Continuous Distributions

Normal Distribution

Learning Objectives
Probability density function of normal distribution
Standard 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
Computation of probabilities from the normal
distribution
Use the normal distribution to solve business problems
Testing whether a set of data is normally distributed
Graphical
Analytical

Continuous Random Variable

Measurement data
Interval level data and ratio level data
Scale data

Continuous Random Variable

A continuous random variable is a real valued function
that can assume any value on a continuum (can assume
an uncountable number of values)
Sales
Profit
Thickness of an item
Time required to complete a task
Temperature of a solution
Height [all in appropriate units]
These can potentially take on any value depending only
on the ability to precisely and accurately measuring it

Some Continuous Probability Distributions

Normal
Standard normal
Exponential(1&2)
Uniform
t
Chi-square (2)
F
Tau ()
Cauchy
Gompertz

Log-normal(2&3)
Gamma (2&3)
Beta
Logistic distribution
Loglogistic (2&3)
Weibull(2&3)
Smallest extreme
value
Largest extreme
value
Pareto

Sampling Distributions

Standard normal (z)

t
Chi-square (2)
F
Tau ()

Normal Distribution
Probably the most widely known and used of
all distributions is the normal distribution
It fits many human characteristics, such as

height
weight
length
IQ scores
scholastic achievements
years of life expectancy
speed

Graphic Representation of the Normal Distribution

Normal Distribution
Many things in nature such as

Plants
Trees
Animals
Insects

Have many characteristics that are

normally distributed
Hence, the name normal

Normal Distribution
Many variables in business and industry
are also normally distributed. For
example,
annual cost of household insurance
cost per square foot of renting
warehouse space
managers satisfaction on a five-point
scale
amount of fill in soda cans, etc.
Extremely important distribution.

Normal Distribution
Discovery of the normal curve of errors is generally
credited to mathematician and astronomer Karl Gauss
(1777 1855), who recognized that the errors of
repeated measurement of objects are often normally
distributed.
Thus the normal distribution is sometimes referred to
as the Gaussian distribution or the normal curve of
errors.
Pierre-Simon de Laplace (1749 1827) and Abraham
de Moivre (1667 1754) contributed significantly in the
development of the normal distribution.

The Normal Distribution

Bell Shaped continuous
Symmetrical about mean
Mean, Median and Mode
are Equal
Location is determined by the
mean,

Spread is determined by the

standard deviation,
The random variable has an
infinite theoretical range:
+ to

f(X)

Mean
= Median
= Mode

Properties of the Normal Distribution

It is asymptotic to the
horizontal axis.
It is unimodal.
Area represents
probability; Area under
the curve is 1.
It is a family of curves.

Family of Normal Curves

Skewness and Kurtosis

Skewness
Skewness=0

Kurtosis
Kurtosis=3

Moments of a Distribution
The rth moment of a rv X about any
point x=A is defined as
1
=
N
'
r

i =1

f i ( xi A) r

It is known as raw moments

Moments
The rth moment of a rv X about mean is
defined as

1
r =
N

f (x
i =1

x)

It is known as central moment

Skewness and Kurtosis

Skewness

Skewness( Sk ) =

Kurtosis

2
3
3
2

4
Kurtosis = 2
2

Measures of Shape
Skewness

Absence of symmetry
Extreme values in one side of a distribution

Kurtosis

Peakedness of a distribution
Leptokurtic: high and thin
Mesokurtic: normal shape
Platykurtic: flat and spread out

Symmetrical and Skewness

0.30
0.4

0.25

0.20

0.3

0.15
0.2
0.10

0.05

0.1

0.00
0.0

0
-4

-3

-2

Symmetrical

-1

0
0

10

12

Right or Positively
Skewed

12

10

0
0.70

0.75

0.80

0.85

0.90

0.95

1.00

Left or Negatively
Skewed

Relationship of Mean, Median and Mode

Relationship of Mean, Median and Mode

Relationship of Mean, Median and Mode

Skewness
If Sk < 0, the distribution is negatively
skewed (skewed to the left).
If Sk = 0, the distribution is symmetric (not
skewed).
If Sk > 0, the distribution is positively
skewed (skewed to the right).

Types of Kurtosis

Platykurtic Distribution

Leptokurtic Distribution
Mesokurtic Distribution

More Properties
As x increases numerically, f(x) decreases
rapidly, the maximum probability occurring
at x= and is given by
f(x) max=1/(*sqrt(2))
Linear combination of independent normal
variates is also a normal variate.

