April Andrea M.

Valera
2016
 Over the past few two years, 324 officers
on the police force received promotions.
The specific breakdowns are as follows:
MEN WOMEN TOTAL

Promoted 288 36 324

Not 672 204 876
Promoted
Total 960 240 1200
 Using the conditional probability to analyze the
discrimination charge.
Let
M = event an officer is a man
W = event an officer is a woman
A = event an officer is promoted
AC = event an officer is not promoted
P (M A) - probability that a randomly selected officer is a
man and is promoted.
P (M AC) - probability that a randomly selected officer is a
man and not promoted
P (W A) - probability that a randomly selected officer is a
woman and is promoted
P (W AC) - probability that a randomly selected officer is a
woman and is not promoted.
P (M A) = 288/1200 = 0.24 = probability that a randomly
selected officer is a man and is promoted.
P (M AC) = 672/1200 = 0.56 = probability that a randomly
selected officer is a man and not promoted
P (W A) = 36/1200 = 0.03 = probability that a randomly
selected officer is a woman and is promoted
P (W AC) = 204/1200 = 0.17 = probability that a randomly
selected officer is a woman and is not promoted.
 MEN WOMEN TOTAL

Promoted P(M A) P(W A) 0.27

Not P(M AC) P(W AC) 0.73
Promoted
Total 0.80 0.20 1.00
Joint probabilities appear Marginal Probabilities
in the body of the table appear in the margin of
the table
MEN WOMEN TOTAL

Promoted 0.24 0.03 0.27

Not 0.56 0.17 0.73
Promoted
Total 0.80 0.20 1.00
 MEN Men WOMEN Women
Only Only
Promote 0.24 P(A | M) 0.03 P(A|W)
d
Not 0.56 P(AC|M) 0.17 P(AC|W)
Promote
d
Total 0.80 0.20
 MEN Men WOMEN Women
Only Only
Promote 0.24 P(MA)/ 0.03 P(WA)/
d P(M) P(W)
Not 0.56 P(MAC) 0.17 P(WAC)
Promote /P(M) /P(W)
d
Total 0.80 0.20
 MEN Men WOMEN Women
Only Only
Promote 0.24 .24/.80 0.03 0.03/.20
d =0.3 =0.15
Not 0.56 .56/.80 0.17 0.17/.20
Promote =0.7 =0.85
d
Total 0.80 0.20
 MEN Men WOMEN Women TOTAL
Only Only
Promote 0.24 P(M | A) 0.03 P(W | A)
d
Not 0.56 P(M | AC) 0.17 P(W | AC)
Promote
d
 Days Listed Until Sold
Under 30 31-90 Over 90 Total

Under 50 40 10 100
Php150,000
Initial 150,000- 20 150 80 250
199,999
Asking
200,000- 20 280 100 400
Price 250,000
Over 10 30 10 50
250,000
TOTAL 100 500 200 800
1. If A is defined as the event that a home is listed for more
than 90 days before being sold, estimate the probability
of A.
2. If B is defined as the event that the initial asking price is
under Php150,000 estimate the probability of B.
3. What is the probability of A B?
Using Excel to Compute
Standard Normal Probabilities
Excel has two functions for computing probabilities
and z values for a standard normal distribution:

NORM S DIST is used to compute the cumulative

NORMSDIST
probability given a z value.

NORM S INV is used to compute the z value

NORMSINV
given a cumulative probability.

