Statistics for Managers

Using Microsoft® Excel

4th Edition

Chapter 6

The Normal Distribution and

Other Continuous Distributions

Statistics for Managers Using Microsoft Excel, 4e © 2004 Prentice-Hall, Inc. Chap 6-1
 Chapter Goals
After completing this chapter, you should be
able to:
 Describe the characteristics of the normal distribution
 Translate normal distribution problems into standardized
normal distribution problems
 Find probabilities using a normal distribution table
 Evaluate the normality assumption
 Recognize when to apply the uniform and exponential
distributions
Statistics for Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-2
 Chapter Goals
(continued)

After completing this chapter, you should be

able to:
 Define the concept of a sampling distribution
 Determine the mean and standard deviation _ for the
sampling distribution of the sample mean, X
 Determine the mean and standard deviation for the
sampling distribution of the sample proportion, ps
 Describe the Central Limit Theorem and its importance
_
Statistics for Managers Using
 Apply sampling distributions for both X and p
Microsoft Excel, 4e © 2004 s

Prentice-Hall, Inc. Chap 6-3

 Probability Distributions
Probability
Distributions

Ch. 5 Discrete Continuous Ch. 6

Probability Probability
Distributions Distributions

Binomial Normal

Poisson Uniform

Statistics for Hypergeometric

Managers Using Exponential
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-4
 Continuous Probability Distributions
 A continuous random variable is a variable that
can assume any value on a continuum (can
assume an uncountable number of values)
 thickness of an item
 time required to complete a task
 temperature of a solution
 height, in inches
 These can potentially take on any value,
depending only on the ability to measure
Statisticsaccurately.
for Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-5
 The Normal Distribution
Probability
Distributions

Continuous
Probability
Distributions

Normal

Uniform

Statistics for Managers Using Exponential

Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-6
 The Normal Distribution
‘Bell Shaped’
 Symmetrical
f(X)
 Mean, Median and Mode

are Equal
Location is determined by the σ
mean, μ X
Spread is determined by the μ
standard deviation, σ
Mean
= Median
The random variable has an = Mode
infinitefor
Statistics theoretical
Managersrange:
Using
+ ∞ to Excel,
Microsoft − ∞ 4e © 2004
Prentice-Hall, Inc. Chap 6-7
 Many Normal Distributions

By varying the parameters μ and σ, we obtain

differentUsing
Statistics for Managers normal distributions
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-8
 The Normal Distribution
Shape

f(X) Changing μ shifts the

distribution left or right.

Changing σ increases
or decreases the
σ spread.

μ X
Statistics for Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-9
 The Normal Probability
Density Function
 The formula for the normal probability density
function is
1 −(1/2)[(X −μ)/σ] 2
f(X) = e
2πσ

Where e = the mathematical constant approximated by 2.71828

π = the mathematical constant approximated by 3.14159
μ = the population mean
Statistics forσManagers Using
= the population standard deviation
Microsoft Excel, 4evalue
X = any © 2004
of the continuous variable
Prentice-Hall, Inc. Chap 6-10
 The Standardized Normal

 Any normal distribution (with any mean and

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

 Need to transform X units into Z units

Statistics for Managers Using

Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-11
 Translation to the Standardized
Normal Distribution

 Translate from X to the standardized normal

(the “Z” distribution) by subtracting the mean
of X and dividing by its standard deviation:

X −μ
Z=
σ
Z always
Statistics has mean
for Managers = 0 and standard deviation = 1
Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-12
 The Standardized Normal
Probability Density Function
 The formula for the standardized normal
probability density function is
1 −(1/2)Z 2
f(Z) = e
2π

Where e = the mathematical constant approximated by 2.71828

π = the mathematical constant approximated by 3.14159
Z = any value of the standardized normal distribution
Statistics for Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-13
 The Standardized
Normal Distribution

 Also known as the “Z” distribution

 Mean is 0
 Standard Deviation is 1
f(Z)

