The Binomial Distribution

The Binomial Distribution
 Introduction and Concept

 Characteristics
 Binomial Formula
 Applications
 Binomial Tables
 Applications
Random Variables
A
A random
random variable
variable is
is aa numerical
numerical description
description of
of the
the
outcome
outcome of
of an
an experiment.
experiment.
A
A discrete
discrete random
random variable
variable may
may assume
assume either
either aa
finite
finite number
number of
of values
values or
or an
an infinite
infinite sequence
sequence of
of
values.
values.
A
A continuous
continuous random
random variable
variable may
may assume
assume any
any
numerical
numerical value
value in
in an
an interval
interval or
or collection
collection of
of
intervals.
intervals.
Example: JSL Appliances
 Discrete random variable with a finite number of values
Let
Let xx =
= number
number ofof TVs
TVs sold
sold at
at the
the store
store in
in one
one day,
day,
where
where xx can
can take
take on
on 5
5 values
values (0,
(0, 1,
1, 2,
2, 3,
3, 4)
4)
Example: JSL Appliances
■ Discrete random variable with an infinite

sequence of values
Let
Let xx =
= number
number ofof customers
customers arriving
arriving in
in one
one day,
day,
where
where xx can
can take
take on
on the
the values
values 0,
0, 1,
1, 2,
2, .. .. ..
We can count the customers arriving, but there is no

finite upper limit on the number that might arrive.
Random Variables
Question Random Variable x Type

Family x = Number of dependents Discrete
size reported on tax return
Distance fromx = Distance in miles from Continuous

home to store home to the store site
Own dog x = 1 if own no pet; Discrete
or cat = 2 if own dog(s) only;
= 3 if own cat(s) only;
= 4 if own dog(s) and cat(s)
Discrete Probability Distributions
The
The probability
probability distribution
distribution for
for aa random
random variable
variable
describes
describes how
how probabilities
probabilities are
are distributed
distributed over
over
the
the values
values of
of the
the random
random variable.
variable.
We can describe a discrete probability distribution

with a table, graph, or equation.
The
The probability
distribution is
is defined
defined by by aa
probability
probability function
function,, denoted
denoted byby ff((xx),
), which
which provides
provides
the
the probability
probability for
for each
each value
value of
of the
the random
random variable.
variable.
The required conditions for a discrete probability

function are:
f(x) > 0
Σ f(x) = 1
■ Using past data on TV sales, …

■ a tabular representation of the probability
distribution for TV sales was developed.
Number 80/200
Units Sold of Days x f(x)
0 80 0 .40
1 50 1 .25
2 40 2 .20
3 10 3 .05
4 20 4 .10
200 1.00
 Graphical Representation of Probability Distribution
.50
.40
Probability
.30
.20
.10
0 1 2 3 4
Values of Random Variable x (TV sales)
Discrete Uniform Probability Distribution
The
The discrete
discrete uniform
uniform probability
distribution is
is the
the
simplest
simplest example
example ofof aa discrete
discrete probability
probability
distribution
distribution given
given by
by aa formula.
formula.
The
The discrete
discrete uniform
uniform probability
probability function
function is
is
the values of the
f(x) = 1/n random variable
are equally likely
where:
n = the number of values the random
variable may assume
Expected Value and
Variance
The
The expected
expected value
value,, or
or mean,
mean, of
of aa random
random variable
variable
is
is aa measure
measure of
of its
its central
central location.
location.
E(x) = µ = Σ xf(x)
The
The variance
variance summarizes
summarizes the
the variability
variability in
in the
the
values
values of
of aa random
random variable.
variable.
Var(x) = σ 2
2 = Σ (x - µ )22f(x)
The
The standard deviation,, σσ ,, is
standard deviation is defined
defined as
as the
the positive
positive
square
square root
root of
of the
the variance.
variance.
Expected Value and
Variance
 Expected Value
x f(x) xf(x)
0 .40 .00
1 .25 .25
2 .20 .40
3 .05 .15
4 .10 .40
E(x) = 1.20
expected number
of TVs sold in a day
Expected Value and
Variance
 Variance and Standard Deviation
x x-µ (x - µ )2 f(x) (x - µ )2f(x)
0 -1.2 1.44 .40 .576

