls? Greater than 8 calls? Exactly 7 calls?

Please practice by reviewing more Poisson problems in your take-home exam or suggested homework in section 5.3

Hypergeometric Problems:

You have 50 stocks in your portfolio. 15 are small-cap, 15 are mid-cap, and 20 are large-cap. Say your portfolio manager randomly select 15 of your stocks to put into a report What is the probability that 2 are small-cap, 3 are mid-cap, and 10 are large-cap? Solution: Population Sample 15 2 15 3 20 10 50 15

Small-Cap Mid-cap Large-cap Totals

P( 2 Small, 3 Mid, 10 Large) =

) ( (

) ( )

Try this one on your own: You teach a class with 10 freshmen, 12 sophomores, 20 juniors, and 15 seniors. If you select 15 students at random, what is the probability that 2 will be freshmen, 3 will be sophomores, 5 will be juniors, and 5 will be seniors? Note: make sure for the midterm you know how to calculate the choose function on a calculator, since you cant use Excel on the test. In the real world you would definitely use Excel.

Please practice by reviewing more Hypergeometric problems in your ch. 5 take-home exam or suggested homework in section 5.3

Section 6.1
Main Concept: The Normal Distribution The normal distribution: Continuous Bell-shaped E(X) = (center) SD(X) = (standard deviation)

Distribution of Random Variable X

We need to standardize (get a Z-statistic) to solve problems.

Distribution of Random Variable Z

-3

-2

-1

Practice Problem: You have determined that the average time it takes your employees to complete a certain task is 12.5 minutes with a standard deviation of 3.4 minutes. If you select an employee at random, what is the probability that it will take that person more than 15 minutes to complete the task? If you select 3 employees at random, what is the probability that all 3 of them take more than 15 minutes to complete the task?

Please practice by reviewing more problems from 6.1 in your ch. 6/7 take-home exam or suggested homework in section 6.1.

Section 7.1
Main Concept: Sampling Error

Parameters of Interest
Population Mean: Population Proportion: Sampling Error:

Statistics to Estimate
Sample Mean: x (called x-bar) Sample Proportion: p

Whenever we take samples from a population, we are subject to sampling error. Sampling error is almost always present. We have good sampling techniques and statistical tools, but the simple fact is that a sample is not a perfect reflection of the population. But, we have powerful tools in statistics to make good inference in spite of this. Sampling Error is simply the difference between the statistic and the parameter. In general: For Means: For Proportions:

Practice Problem: Here is your population. Say you take a random sample to estimate the mean and end up with the numbers in yellow. What is the sampling error for the mean in this case?
4 5 1 3 5 1 2 1 5 2 3 5 1 1 2

Please practice by reviewing more problems from 7.1 in your ch. 6/7 take-home exam or suggested homework in section 7.1.

Section 7.2
Main Concept: The Sampling Distribution of X-Bar and the Central Limit Theorem (which tells us what the distribution of X-Bar looks like)

For the ORIGINAL Distribution X:

( ) ( )

For the SAMPLING Distribution of X-Bar:

( ) ( )

X-Bar is a Random Variable with a Normal Distribution, so we can construct a Z-Statistic for X-Bar

The Central Limit Theorem says that even if the ORIGINAL population is not normally distributed (bell-shaped), the SAMPLING distribution of X-Bar will be (approx) normally distributed.

Practice Problems:

1. If the average score on the midterm exam is 84%, with a standard deviation of 8%, and I take a random sample of size n= 16, what is the probability that x-bar will exceed 88%

P(X > 88) = P(Z >

) = P(Z > 2), then you can look this up on table.

2. If you have a normal distribution X with mean = 500 and standard deviation equal to 100, what is the probability that a random sample of size 25 would yield an x-bar less than 480? Please practice by reviewing more problems from 7.2 in your ch. 6/7 take-home exam or suggested homework in section 7.2

Section 7.3
Examples of proportions: Proportion of people who are happy with a product or service Proportion of people who support a particular political candidate Proportion of our class who are Finance majors Proportion of U of U students who are juniors

The SAMPLING distribution of the proportion (p) is also approximately normally distributed.

For the SAMPLING Distribution of p:

( ) ( ) )

Since the sampling distribution of p is approximately normal, we can construct a Z-statistic for the proportion, which is:

Practice Problem: You think that the proportion of accounts receivable that are uncollectable is 4%. You take a random sample of 25 accounts receivable items, and find that 2 out of 25 were written off as uncollectable. What is your sample proportion p? What is the probability that p would be this high or higher than that if the true proportion were really 4%?

Please practice by reviewing more problems from 7.3 in your ch. 6/7 take-home exam or suggested homework in section 7.3.