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Probability Distributions Guide

* Average arrival rate (λ) = 6 patients/hour * Given time period is 30 minutes = 0.5 hours * So λ for the given time period is 6 * 0.5 = 3 patients * Using the Poisson probability formula: P(X=4) = (e-3 * 34) / 4! = 0.1587 Therefore, the probability of 4 arrivals in 30 minutes is 0.1587.

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225 views22 pages

Probability Distributions Guide

* Average arrival rate (λ) = 6 patients/hour * Given time period is 30 minutes = 0.5 hours * So λ for the given time period is 6 * 0.5 = 3 patients * Using the Poisson probability formula: P(X=4) = (e-3 * 34) / 4! = 0.1587 Therefore, the probability of 4 arrivals in 30 minutes is 0.1587.

Uploaded by

ENID
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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S-MATH311LA

Management Science
Module 3: Probability Distribution
Synchronous Meeting
September 8, 2022
2:00 pm – 4:00 pm

We shall start at 2:00 pm…please standby


PROBABILITY
DISTRIBUTION
Random Variable
Binomial Distribution
Poisson Distribution
Exponential Distribution
Normal Distribution
Random Variable
➢Is a function whose value is a real number
determined by each element in the sample space.
Example
A coin is tossed three times. List down the elements of the
sample space. List down the possible values of the following
random variables:
X: the number of heads that fall
Y: the number of tails that fall

A random variable is a numerical description of the


outcome of an experiment.
Random Variable

Sample Random Variable Random Variable


space X: no. of heads Y: no. of tails

3 0
HHH 2 1
HHT 2 1
HTH 2 1
THH 1 2
HTT 1 2
THT 1 2
TTH 0 3
TTT
Probability Distribution

A probability distribution is a function or rule that assigns the value of a


random variable to the probability associated with these values.

Probability distribution is a list of all possible outcome of a random variable


with their corresponding probabilities

Probability distribution of the following random variable:


Random Variable Random Variable
X Y
P(X=0) = 1/8 P(Y=0) = 1/8
P(X=1) = 3/8 P(Y=1) = 3/8
P(X=2) = 3/8 P(Y=2) = 3/8
P(X=3) = 1/8 P(Y=3) = 1/8
X 0 1 2 3

P(X=x) 1/8 3/8 3/8 1/8


Expected Value and Variance
The expected value, or mean, of a random variable
is a measure of its central location.
E(x) =  = xf(x)

The variance summarizes the variability in the


values of a random variable.

Var(x) =  2 = (x - )2f(x)

The standard deviation, , is defined as the positive


square root of the variance.
Example: JSL Appliances
Using past data on TV sales, …

• Create a tabular representation of the probability distribution for TV sales


• Find the expected value, variance, and standard deviation
• Create a probability histogram for TV sales

Use our MS Excel template


Some Types of Probability Distribution

Discrete Probability Distribution

1. Binomial Distribution
2. Poisson Distribution

Continuous Probability Distribution

3. Exponential Distribution
4. Normal Distribution
Discrete Probability Distributions

The probability distribution is defined by a


probability function, denoted by f(x), which provides
the probability for each value of the random variable.

The required conditions for a discrete probability


function are:
f(x) > 0

f(x) = 1
The Binomial Distribution

The Binomial distribution is one of the most widely encountered


probability distributions in business processes. The distribution is
derived from a process known as a Bernoulli trial, named in honor of
the Swiss mathematician James Bernoulli.

The Bernoulli Process:


• Each trial has only two possible outcomes
• The probability of a success on any trial remains fixed over time.
• The trials are statistically independent
Binomial Distribution
A binomial experiment is one that possesses the following
properties:

▪ the experiment consists of n identical trials


▪ each trial results in one of two outcomes, a “success” or a
“failure”
▪ the probability of success on a single trial is equal to p and
remains the same from trial to trial
▪ the probability of a failure is equal to q = 1 – p
▪ the trials are independent, which means that the outcome of
trials does not affect the outcomes of any other trials.
The Binomial Distribution

Definition: The discrete probability distribution of the binomial random


variable is given by
n!
f (x) = p x (1 − p)( n − x )
x !(n − x )!

n −r
P(r)= n Cr p q r

Where:
P(r) is the probability of r successes in n trials.
n is the total number of trials.
r represents a certain number of successes.
p represents the probability of success.
q represents the probability of failure.
Binomial Distribution

 Expected Value E(x) =  = np

 Variance Var(x) =  2 = np(1 − p)

 Standard Deviation  = np(1 − p )


Example: Evans Electronics
Binomial Distribution
Evans is concerned about a low retention rate for
employees. In recent years, management has seen a turnover of
10% of the hourly employees annually. Thus, for any hourly
employee chosen at random, management estimates a
probability of 0.1 that the person will not be with the company
next year.
Find the Expected value, variance, and standard deviation
Choosing 3 hourly employees at random, what is the
probability that 1 of them will leave the company this
year?
The Binomial Distribution

Sample Problem

5 employees are required to operate a chemical process; the


process cannot be started until all 5 workstations are manned.
Employee records indicate there is a 0.4 chance of any one
employee being late, and we know that they all come to work
independently of each other. Management is interested in
knowing the probabilities of 0, 1, 2, 3, 4, or 5 employees being
late, so that a decision concerning the number of backup
personnel can be made.

This Photo by Unknown Author is licensed under CC BY


The Binomial Distribution
The Poisson Distribution

➢Named after the mathematician and physicist


Siméon Poisson (1781-1840).

➢ The selection of samples is usually performed and related to a given time


interval or to a specified region. These types of experiments yielding to
numerical values of a random variable X during a specified time interval or
region are called Poisson experiments.
➢It describes the distribution of arrivals per unit time at a
service facility.

➢A Poisson distributed random variable is often useful in


estimating the number of occurrences over a specified interval
of time or space.
The Poisson Distribution
➢It is used to describe a number managerial situations including the demand
(arrivals) of patience at a health clinic, the distribution of telephone calls going
through a central switching system, the arrivals of vehicles at a toll booth, the
number of accidents at an intersection, and the number of looms waiting for
service in a textile mill.
The Poisson Distribution
For events that occur randomly and independently with a Poisson random
variable (number of success) X, with a constant rate ( µ ) per unit time or
region, the probability distribution is called Poisson distribution and described
by the formula x −
e
f ( x) =
x!
THE POISSON FORMULA
–
x e
P(x) =
x
Where:
P(x) the probability of exactly x occurrences.
 x
Lambda (the average number of occurrences per
interval of time) raised to the x power.
–
e e (2.71828…) raised to the negative lambda power.
x x factorial
The Poisson Distribution
Sample Problem
The manager of DWN BANK records the arrival of customers and on the
average; three customers arrive per minute at the bank during the
noon to 1 P.M. hour.
a. What is the probability that in a given minute exactly two
customers will arrive?
b. What is the probability that more than two customers will arrive in
a given minute?
Example: Mercy Hospital
Patients arrive at the emergency room of Mercy Hospital at the average
rate of 6 per hour on weekend evenings. MERCY
What is the probability of 4 arrivals in
30 minutes on a weekend evening?

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