CH 06

Copyright 2012 John Wiley & Sons, Ltd.

Chapter 6

Continuous
Distributions
Understand concepts of the uniform distribution.
Appreciate the importance of the normal
distribution.
Recognize normal distribution problems, and know
how to solve them.
Decide when to use the normal distribution to
approximate binomial distribution problems, and
know how to work them.
Decide when to use the exponential distribution to
solve problems in business, and know how to work
them.
Learning Objectives
Continuous Distributions
Continuous distributions
Continuous distributions are constructed from continuous
random variables in which values are taken for every point
over a given interval
With continuous distributions, probabilities of outcomes
occurring between particular points are determined by
calculating the area under the curve between these points
3
Uniform Distribution
The uniform distribution is a relatively simple
continuous distribution in which the same height f(x),
is obtained over a range of values

f x
b a
for a x b
for
( ) =

s s
1
0 all other values
Area = 1
f x ( )
x
1
b a
a
b
Mean and standard deviation of a uniform
distribution

=> Mean = (a + b)/2
=> Std Dev = (b-a)/Square root 12
Uniform Distribution: Example
Suppose the ages of medium-level managers in an
commercial bank ranges from 35-48 years in an
uniform distribution.

Uniform Distribution of Ages of
Managers
s s
=
es other valu all 0
48 35
48 35
1
) (
for
x for
x f
Area = 1
f x ( )
x
13
1
35 48
1
=
35
48
8
Uniform Distribution Mean
and Standard Deviation
Mean
=
+
a b
2
5 . 41
2
83
2
48 + 5 3
=
Mean
= =
Standard Deviation
o =
b a
12
753 . 3
464 . 3
13
12
35 48
Deviation Standard
= =
= o
Copyright 2010 John Wiley & Sons, Inc.
Uniform Distribution Probability
With discrete distributions, the probability function
yields the value of the probability
For continuous distributions, probabilities are
calculated by determining the area over an interval
of the function
10
a b
X
P
x x
x x

= s s
1 2
2 1
) (
13
3
35 48
37 40
) 45 42 (
=

= s s
X P
Uniform Distribution Probability
What is the probability that a randomly selected
manager is aged between 37and 40 years old?
f x ( )
x
13
3
35 48
37 40
=
35
48
0.231
Properties of the Normal
Distribution
Characteristics of the normal distribution:
Continuous distribution - Line does not break
Symmetrical distribution - Each half is a mirror of the other
half
Asymptotic to the horizontal axis - it does not touch the x
axis and goes on forever
Unimodal - means the values mound up in only one portion
of the graph
Area under the curve = 1; total of all probabilities = 1
Probability Density Function of
the Normal Distribution
Normal distribution is characterized by the mean
and the Std Dev
Values of and produce a normal distribution
Probability Density Function of
the Normal Distribution
. . . 2.71828
. . . 3.14159 =
X of deviation standard
X of mean
:
2
1
) (
2
2
1
=
=
=
|
.
|
\
|

=

e
Where
x
x f
e
t
o
t o
X
Standardized Normal Distribution
Every unique pair of or values define a different
normal distribution
Changes in or give a different distribution
Z distribution mechanism by which normal
distributions can be converted into a single distribution
Z formula => Z = (x )/ , where 0
The conversion formula for any x value of a given
normal distribution is given below.
It is called the z-score.

A z-score gives the number of standard deviations
that a value x, is above or below the mean.
If x value is less than the mean, the Z score is negative
If x value is greater than mean, the Z score is positive

o

=
x
z
Z score can be used to find probabilities for any
normal curve problem that has been converted to Z
scores
Z distribution is normal distribution with a mean of 0
and a Std Dev of 1
- Continued
- Continued
Z distribution probability values are given in table A5
Table A5 gives the total area under the Z curve
between 0 and any point on the positive Z axis
Since the curve is symmetric, the area under the curve
between Z and 0 is the same whether the Z curve is
positive or negative
A normal distribution with
a mean of zero, and
a standard deviation of one
Z Formula
standardizes any normal distribution
Z Score
computed by the Z Formula
the number of standard
deviations which a value
is away from the mean
o

