Chap06 1

Statistics for Managers
Using Microsoft® Excel

4th Edition
Chapter 6
The Normal Distribution and

Other Continuous Distributions
Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 6-1
Chapter Goals
After completing this chapter, you should be
able to:
 Describe the characteristics of the normal, uniform and
exponential distributions
 Recognize when to apply the normal, uniform and
exponential distributions
 Find normal, uniform and exponential probabilities
 Evaluate the normality assumption
Chapter Goals
(continued)
After completing this chapter, you should be

able to:
 Understand the concept of a sampling distribution
 Determine the mean and standard _deviation for the
sampling distribution of the mean, X
 Determine the mean and standard deviation for the
sampling distribution of the proportion, ps
 Describe the Central Limit Theorem and its importance
_
 Apply sampling distributions for both X and ps
Probability Distributions
Probability
Distributions
Ch. 5 Discrete Continuous Ch. 6

Probability Probability
Distributions Distributions
Binomial Normal and Sampling
Poisson Uniform
Hypergeometric Exponential
Continuous Probability Distributions
 A continuous random variable is a variable that
can assume any value on a continuum (can
assume an infinite number of values)
 thickness of an item
 time required to complete a task
 temperature of a solution
 height, in inches
 These can potentially take on any value,

depending only on the ability to measure
accurately.
The Normal Distribution
Probability
Distributions
Continuous
Probability
Distributions
Normal
Uniform
Exponential
The Normal Distribution
‘Bell Shaped’
 Symmetrical
f(X)
 Mean, Median and Mode
are Equal
Location is determined by the
mean, μ σ
X
Spread is determined by the μ
standard deviation, σ
Mean
The random variable has an = Median
infinite theoretical range: = Mode
+  to  
The Normal Probability
Density Function
 The formula for the normal probability density
function is
1 (1/2)[(Xμ)/σ]2
f(X)  e
2π
Where e = the mathematical constant approximated by 2.71828

π = the mathematical constant approximated by 3.14159
μ = the population mean
σ = the population standard deviation
X = any value of the continuous variable
Probability as
Area Under the Curve
The total area under the curve is 1.0, and the curve is
symmetric, so half is above the mean, half is below
f(X) P(   X  μ)  0.5
P(μ  X   )  0.5
0.5 0.5
μ X
P(  X  )  1.0
Finding Normal Probabilities
Probability is the
Probability is measured by the area
area under the
curve! under the curve
f(X)
P (a ≤ X ≤ b)
= P (a < X < b)
(Note that the probability
of any individual value is
zero)
a b X
Finding Normal Probabilities
 Draw the normal curve for the problem in
terms of X
 Suppose X is normal with mean 8.0 and standard
deviation 5.0
 Find P(X < 8.6)
 Use the Normal
function in Excel
or PhStat
X
8.0
8.6
Upper Tail Probabilities
 Suppose X is normal with mean 8.0 and
standard deviation 5.0.
 Now Find P(X > 8.6)
 P(X > 8.6)=1- P(X < 8.6)
X
8.0
8.6
Probability Between
Two Values
 Suppose X is normal with mean 8.0 and

standard deviation 5.0. Find P(8 < X < 8.6)
 = P(X < 8.6)- P(X < 8)
8 8.6
X
P(8 < X < 8.6)
PhStat - Normal Probabilities
 PHStat | Probability & Prob. Distributions |

Normal…
Assessing Normality
 Not all continuous random variables are

normally distributed
 It is important to evaluate how well the data set
is approximated by a normal distribution
Assessing Normality
(continued)
 Construct charts or graphs
 For small, or moderate sized data sets - do a stem-and-
leaf display and box-and-whisker plot look symmetric?
 For large data sets, does the histogram or polygon
appear bell-shaped?
 Compute descriptive summary measures
 Do the mean, median and mode have similar values?
 Is the interquartile range approximately 1.33 s?
 Is the range approximately 6 s?
 Evaluate normal probability plot
The Normal Probability Plot
(continued)
A normal probability plot for data

from a normal distribution will be
approximately linear:
X
90
60
30
-2 -1 0 1 2 Z
Normal Probability Plot
(continued)
Left-Skewed Right-Skewed
X 90 X 90
60 60
30 30
-2 -1 0 1 2 Z -2 -1 0 1 2 Z
Rectangular
X 90 Nonlinear plots indicate
a deviation from
60
normality
30
-2 -1 0 1 2 Z
Normal Probability Plot in PHStat