1 -0.2 0.04 .25 .010
2 0.8 0.64 .20 .128
3 1.8 3.24 .05 .162
4 2.8 7.84 .10 .784 TVs
square
Variance of daily sales = σ 2 = 1.660d
Standard deviation of daily sales = 1.2884 TVs
Introduction and Concept
 Based on Bernoulli Process.
 Is a discrete-time stochastic process consisting of a sequence of independent

random variables taking values over two symbols
 We are not dealing with samples but with population values so dealing with
parameters.
 Consider tossing a coin twice. The possible outcomes are:

no heads: P (m = 0) = q2
one head: P (m = 1) = qp + pq
(toss 1 is a tail, toss 2 is a head or toss 1 is head, toss 2 is a tail) = 2pq
two heads: P(m = 2) = p2
Now recalling square of Binomial (p + q) is equal to the same as if added
above.
Characteristics
 Experiment consist of n identical trials
 Each trial has only two outcomes
 The probability of one outcome is p and the other is q=1-p
 The probability stays the same from one trail to the next.
 The trials are statistically independent
 We are interested in r, the number of success observed during

the n trials.
Binomial Formula
 Binomial distribution: the probability of r success out of N trials
P (r , N , p ) = C N ,r p r q N − r = ( )p q
N
r
r N −r
=
N!
r!( N − r )!
p r q N −r
0.40 0.14
Expectation Value
Expectation Value 0.12 µ = np = 50 * 1/3 = 16.667...
0.30 µ = np = 7 * 1/3 = 2.333...
0.10
P (k , 50, 1/3)
P (k , 7, 1/3)
0.08
0.20
0.06
0.04
0.10
0.02
0.00 0.00
0 2 4 6 8 10 0 5 10 15 20 25 3
k k
Binomial Distribution
■ Binomial Probability Function
n!
f (x) = px (1 − p)( n− x)
x!(n − x)!
where:
f(x) = the probability of x successes in n trials
n = the number of trials
p = the probability of success on any one trial
Binomial Formulas
Mean
( )
∂  N N m N −m 
∑ m p q
∂p  m = 0  = 0
N
∑m
m=0
( )p
N
m
m −1 N − m
q − ∑
N
m=0
( )p
N
m
m
( N − m)(1 − p ) N − m −1 = 0
N
p −1 ∑ m
m=0
( )p
N
m
m N −m
q = N (1 − p) −1 ∑
m= 0
N
( )p
N
m
m
N
(1 − p ) N − m − (1 − p) −1 ∑ m
m=0
( )p
N
m
m
(1 − p ) N − m
p −1µ = N (1 − p ) −1 ⋅ 1 − (1 − p ) −1 µ
µ = Np
Standard Deviation
N
∑(m−µ)2P(m,N ,p)
σ2=m=0 N =N
p
q
∑P(m,N,p)
m=0
■ Binomial Probability
Function
n!
f (x) = px (1 − p)( n− x)
x!(n − x)!
Probability of a particular
Number of experimental sequence of trial outcomes
outcomes providing exactly with x successes in n trials
x successes in n trials
■ Example: Evans Electronics

Evans is concerned about a low retention
rate for employees. In recent years,
management has seen a turnover of 10% of
the hourly employees annually. Thus, for any
hourly employee chosen at random,
management estimates a probability of 0.1
that the person will not be with the company
next year.
■ Using the Binomial Probability Function

Choosing 3 hourly employees at random,
what is the probability that 1 of them will leave
the company this year?
Let: p = .10, n = 3, x = 1
n!
f ( x) = p x (1 − p ) ( n − x )
x !( n − x )!
3!
f (1) = (0.1) 1(0.9) 2= 3(.1)(.81)= .243
1!(3 − 1)!
 Tree Diagram
1st Worker 2nd Worker 3rd Worker x Prob.
L (.1) 3 .0010
Leaves (.1)
S (.9) 2 .0090
Leaves
(.1) L (.1) 2 .0090
Stays (.9)
S (.9) 1 .0810
L (.1) 2 .0090
Leaves (.1)
Stays S (.9) 1 .0810
(.9) L (.1)
1 .0810
Stays (.9)
S (.9) 0 .7290
■ Using Tables of Binomial Probabilities