(The S in the function names reminds

us that they relate to the standard
normal probability distribution.)
Using Excel to Compute
Standard Normal Probabilities
Excel Formula Worksheet
A B
1 Probabilities: Standard Normal Distribution
2
3 P (z < 1.00) =NORMSDIST(1)
4 P (0.00 < z < 1.00) =NORMSDIST(1)-NORMSDIST(0)
5 P (0.00 < z < 1.25) =NORMSDIST(1.25)-NORMSDIST(0)
6 P (-1.00 < z < 1.00) =NORMSDIST(1)-NORMSDIST(-1)
7 P (z > 1.58) =1-NORMSDIST(1.58)
8 P (z < -0.50) =NORMSDIST(-0.5)
9
Using Excel to Compute
Standard Normal Probabilities
Excel Value Worksheet
A B
1 Probabilities: Standard Normal Distribution
2
3 P (z < 1.00) 0.8413
4 P (0.00 < z < 1.00) 0.3413
5 P (0.00 < z < 1.25) 0.3944
6 P (-1.00 < z < 1.00) 0.6827
7 P (z > 1.58) 0.0571
8 P (z < -0.50) 0.3085
9
Using Excel to Compute
Standard Normal Probabilities
Excel Formula Worksheet
A B
1 Finding z Values, Given Probabilities
2
3 z value with .10 in upper tail =NORMSINV(0.9)
4 z value with .025 in upper tail =NORMSINV(0.975)
5 z value with .025 in lower tail =NORMSINV(0.025)
6
 Translation to the Standardized Normal
Distribution

Translate any X to the Standardized Normal (the Z distribution)

by subtracting from any particular X value the population mean
and dividing by the population standard deviation:

Any normal distribution (with any mean and standard

deviation combination) can be transformed into the
standardized normal distribution (Z)
X
Z

 Translation to the Standardized Normal
Distribution

Translate any Z to the X value by:

Getting the product of the Z value and the population
standard deviation then adding the population
mean.

X (Z * )
Given the following z-scores:
With a MEAN of 12, and a Standard Deviation of 3,
what are values of X.
-1.20
-0.34
-0.20
+0.17
+1.45
+2.27

20
Given the following z-scores:
With a MEAN of 12, and a Standard Deviation of 3,
what are values of X.
(-1.20 * 3) + 12 = 8.4
(-0.34 * 3) + 12 = 10.98
(-0.20 * 3) + 12 = 11.4
(+0.17 * 3) + 12 = 12.51
(+1.45 * 3) + 12 = 16.35
(+2.27 * 3) + 12 = 18.81

21
 Random Variables is a numerical description of the outcome
of an experiment.
It must assume numerical values and associates it with each
possible experimental outcome. The particular numerical
value of the random variable depends on the outcome of the
experiment.
It describes how probabilities are distributed over the values
of the random variable.
Advantage of defining a random variable is that once the
probability distribution is know, you can determine
probability for the decision maker.
 DISCRETE CONTINUOUS
RANDOM RANDOM
VARIABLES VARIABLES

Discrete Random Variable Continuous Random Variable

A random variable that A random variable that may
may assume either a finite assume any numerical value in
number of values or an an interval or collection of
infinite sequence of intervals
values. e.g. time, weight, distance,
e.g. fixed tangible number temperature with interval
 Random Variables

Question Random Variable x Type

Family x = Number of dependents Discrete
size reported on tax return
Distance from x = 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)
 Identify the values that the random variable can assume
and state whether the random variable is discrete or
continuous.
Experiment Random Variable
1. Take a 20 question # of questions answered
examination correctly
2. Observe an employees # of non productive hours in an
work eight hour workday
3. Audit 50 tax returns # or returns containing errors
4. Weigh a shipment of # of pounds
goods
5. Observe cars arriving at # of cars arriving at the
a tollbooth for one hour tollbooth
1. 0, 1, 2, . . . , 20 correct answer [discrete]
2. 0 x 8 hours, [continuous]
3. 0, 1, 2, . . . , 50 returns with errors [discrete]
4. x > 0 , [continuous]
5. 0, 1, 2, . . . Cars, [discrete]
 Discrete Random Variable a random variable that may
assume either a finite number of values or an infinite
sequence of values.