Normal Probability Plot…
 Need actual data
The Uniform Distribution
Probability
Distributions
Continuous
Probability
Distributions
Normal
Uniform
Exponential
 The uniform distribution is a probability

distribution that has equal probabilities
for all possible outcomes of the
random variable (a die - P(X)=1/6)
 Also called a rectangular distribution
(continued)
The Continuous Uniform Distribution:

ab
μ
2
ab
μ
2
f(X) (b - a)2
σ
12
a b X
For a die
where
1 6
f(X) = value of the density function at any X value μ  3.5
a = minimum value of X 2
b = maximum value of X
(6  1) 2
  1.44
12
Uniform Distribution Example
Example: Uniform Probability Distribution
Over the range 2 ≤ X ≤ 6:
1
f(X) = 6 - 2 = .25 for 2 ≤ X ≤ 6
f(X)
ab 26
μ  4
.25 2 2
(b - a)2 (6 - 2)2
σ   1.1547
2 6 X 12 12
The Exponential Distribution
Probability
Distributions
Continuous
Probability
Distributions
Normal
Uniform
Exponential
The Exponential Distribution
 Used to model the length of time between two

occurrences of an event (the time between
arrivals)
 Examples:
 Time between trucks arriving at an unloading dock
 Time between transactions at an ATM Machine
 Time between phone calls to the main operator
Exponential Distributions
 Describes time or distance between events
is the inverse of the Poisson distribution
f(X)
 Density function  = 0.5
x
 1   = 2.0
f  x  e 

X
 Parameters

   
Exponential Distribution
Example
Example: Customers arrive at the service counter at
the rate of 15 per hour. What is the probability that the
arrival time between consecutive customers is less
than three minutes?
 The mean number of arrivals per hour is 15, so λ = 15

 Three minutes is .05 hours
 P(arrival time < .05) = 1 – e-λX = 1 – e-(15)(.05) = .5276
 So there is a 52.76% probability that the arrival time
between successive customers is less than three
minutes
Exponential Distribution
in PHStat

Exponential…
Sampling Distributions
Sampling
Distributions
Sampling Sampling
of the of the
Mean Proportion
 A sampling distribution is a distribution of all of

the possible values for the mean or proportion
from a given size sample selected from a
population
X p( X )
X 1 . yyyyy
X 2 .zzzzz
.....
Developing a
Sampling Distribution
 Assume there is a population …

A C D
 Population size N=4 B
 Random variable, X,
is age of individuals
 Values of X: 18, 20,
22, 24 (years)
Developing a
(continued)
Summary Measures for the Population Distribution:
μ
 X i P(x)
N .3
18  20  22  24 .2
  21
4 .1
0
σ
 i
(X  μ) 2
 2.236
18 20 22 24 x
N A B C D
Uniform Distribution
Developing a
(continued)
Now consider all possible samples of size n=2
1st 2nd Observation
Obs 18 20 22 24 16 Sample
Means
18 18,18 18,20 18,22 18,24
1st 2nd Observation
20 20,18 20,20 20,22 20,24 Obs 18 20 22 24
22 22,18 22,20 22,22 22,24 18 18 19 20 21
24 24,18 24,20 24,22 24,24 20 19 20 21 22
16 possible samples 22 20 21 22 23
(sampling with
replacement)
24 21 22 23 24
Developing a
(continued)
Sampling Distribution of All Sample Means
16 Sample Means Sample Means

Distribution
1st 2nd Observation _
Obs 18 20 22 24 P(X)
.3
18 18 19 20 21
.2
20 19 20 21 22
.1
22 20 21 22 23
0 _
24 21 22 23 24 18 19 20 21 22 23 24 X
(no longer uniform)
Developing a
(continued)
Summary Measures of this Sampling Distribution:
μX 
 X i

18  19  21    24
 21
N 16
σX 
 (X  μ i X
) 2
(18 - 21)2  (19 - 21)2    (24 - 21)2

  1.58
16
Comparing the Population with its
Population Sample Means Distribution
N=4 n=2
μ  21 σ  2.236 μX  21 σ X  1.58
_
P(X) P(X)
.3 .3
.2 .2
.1 .1
0 0
18 20 22 24 18 19 _ 22 23
20 21 24
A B C D X
X
Standard Error of the Mean
 Different samples of the same size from the same
population will yield different sample means
 A measure of the variability from sample to sample is
given by the Standard Error of the Mean:
σ
σX 
n
 Note that the standard error of the mean decreases as
the sample size increases
If the Population is Normal
 If a population is normal with mean μ and

standard deviation σ, the sampling distribution
of X is also normally distributed with
σ
μ X andμ σX 
n
(This assumes that sampling is with replacement or
sampling is without replacement from an infinite population)
Sampling Distribution Properties
 For sampling with