p
n x .05 .10 .15 .20 .25 .30 .35 .40 .45 .50
3 0 .8574 .7290 .6141 .5120 .4219 .3430 .2746 .2160 .1664 .1250
1 .1354 .2430 .3251 .3840 .4219 .4410 .4436 .4320 .4084 .3750
2 .0071 .0270 .0574 .0960 .1406 .1890 .2389 .2880 .3341 .3750
3 .0001 .0010 .0034 .0080 .0156 .0270 .0429 .0640 .0911 .1250
■ Expected
Value
E(x) = µ = np
■ Varianc
e
Var(x) = σ 2
2 = np(1 − p)
■ Standard
Deviation
σ = np(1− p)
■ Expected Value
E(x) = µ = 3(.1) = .3 employees out of 3
■ Variance
Var(x) = σ 2
2 = 3(.1)(.9) = .27
■ Standard Deviation
σ = 3(.1)(.9) = .52 employees

Applications
 A committee consisting of 5 members votes on

whether or not to hire a new manager. The
probability that each member’s vote for
candidate A is 0.6. Only if over half of the
committee agrees to hire her does candidate A
receive the offer.
 1) What is the probability that the candidate A
gets an offer.
does not get the offer
Answer
 Selected = 0.3456+ 0.2592+ 0.0778
=0.6826
 Not Selected = 1-0.6826 = 0.3174
Binomial Tables
 Binomial Tables are used to same time
 Binomial Tables ..\Binom_Tab.pdf
Applications
 A committee consisting of 5 members votes on

whether or not to hire a new professor. The
probability that each member’s vote for candidate
A is 0.6. Only if over half of the committee agrees
to hire her does candidate A receive the offer.
gets an offer. (Hint: 0.6=0.4)
does not get the offer
Poisson Distribution
A
A Poisson
Poisson distributed
distributed random
random variable
variable is
is often
often
useful
useful in
in estimating
estimating the
the number
number of
of occurrences
occurrences
over
over aa specified
specified interval
interval of
of time
time or
or space
space
It
It is
is aa discrete
discrete random
random variable
variable that
that may
may assume
assume
an
an infinite
infinite sequence
sequence of
of values
values (x
(x =
= 0,
0, 1,
1, 2,
2, .. .. .. ).
).
Examples of a Poisson distributed random variable:
the
the number
number of
of knotholes
knotholes in
in 14
14 linear
linear feet
feet of
of
pine
pine board
board
the
the number
number ofof vehicles
vehicles arriving
arriving at
at aa toll
toll
booth
booth in
in one
one hour
hour
■ Two Properties of a Poisson Experiment

1.
1. The
The probability
probability of
of an
an occurrence
occurrence is
is the
the same
same
for
for any
any two
two intervals
intervals of
of equal
equal length.
length.
2.
2. The
The occurrence
occurrence or
or nonoccurrence
nonoccurrence in
in any
any
interval
interval is
is independent
independent ofof the
the occurrence
occurrence or
or
nonoccurrence
nonoccurrence in in any
any other
other interval.
interval.
 Poisson Probability Function
µ x e −µ
f ( x) =
x!
where:
f(x) = probability of x occurrences in an interval
µ = mean number of occurrences in an interval
e = 2.71828
■ Example: Mercy Hospital
Patients arrive at the emergency room of
Mercy
Hospital at the average rate of 6 per hour on
weekend
evenings.
What is the probability of 4 arrivals in 30
minutes on a weekend evening?
■ Using the Poisson Probability Function
µ = 6/hour = 3/half-hour, x = 4
34 (2.71828)− 3
f (4) = = .1680
4!
■ Poisson Distribution of Arrivals
Poisson Probabilities
0.25
0.20
Probability
0.15 actually,
the
0.10 sequence
continues:
0.05
11, 12, …
0.00
0 1 2 3 4 5 6 7 8 9 10
Number of Arrivals in 30 Minutes
A
A property
property of
of the
the Poisson
Poisson distribution
distribution is
is that
that
the
the mean
mean and
and variance
variance are
are equal.
equal.
µ =σ 2
■ Variance for Number of Arrivals