=
X
Z
o =
1
= 0
- Continued
- Continued
If x is normally distributed with a mean of and a
standard deviation of o, then the z-score will also be
normally distributed with a mean of 0 and a standard
deviation of 1.
Tables have been generated for standard normal
distribution which enable you to determine
probabilities for normal variables.
The tables are set to give the probabilities between
z = 0 and some other z value, z
0
say, which is depicted
on the next slide.
Z Table
Second Decimal Place in Z
Z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09

0.00 0.0000 0.0040 0.0080 0.0120 0.0160 0.0199 0.0239 0.0279 0.0319 0.0359
0.10 0.0398 0.0438 0.0478 0.0517 0.0557 0.0596 0.0636 0.0675 0.0714 0.0753
0.20 0.0793 0.0832 0.0871 0.0910 0.0948 0.0987 0.1026 0.1064 0.1103 0.1141
0.30 0.1179 0.1217 0.1255 0.1293 0.1331 0.1368 0.1406 0.1443 0.1480 0.1517

0.90 0.3159 0.3186 0.3212 0.3238 0.3264 0.3289 0.3315 0.3340 0.3365 0.3389
1.00 0.3413 0.3438 0.3461 0.3485 0.3508 0.3531 0.3554 0.3577 0.3599 0.3621
1.10 0.3643 0.3665 0.3686 0.3708 0.3729 0.3749 0.3770 0.3790 0.3810 0.3830
1.20 0.3849 0.3869 0.3888 0.3907 0.3925 0.3944 0.3962 0.3980 0.3997 0.4015

2.00 0.4772 0.4778 0.4783 0.4788 0.4793 0.4798 0.4803 0.4808 0.4812 0.4817

3.00 0.4987 0.4987 0.4987 0.4988 0.4988 0.4989 0.4989 0.4989 0.4990 0.4990
3.40 0.4997 0.4997 0.4997 0.4997 0.4997 0.4997 0.4997 0.4997 0.4997 0.4998
3.50 0.4998 0.4998 0.4998 0.4998 0.4998 0.4998 0.4998 0.4998 0.4998 0.4998

Table Lookup of a Standard
Normal Probability
-3 -2 -1 0 1 2 3
P Z ( ) . 0 1 0 3413 s s =
Z 0.00 0.01 0.02

0.00 0.0000 0.0040 0.0080
0.10 0.0398 0.0438 0.0478
0.20 0.0793 0.0832 0.0871

1.00 0.3413 0.3438 0.3461

1.10 0.3643 0.3665 0.3686
1.20 0.3849 0.3869 0.3888
Applying the Z Formula
X is normally distributed with = 485, and =105 o
P X P Z ( ) ( . ) . 485 600 0 1 10 3643 s s = s s =
For X = 485,
Z =
X-
o
=

=
485 485
105
0
10 . 1
105
485 600 - X
= Z
600, = X For
=
=
o
Z 0.00 0.01 0.02

0.00 0.0000 0.0040 0.0080
0.10 0.0398 0.0438 0.0478

1.00 0.3413 0.3438 0.3461

1.10 0.3643 0.3665 0.3686

1.20 0.3849 0.3869 0.3888
X is normally distributed with = 485, and =105 o
P X P Z ( ) ( . ) . 485 600 0 1 10 3643 s s = s s =
For X = 485,
Z =
X-
o
=

=
485 485
105
0
For X = 600,
Z =
X-
o
=

=
600 485
105
1 10 .
Z 0.00 0.01 0.02

0.00 0.0000 0.0040 0.0080
0.10 0.0398 0.0438 0.0478

1.00 0.3413 0.3438 0.3461

1.10 0.3643 0.3665 0.3686

1.20 0.3849 0.3869 0.3888
7123 . ) 56 . 0 ( ) 550 (
100 = and 494, = with d distribute normally is X
= s = s Z P X P
o
56 . 0
100
494 550 - X
= Z
550 = X For
=
=
o
0.5 + 0.2123 = 0.7123

