Business Statistics, 6

th
ed.
by Ken Black
Chapter 6

Continuous
Distributions
Copyright 2010 John Wiley & Sons, Inc.
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.
Copyright 2010 John Wiley & Sons, Inc.
2
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
Copyright 2010 John Wiley & Sons, Inc.
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

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4
Uniform Distribution
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
Copyright 2010 John Wiley & Sons, Inc.
5
Uniform Distribution
Height, mean and standard deviation of a uniform
distribution

=> Height 1/(b- a)
=> Mean = (a + b)/2
=> Std Dev = (b-a)/Square root 12

Probabilities:
P(x) = (X2 X1) / (b a)
Copyright 2010 John Wiley & Sons, Inc.
6
Uniform Distribution
A production line is set up to manufacture machine
braces in a lots of five per minute during a shift.
Assume the distribution is uniform. When lots are
weighed, variations among the weights range from
41 to 47 grams.

What is the height? What is the mean and standard
deviation?
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7
Uniform Distribution Mean
and Standard Deviation
Mean
=
+

a b
2
Mean
=
+

41 47
2
88
2
44 = =
Standard Deviation
o =
b a
12
Standard Deviation
o =

= =
47 41
12
6
3 464
1 732
.
.
Copyright 2010 John Wiley & Sons, Inc.
8
Uniform Distribution of Lot Weights
f x
for x
for
( ) =

s s

1
47 41
41 47
0 all other values
Area = 1
f x ( )
x
6
1
41 47
1
=

41 47
Copyright 2010 John Wiley & Sons, Inc.
9
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
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10
Demonstration Problem 6.1
Suppose the amount of time it takes to assemble a
plastic module ranges from 27 to 39 seconds and that
assembly times are uniformly distributed. Describe the
distribution.
What is the probability that a given assembly will take
between 30 and 35 seconds?
Fewer than 30 seconds?
Greater than 29 seconds?
Copyright 2010 John Wiley & Sons, Inc.
11
Demonstration Problem 6.1
12
Solution
The height of the distribution is 1/12. The mean time is 33
seconds with a standard deviation of 3.464 seconds.

f (x) = 1/(39 27) = 1/12
= (a + b)/2 = (39 + 27)/2 = 33

= (b a)/ Sq.Rt of 12 = (39 27)/3.464 = 3.4643
Copyright 2010 John Wiley & Sons, Inc.
12
Demonstration Problem 6.1
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13
4167 . 0
12
5
27 39
30 35
) 35 30 ( = =

= s s X P
42
45
f x ( )
x 27 39
4167 . 0
27 39
30 35
=

Demonstration Problem 6.1

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14
2500 . 0
12
3
27 39
27 30
) 30 ( = =

= < X P
f x ( )
x 27 39
2500 . 0
27 39
27 30
=

Demonstration Problem 6.1

Copyright 2010 John Wiley & Sons, Inc.
15
8333 . 0
27 39
29 39
) 29 ( =

= > X P
f x ( )
x 27 39
29
8333 . 0
27 39
29 39
=

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
Copyright 2010 John Wiley & Sons, Inc.
16
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
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17
Standardized Normal Distribution
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.
o

=
x
z
Copyright 2010 John Wiley & Sons, Inc.
18
Standardized Normal Distribution
Z score is the number of Std Dev 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
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19
Standardized Normal Distribution - 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
Copyright 2010 John Wiley & Sons, Inc.
20
Standardized Normal Distribution - 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.
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21
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

Copyright 2010 John Wiley & Sons, Inc.
22
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
Copyright 2010 John Wiley & Sons, Inc.
23
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
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
Copyright 2010 John Wiley & Sons, Inc.
24
Applying the Z Formula
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

Copyright 2010 John Wiley & Sons, Inc.
25
Applying the Z Formula
0197 . ) 06 . 2 ( ) 700 (
100 = and 494, = with d distribute normally is X
= > = > Z P X P
o
06 . 2
100
494 700 - X
= Z
700 = X For
=

=
o

0.5 0.4803 = 0.0197

Copyright 2010 John Wiley & Sons, Inc.
26
Applying the Z Formula
94 . 1
100
494 300 - X
= Z
300 = X For
=

=
o

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

100 = and 494, = with d distribute normally is X
= 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

Copyright 2010 John Wiley & Sons, Inc.

27
Applying the Z Formula
) 610 500 (
100 = and 494, = with d distribute normally is X
s s X P
o
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28
0 , 0 for ) ( > > =

X X P
e
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
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29
Different Exponential Distributions
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30
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
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31
Example
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32
During the dry month of August, one US city has a
measurable rain on average only three days per
month. If the arrival of rainy dais is Poisson
distributed in this city during August, what is the
average number of days that will pass between
measurable rain? What is the probability during this
month that there will be a period of less than two
days between rain?i
Hw
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33
6.2, 6.4, 6.10, 6.13, 6.30, 6.33, 6.55