Area Property
P(-<X< +) = 0.6826
P(-2<X< +2) = 0.9544
P(-3<X< +3) = 0.9973

Probability Density Function (pdf) of Normal

Distribution

The formula for the normal probability density function is

f(x) =

1
2

1 (x )

Where e = the mathematical constant approximated by 2.71

= the mathematical constant approximated by 3.14
= the population mean
= the population standard deviation
x= any value of the continuous random variable, X

Standardized Normal Distribution

Since there is an infinite number of combinations for
and , then we can generate an infinite family of
curves.
Because of this, it would be impractical to deal with all
of these normal distributions.
Fortunately, a mechanism was developed by which all
normal distributions can be converted into a single
distribution called the z distribution.
This process yields the standardized normal
distribution (or curve).

Transformation
The conversion formula for any x value of a
given normal distribution is given below. It is
called the z-score.

z=

A z-score gives the number of standard

deviations that a value x, is above or below the
mean.

Probability Density Function of

Standardized Normal Distribution
The formula for the standardized normal
probability density function is

f(Z) =

1
(1/2)Z 2
e
2

Where e = the mathematical constant approximated by 2.71828

= the mathematical constant approximated by 3.14159
Z = any value of the standardized normal distribution

Standardized Normal Distribution

If X is normally distributed with a mean of and a
standard deviation of , then the z-score will also be
normally distributed with
mean of 0 and
standard deviation of 1
Since we can convert to this standard normal
distribution, tables have been generated for this
standard normal distribution which will enable us to
determine probabilities for normal variables
The tables in the text are set up to give the probabilities
between z = 0 and some other z value, z0 say

Probability
The probability that a rv X lies in the
interval (-, +) is given by
P( < X < + ) =

f ( x)dx

Standardized Normal Distribution

Applying the Z Formula

X is normally distributed with = 485, and = 105
P( 485 X 600 ) = P( 0 Z 1.10 ) =. 3643
For X = 485,
X - 485 485
=
=0
Z=
105

0.00

0.01

0.02

0.00
0.10

0.0000 0.0040 0.0080

0.0398 0.0438 0.0478

For X = 600,

1.00

0.3413 0.3438 0.3461

X - 600 485
=
= 1.10
Z=
105

1.10

0.3643 0.3665 0.3686

1.20

0.3849 0.3869 0.3888

Applying the Z Formula

Example 1
X is normally distributed with = 494, and = 100
P( X 550) = P( Z 0.56) = .7123
For X = 550
X - 550 494
Z=
=
= 0.56
100

0.5 + 0.2123 = 0.7123

Example 2

Applying the Z Formula

Example 3
X is normally distributed with = 494, and = 100
P( X > 700) = P( Z > 2.06) = .0197
For X = 700
X - 700 494
Z=
=
= 2.06
100

0.5 0.4803 = 0.0197

Applying the Z Formula

Example 4
X is normally distributed with = 494, and = 100
P(300 X 600) = P(1.94 Z 1.06) = .8292
For X = 300
X - 300 494
Z=
=
= 1.94
100

For X = 600
X - 600 494
Z=
=
= 1.06

100

0.4738+ 0.3554 = 0.8292

Normal Approximation
of the Binomial Distribution
n=10 p=.2

n=10

p=.2

Normal Approximation
of the Binomial Distribution
The normal distribution can be used to
approximate binomial probabilities.
Procedure
Convert binomial parameters to normal
parameters.
Approximation is good if both np>5 and nq>5
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 Binomial:

Parameter Conversion
Conversion equations
= n p

= n pq
Conversion example:
Given that X has a binomial distribution, find
P( X 25| n = 60 and p =. 30 ).
= n p = (60 )(. 30 ) = 18

= n p q = (60 )(. 30 )(. 70 ) = 3. 55

Normal Approximation of Binomial:

Interval Check
3 = 18 3(355
. ) = 18 10.65
3 = 7.35
+ 3 = 28.65

10

20

30

40

50

60
n

70

Graph of the Binomial Problem:

n = 60, p = 0.3
0.12
0.10

P(x)

0.08
0.06
0.04
0.02
0.00
10

15

20
x

25

30

Normal Approximation of Binomial:

Correcting for Continuity
Values
Being
Determined

Correction

X>
X
X<
X
X
<X<

+.50
-.50
-.50
+.50
-.50 and +.50
+.50 and -.50

The binomial probability,

P( X 25| n = 60 and p =. 30 )
is approximated by the normal probability
P(X 24.5| = 18 and = 3. 55).

Normal Approximation of Binomial:

Computations
X

P(X)

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

The normal approximation,

. )
P(X 24.5| = 18 and = 355
24.5 18

= P Z

.
355
. )
= P( Z 183
. )
=.5 P( 0 Z 183
=.5.4664
=.0336

Learning Continues