During 30-Minute Periods
µ =σ 2
2 =3
Continuous Probability Distributions
 Uniform Probability Distribution
 Normal Probability Distribution
 Normal Approximation of Binomial Probabilities
 Exponential Probability Distribution
Uniform f (x) Exponential

f (x)
Normal
f (x)
x
x
x
■ A continuous random variable can assume any

value in an interval on the real line or in a
collection of intervals.
■ It is not possible to talk about the probability
of the random variable assuming a particular
■ value.
Instead, we talk about the probability of the
random variable assuming a value within a
given interval.
■ The probability of the random variable

assuming a value within some given interval
from x1 to x2 is defined to be the area under
the graph of the probability density function
between x1 and x2. Exponential
Uniform f (x)
f (x)
Normal
f (x)
x
x xx1122 x22
x11 x22 x11
x
x11 x22
Uniform Probability
Distribution
■ A random variable is uniformly distributed
whenever the probability is proportional to the
interval’s length.
■ The uniform probability density function is:
ff ((xx)) =
= 1/(
1/(bb –– aa)) for
for aa <
< xx <
<bb
=
=0 0 elsewhere
elsewhere
where: a = smallest value the variable can assume

b = largest value the variable can assume
Uniform Probability
Distribution
■ Expected Value of x
E(
E(xx)) =
= ((aa +
+bb)/2
)/2
■ Variance of x
Var(
Var(xx)) =
= ((b
b -- aa))22/12
/12
Uniform Probability
Distribution
■ Example: Slater's Buffet
Slater customers are charged for the
amount of
salad they take. Sampling suggests that the
amount
of salad taken is uniformly distributed
between 5
ounces and 15 ounces.
Uniform Probability Distribution
■ Uniform Probability Density Function
ff((xx)) =
= 1/10
1/10 for
for 5
5<< xx <
< 15
15
=
=0 0 elsewhere
elsewhere
where:
x = salad plate filling weight
■ Expected Value of x
E(x) = (a + b)/2
= (5 + 15)/2
= 10
■ Variance of x
Var(x) = (b - a)22/12
= (15 – 5)22/12
= 8.33
Uniform Probability
Distribution
 Uniform Probability Distribution
for Salad Plate Filling Weight
f(x)
1/10
x
5 10 15
Salad Weight (oz.)
What is the probability that a customer

will take between 12 and 15 ounces of
salad?
f(x)
P(12 < x < 15) = 1/10(3) = .3

1/10
x
5 10 12 15
Salad Weight (oz.)
Normal Probability
Distribution
 The normal probability distribution is the most
important distribution for describing a continuous
random variable.
 It is widely used in statistical inference.
■ It has been used in a wide variety of
applications:
• Heights of people
• Scientific measurements
• Test scores
• Amounts of rainfall
Normal Probability
Distribution
 Normal Probability Density Function
1 − (x −µ )2 / 2 σ2
f ( x) = e
σ 2π
where:
µ = mean
σ = standard deviation
π = 3.14159
e = 2.71828
Normal Probability Distribution
■ Characteristics
The distribution is symmetric; its skewness

measure is zero.
x
■ Characteristics
The entire family of normal probability

distributions is defined by its mean µ and its
standard deviation σ .
Standard Deviation σ
x
Mean µ
■ Characteristics
The highest point on the normal curve is at the

mean, which is also the median and mode.
x
■ Characteristics
The mean can be any numerical value: negative,

zero, or positive.
x
-10 0 20
■ Characteristics
The standard deviation determines the width of the

curve: larger values result in wider, flatter curves.
σ = 15
σ = 25
x
■ Characteristics
Probabilities for the normal random variable are
given by areas under the curve. The total area
under the curve is 1 (.5 to the left of the mean and
.5 to the right).
.5 .5
x
■ Characteristics
68.26%of values of a normal random variable

are within +/- 1 standard deviation of its mean.

are within +/- 2 standard deviations of its mean.