0197 . ) 06 . 2 ( ) 700 (
= > = > Z P X P
o
06 . 2
100
494 700 - X
= Z
700 = X For
=
=
o
0.5 0.4803 = 0.0197

94 . 1
100
494 300 - X
= Z
300 = X For
=
=
o
8292 . ) 06 . 1 94 . 1 ( ) 600 300 (

= s s = s s Z P X P
o
0.4738+ 0.3554 = 0.8292
06 . 1
100
494 600 - X
= Z
600 = X For
=
=
o

Normal Approximation of the
Binomial Distribution
For certain types of binomial distributions, the
normal distribution can be used to approximate the
probabilities
At large sample sizes, binomial distributions approach the
normal distribution in shape regardless of the value of p
The normal distribution is a good approximate for binomial
distribution problems for large values of n
Procedure
Convert binomial parameters to normal parameters
Does the interval 3 lie between 0 and n? If so, continue;
otherwise, do not use the normal approximation
Correct for continuity
Solve the normal distribution problem

Normal Approximation of the
Binomial Distribution: Example
These types of problems can be solved quite easily
with the appropriate technology.
The output shows the MINITAB solution to the
binomial example presented in the chapter 5 slides
(DELL survey on digitally engaged companies):
n=20, p=0.06, P(X2)= ?
Normal Approximation of Binomial:
Parameter Conversion
Conversion equations

Conversion example:
o
=
=
n p
n p q
55 . 3 ) 70 )(. 30 )(. 60 (
18 ) 30 )(. 60 (
). 30 . and 60 | 25 (
find on, distributi binomial a has X Given that
= = =
= = =
= = >
q p n
p n
p n X P
o

65 . 28 3
35 . 7 3
65 . 10 18 ) 55 . 3 ( 3 18 3
= +
=
= =
o
o
o
0 10 20 30 40 50 60
n
70
Interval Check
Correcting for Continuity
Values
Being
Determined
Correction
X>
X>
X<
Xs
sXs
<X<
+.50
-.50
-.50
+.05
-.50 and +.50
+.50 and -.50
The binomial probability,
and
is approximated by the normal probability
P(X 24. 5| and
P X n p ( | . )
. ).
> = =
> = =
25 60 30
18 3 55 o
25
26
27
28
29
30
31
32
33
Total
0.0167
0.0096
0.0052
0.0026
0.0012
0.0005
0.0002
0.0001
0.0000
0.0361
X P(X)
( )
The normal approximation,
P(X 24.5| and > = =
= >

|
\
|
.
|
= >
= s s
=
=
o 18 355
24 5 18
355
183
5 0 183
5 4664
0336
. )
.
.
( . )
. .
. .
.
P Z
P Z
P Z
Computations
0 , 0 for ) ( > > =

X
e
X f
X
Exponential Distribution
Continuous
Family of distributions
Skewed to the right
X varies from 0 to infinity
Apex is always at X = 0
Steadily decreases as X gets larger
Probability function
Different Exponential Distributions
0.0
0.2
0.4
0.6
0.8
1.0
1.2
0 1 2 3 4 5
= 1.2
( )
( )
P X X
X
P X
e
e
> =

> = =

=
0
0
2 12
12 2
0907
| .
( . )( )
.
Exponential Distribution:
Probability Computation

CH 06

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Copyright 2012 John Wiley & Sons, Ltd.

Copyright 2012 John Wiley & Sons, Ltd.

Z 0.00 0.01 0.02

0.5 + 0.2123 = 0.7123

0.5 0.4803 = 0.0197

8292 . ) 06 . 1 94 . 1 ( ) 600 300 (

Copyright 2012 John Wiley & Sons, Ltd.

Copyright 2012 John Wiley & Sons, Ltd.

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