replacement:
Larger
As n increases, sample size
σ x decreases
Smaller
sample size
σ
σX 
n
μ x
Population and Sampling Distribution
Population
μ 
All samples of
size n
Sampling
Distribution
X σ
σX 
Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. n Chap 6-40
If the Population is not Normal
 We can apply the Central Limit Theorem:
 Even if the population is not normal,
 …sample means from the population will be
approximately normal as long as the sample size is
large enough
 …and the sampling distribution will have
σ
μx  μ
and
σx 
n
Central Limit Theorem
the sampling
As the n↑
distribution
sample
becomes
size gets
almost normal
large
regardless of
enough…
shape of
population
x
If the Population is not Normal
(continued)
Population Distribution
Sampling distribution
properties:
Central Tendency
μx  μ
μ x
Variation Sampling Distribution
σ (becomes normal as n increases)
σx  Larger
n Smaller
sample size
sample
size
(Sampling with
replacement)
μx x
How Large is Large Enough?
 For most distributions, n > 30 will give a

sampling distribution that is nearly normal
 For fairly symmetric distributions, n > 15
 For normal population distributions, the
sampling distribution of the mean is always
normally distributed
Example
 Suppose a population has mean μ = 8 and

standard deviation σ = 3. Suppose a random
sample of size n = 36 is selected.
 What is the probability that the sample mean is

between 7.8 and 8.2?
Example
(continued)
Solution:
 n > 30 … so the sampling distribution is
approximately normal
 … with mean μx = 8
 …and standard deviation σ x  σ  3  0.5
n 36
 Use these as parameters of the normal distribution and
find the probability that the sample mean is between 7.8
and 8.2
of the Proportion
Sampling
Distributions
Sampling Sampling
of the of the
Mean Proportion
Population Proportions, p
p = the proportion of the population having some
characteristic
Sample proportion ( ps ) provides an estimate of p:
X number in the sample having the characteristic of interest

ps  
n sample size
 0 ≤ ps ≤ 1
 ps has a binomial distribution
(assuming sampling with replacement from a finite population or
without replacement from an infinite population)
Sampling Distribution of p
 Approximated by a
normal distribution if: P( ps)
.3
 np  5 .2
.1
0
n(1  p)  5 0 .2 .4 .6 8 1 ps
where
p(1  p)
μps  p and σps 
n
(where p = population proportion)
Example
 If the true proportion of voters who support

Proposition A is p = .4, what is the probability
that a sample of size 200 yields a sample
proportion between .40 and .45?
 i.e.: if p = .4 and n = 200, what is

P(.40 ≤ ps ≤ .45) ?
Example
(continued)
 if p = .4 and n = 200, what is

P(.40 ≤ ps ≤ .45) ?
Find σ p s : p(1  p) .4(1  .4)

σ ps    .03464
n 200
Use PhStat Normal distribution with mean of .4 and

standard deviation .03464
Sampling from Finite Populations
 Modify standard error if sample size (n) is large relative

to population size (N )
 n  .05 N or n / N  .05
 Use finite population correction factor (fpc)
 Standard error with FPC

 N n
X 
n N 1

p 1  p  N n
 PS 
n N 1
Chapter Summary
 Presented key continuous distributions

 normal, uniform, exponential
 Found probabilities using PhStat and Excel

 Recognized when to apply different distributions
 Applied distributions to decision problems
Chapter Summary
(continued)
 Introduced sampling distributions

 Described the sampling distribution of the mean
 For normal populations
 Using the Central Limit Theorem
 Described the sampling distribution of a
proportion
 Calculated probabilities using sampling
distributions

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Statistics for Managers

Using Microsoft® Excel

The Normal Distribution and

After completing this chapter, you should be

Ch. 5 Discrete Continuous Ch. 6

Binomial Normal and Sampling

 These can potentially take on any value,

Where e = the mathematical constant approximated by 2.71828

 Suppose X is normal with mean 8.0 and

P(8 < X < 8.6)

 PHStat | Probability & Prob. Distributions |

 Not all continuous random variables are

A normal probability plot for data

 PHStat | Probability & Prob. Distributions |

 The uniform distribution is a probability

The Continuous Uniform Distribution:

 Used to model the length of time between two

 The mean number of arrivals per hour is 15, so λ = 15

 PHStat | Probability & Prob. Distributions |

 A sampling distribution is a distribution of all of

 Assume there is a population …

Summary Measures for the Population Distribution:

Sampling Distribution of All Sample Means

16 Sample Means Sample Means

Summary Measures of this Sampling Distribution:

(18 - 21)2  (19 - 21)2    (24 - 21)2

 If a population is normal with mean μ and

 For sampling with

 For most distributions, n > 30 will give a

 Suppose a population has mean μ = 8 and

 What is the probability that the sample mean is

Sample proportion ( ps ) provides an estimate of p:

X number in the sample having the characteristic of interest

 If the true proportion of voters who support

 i.e.: if p = .4 and n = 200, what is

 if p = .4 and n = 200, what is

Find σ p s : p(1  p) .4(1  .4)

Use PhStat Normal distribution with mean of .4 and

 Modify standard error if sample size (n) is large relative

 Presented key continuous distributions

 Found probabilities using PhStat and Excel

 Introduced sampling distributions

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