are within +/- 3 standard deviations of its mean.
■ Characteristics
99.72%
95.44%
68.26%
µ x
µ – 3σ µ – 1σ µ + 1σ µ + 3σ
µ – 2σ µ + 2σ
Standard Normal Probability
Distribution
A
A random
random variable
variable having
having aa normal
normal distribution
distribution
with
with aa mean
mean ofof 00 and
and aa standard
standard deviation
deviation of
of 11 is
is
said
said to
to have
have aa standard
standard normal
normal probability
probability
distribution
distribution..
Standard Normal Probability Distribution
The letter z is used to designate the standard

normal random variable.
σ = 1
z
0
■ Converting to the Standard Normal

Distribution
x−µ
z=
σ
We can think of z as a measure of the number of

standard deviations x is from µ .
Standard Normal Probability
Distribution
■ Example: Pep Zone
Pep Zone sells auto parts and supplies
including
a popular multi-grade motor oil. When the
stock of
this oil drops to 20 gallons, a replenishment
order is
placed.
■ Example: Pep Zone

The store manager is concerned that sales
are being
lost due to stockouts while waiting for an order.
It ha
been determined that demand during
replenishment
lead-time is normally distributed with a mean of
15
gallons and a standard deviation of 6 gallons.
The manager would like to know the
probability of
a stockout, P(x > 20).
■ Solving for the Stockout Probability
Step 1: Convert x to the standard normal distribution.
z = (x - µ )/σ
= (20 - 15)/6
= .83
Step 2: Find the area under the standard normal

curve to the left of z = .83.
see next slide

■ Cumulative Probability Table for

the Standard Normal Distribution
z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09
. . . . . . . . . . .
.5 .6915 .6950 .6985 .7019 .7054 .7088 .7123 .7157 .7190 .7224
.6 .7257 .7291 .7324 .7357 .7389 .7422 .7454 .7486 .7517 .7549
.7 .7580 .7611 .7642 .7673 .7704 .7734 .7764 .7794 .7823 .7852
.8 .7881 .7910 .7939 .7967 .7995 .8023 .8051 .8078 .8106 .8133
.9 .8159 .8186 .8212 .8238 .8264 .8289 .8315 .8340 .8365 .8389
. . . . . . . . . . .
P( z < .
83)
Step
Step 3:
3: Compute
Compute thethe area
area under
under thethe standard
standard normal
normal
curve
curve to
to the
the right
right of
of zz =
= .83.
.83.
P(z > .83) = 1 – P(z < .83)

= 1- .7967
= .2033
Probability
of a stockout P(x > 20)
Area = 1 - .7967
Area = .7967
= .2033
z
0 .83
 Standard Normal Probability Distribution

If the manager of Pep Zone wants the
probability of a stockout to be no more than .
05, what should the reorder point be?
■ Solving for the Reorder Point
Area = .9500
Area = .0500
z
0 z.05

Step 1: Find the z-value that cuts off an area of .05
in the right tail of the standard normal
distribution.
z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09
. . . . . . . . . . .
1.5 .9332 .9345 .9357 .9370 .9382 .9394 .9406 .9418 .9429 .9441
1.6 .9452 .9463 .9474 .9484 .9495 .9505 .9515 .9525 .9535 .9545
1.7 .9554 .9564 .9573 .9582 .9591 .9599 .9608 .9616 .9625 .9633
1.8 .9641 .9649 .9656 .9664 .9671 .9678 .9686 .9693 .9699 .9706
1.9 .9713 .9719 .9726 .9732 .9738 .9744 .9750 .9756 .9761 .9767
. . . . . . . . . . .
We look up the
complement of the
tail area (1 - .05 = .95)
Step
Step 2:
2: Convert
Convert zz.0.055 to
to the
the corresponding
corresponding value
value of
of xx..
x = µ + z.0.055 σ
= 15 + 1.645(6)
= 24.87 or 25
A reorder point of 25 gallons will place the probability

of a stockout during leadtime at (slightly less than) .05.