Experiment Random Variable (x) Possible Values for

the
Random Variable
Contact five # of customers who 0, 1, 2, 3, 4, 5
customers place an order
Inspect a shipment of # of defective phones 0, 1, 2 , . . . , 49, 50
50 phones
Operate a restaurant # of customers 0, 1, 2, 3, . . .
for one day
Sell an automobile Gender of the 0 if male, 1 if female
customer
 DISCRETE
UNIFORM
PROBABILILTY
DISTRIBUTION

HYPERGEOMETRI DISCRETE BINOMIAL

C PROBABILITY PROBABILITY PROBABILITY
DISTRIBUTION DISTRIBUTION DISTRIBUTION
(HPD) (BPD)

POISSON
PROBABILITY
DISTRIBUTION
(PPD)
1. Table
Let x = number of TVs sold at the store in one
day, where x can take on 5 values (0, 1, 2, 3, 4)

Units Sold # of Days x F (x)

0 80 0 0.40 80/200

1 50 1 0.25
2 40 2 0.20
3 10 3 0.05
4 20 4 0.10
200 1.00
2. Graph

.50
.40

Probability
.30
.20
.10

0 1 2 3 4
Values of Random Variable x (TV sales)
3. Formula
The discrete uniform probability distribution is the
simplest example of a discrete probability distribution
given by a formula.
The discrete uniform probability function 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

 The probability distribution for the X F (x)
random variable x follows:
20 0.20
a) Is this probability distribution valid?
Explain 25 0.15
b) What is the probability that x = 30? 30 0.25
c) What is the probability that x is less 35 0.40
than or equal to 25?
d) What is the probability that x is
greater than 30?
 The expected value or mean of a random variable is a
measure of the central location for the random variable.
The formula for the expected value of a discrete random
variable x follows:

E(x) = = x f (x)
Both the notations E(x) and are used to denote the
expected value of a random variable.
The expected value does not have to be a value the
random variable can assume.
 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 Although sales of 0, 1, 2, 3, 4 TVs are possible
on any given day, you can anticipate an
average of 1.20 TVs sold per day. Assuming in a
month, you have 30(1.20) = 36 TVs
 Bikes Days f(x)
1 14
2 36
3 18
4 6

expected number of
Bikes sold in a day
 Bikes Days f(x)
1 14 .19
2 36 .49
3 18 .24
4 6 .08
E(x) =

expected number of
Bikes sold in a day
 Bikes Days f(x) x * f(x)
1 14 .19 .19
2 36 .49 .98
3 18 .24 .72
4 6 .08 .32
E(x) = 2.21

expected number of
Bikes sold in a day
 Even though the expected value provides the mean value for
the random variable, we often need a measurement of
variability or dispersion.
Variance is a measure of variability or dispersion of a random
variable.
Var(x) = 2 = (x - )2 f(x)
The variance is a weighted average of the squared deviations
of a random variable from its mean. The weights are the
probabilities. Standard deviations is positive square root of
the variance.
E(x) = 1.20

x x- (x - )2 f(x) (x - )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
squared
Variance of daily sales = 2 = 1.660
Standard deviation of daily sales = 1.2884 TVs
Continuous Probability
Distributions
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.
 Continuous Random Variable
A random variable that may assume any numerical value
in an interval or collection of intervals

Experiment Random Variable (x) Possible Values

for the
Random Variable
Operate a bank Time between customer x0
arrivals in minutes
Fill a soft drink # of ounces 0 x 12.1
can
Construct a new Percentage of project 0 x 100
library complete after six months
Test a new Temperature when the 150 x 212
chemical process desired reaction takes place
 Uniform Probability Distribution
Normal Probability Distribution
Exponential Probability Distribution

Uniform Normal f (x) Exponential

f (x) f (x)

x x x
 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.

Uniform Normal f (x) Exponential

f (x) f (x)

x x x
x1 x2 x1 x2 x1 xx12 x2
 Uniform A random variable is uniformly
f (x)
distributed whenever the probability is
proportional to the intervals length.
The uniform probability density function
is:
x
f (x) = 1/(b a) for a < x < b
=0 elsewhere

where:
a = smallest value the variable can assume
b = largest value the variable can assume
 Normal
f (x) The normal probability distribution is the
most important distribution for describing
a continuous random variable.
It is widely used in statistical inference.

x
Normal Probability Density Function:

1 ( x )2 /2 2
f (x) e
where: 2
= mean
= standard deviation
= 3.14159
e = 2.71828
 Exponential
f (x) 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
x
Time required to complete a survey
Distance between major defects in a highway

Exponential Probability Density Function:

where: = mean
e = 2.71828 1
f ( x) e x / for x > 0, > 0