By raising the reorder point from 20 gallons to
25 gallons on hand, the probability of a stockout
decreases from about .20 to .05.
This is a significant decrease in the chance that Pep
Zone will be out of stock and unable to meet a
customer’s desire to make a purchase.
Normal Approximation
of Binomial Probabilities
 When the number of trials, n, becomes large,
evaluating the binomial probability function by
hand or with a calculator is difficult
 The normal probability distribution provides an
easy-to-use approximation of binomial
probabilities
where n > 20, np > 5, and n(1 - p) > 5.
Normal Approximation
of Binomial Probabilities
■ Set µ = np
σ = np(1− p)
■ Add and subtract 0.5 (a continuity correction factor)

because a continuous distribution is being used to
approximate a discrete distribution. For example,
P(x = 10) is approximated by P(9.5 < x < 10.5).
Exponential Probability Distribution
■ The exponential probability distribution is

useful in describing the time it takes to
complete a task.
■ The exponential random variables can be used
to describe:
• Time between vehicle arrivals at a toll booth
• Time required to complete a questionnaire
• Distance between major defects in a highway
 Density Function
1 − x /µ
f ( x) = e for x > 0, µ > 0
µ
where: µ = mean
e = 2.71828
 Cumulative Probabilities
P ( x ≤ x0 ) = 1 − e − xo / µ
where:
x0 = some specific value of x
Exponential Probability
Distribution
■ Example: Al’s Full-Service Pump
The time between arrivals of cars at Al’s
full-service
gas pump follows an exponential probability
distribution with a mean time between arrivals
of
3 minutes. Al would like to know the probability
that
the time between two successive arrivals will be
2
minutes or less.
Exponential Probability
Distribution
f(x)
.4 PP((xx <
< 2)
2) =
=11 -- 2.71828
2.71828-2-2/3/3 =
=11 -- .5134
.5134 =
= .4866
.4866
.3
.2
.1
x
1 2 3 4 5 6 7 8 9 10
Time Between Successive Arrivals (mins.)
Relationship between the Poisson
and Exponential Distributions
The Poisson distribution

provides an appropriate description
of the number of occurrences
per interval
The exponential distribution

provides an appropriate description
of the length of the interval
between occurrences

The Binomial Distribution

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The Binomial Distribution

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The Binomial Distribution

 Introduction and Concept

 Discrete random variable with a finite number of values

■ Discrete random variable with an infinite

We can count the customers arriving, but there is no

Question Random Variable x Type

Distance fromx = Distance in miles from Continuous

We can describe a discrete probability distribution

The required conditions for a discrete probability

■ Using past data on TV sales, …

 Graphical Representation of Probability Distribution

x x-µ (x - µ )2 f(x) (x - µ )2f(x)

0 -1.2 1.44 .40 .576

 Based on Bernoulli Process.

 Is a discrete-time stochastic process consisting of a sequence of independent

 Consider tossing a coin twice. The possible outcomes are:

 Each trial has only two outcomes

 The probability of one outcome is p and the other is q=1-p

 The trials are statistically independent

 We are interested in r, the number of success observed during

■ Binomial Probability Function

■ Example: Evans Electronics

■ Using the Binomial Probability Function

■ Using Tables of Binomial Probabilities

E(x) = µ = 3(.1) = .3 employees out of 3

σ = 3(.1)(.9) = .52 employees

 A committee consisting of 5 members votes on

 A committee consisting of 5 members votes on

Examples of a Poisson distributed random variable:

■ Two Properties of a Poisson Experiment

■ Using the Poisson Probability Function

■ Poisson Distribution of Arrivals

■ Variance for Number of Arrivals

Uniform f (x) Exponential

■ A continuous random variable can assume any

■ The probability of the random variable

where: a = smallest value the variable can assume

■ Uniform Probability Density Function

What is the probability that a customer

P(12 < x < 15) = 1/10(3) = .3

The distribution is symmetric; its skewness

The entire family of normal probability

The highest point on the normal curve is at the

The mean can be any numerical value: negative,

The standard deviation determines the width of the

68.26%of values of a normal random variable

95.44%of values of a normal random variable

99.72%of values of a normal random variable

The letter z is used to designate the standard

■ Converting to the Standard Normal

We can think of z as a measure of the number of

■ Example: Pep Zone

■ Solving for the Stockout Probability

Step 1: Convert x to the standard normal distribution.

Step 2: Find the area under the standard normal

see next slide

■ Cumulative Probability Table for

■ Solving for the Stockout Probability

P(z > .83) = 1 – P(z < .83)

■ Solving for the Stockout Probability

 Standard Normal Probability Distribution

■ Solving for the Reorder Point

■ Solving for the Reorder Point

■ Solving for the Reorder Point