1
Z
0
Values above the mean have positive Z-values,
Statistics for Managers Using
values below the mean have negative Z-values
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-14
 Example

 If X is distributed normally with mean of 100

and standard deviation of 50, the Z value for
X = 200 is
X − μ 200 − 100
Z= = = 2.0
σ 50
 This says that X = 200 is two standard
deviations (2 increments of 50 units) above
the
Statistics formean of 100.
Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-15
 Comparing X and Z units

100 200 X (μ = 100, σ = 50)

0 2.0 Z (μ = 0, σ = 1)

Note that the distribution is the same, only the

scale has changed. We can express the problem in
Statistics for Managers
original Using
units (X) or in standardized units (Z)
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-16
 Finding Normal Probabilities

Probability is the
Probability is measured by the area
area under the
curve! under the curve
f(X)
P (a ≤ X ≤ b)
= P (a < X < b)
(Note that the probability
of any individual value is
zero)

a
Statistics for Managers Using b X
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-17
 Probability as
Area Under the Curve
The total area under the curve is 1.0, and the curve is
symmetric, so half is above the mean, half is below

f(X) P( −∞ < X < μ) = 0.5

P(μ < X < ∞) = 0.5

0.5 0.5

μ X
Statistics for Managers Using
−∞ <
P(2004
Microsoft Excel, 4e © X < ∞ ) = 1.0
Prentice-Hall, Inc. Chap 6-18
 Empirical Rules

What can we say about the distribution of values

around the mean? There are some general rules:
f(X)

μ ± 1σ encloses about
68% of X’s
σ σ

X
μ-1σ μ μ+1σ
Statistics for Managers Using
Microsoft Excel, 4e © 200468.26%
Prentice-Hall, Inc. Chap 6-19
 The Empirical Rule
(continued)

 μ ± 2σ covers about 95% of X’s

 μ ± 3σ covers about 99.7% of X’s

2σ 2σ 3σ 3σ
μ x μ x

95.44% 99.72%
Statistics for Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-20
 The Standardized Normal Table

 The Standardized Normal table in the

textbook (Appendix table E.2) gives the
probability less than a desired value for Z
(i.e., from negative infinity to Z)

.9772
Example:
P(Z < 2.00) = .9772

0 2.00 Z
Statistics for Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-21
 The Standardized Normal Table
(continued)

The column gives the value of

Z to the second decimal point
Z 0.00 0.01 0.02 …

The row shows 0.0

the value of Z 0.1
. The value within the
to the first .
decimal point . table gives the
2.0 .9772 probability from Z = − ∞
up to the desired Z
2.0
value
StatisticsP(Z
for < 2.00) = .9772
Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-22
 General Procedure for
Finding Probabilities

To find P(a < X < b) when X is

distributed normally:
 Draw the normal curve for the problem in
terms of X

 Translate X-values to Z-values

 Use the Standardized Normal Table

Statistics for Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-23
 Finding Normal Probabilities

 Suppose X is normal with mean 8.0 and

standard deviation 5.0
 Find P(X < 8.6)

X
Statistics for Managers Using 8.0
Microsoft Excel, 4e © 2004 8.6
Prentice-Hall, Inc. Chap 6-24
 Finding Normal Probabilities
(continued)
 Suppose X is normal with mean 8.0 and
standard deviation 5.0. Find P(X < 8.6)
X − μ 8.6 − 8.0
Z= = = 0.12
σ 5.0

μ=8 μ=0
σ = 10 σ=1

8 8.6 X 0 0.12 Z
Statistics for Managers Using
P(X < 4e
Microsoft Excel, 8.6)
© 2004 P(Z < 0.12)
Prentice-Hall, Inc. Chap 6-25
 Solution: Finding P(Z < 0.12)

Standardized Normal Probability P(X < 8.6)

Table (Portion) = P(Z < 0.12)
Z .00 .01 .02 .5478
0.0 .5000 .5040 .5080

0.1 .5398 .5438 .5478

0.2 .5793 .5832 .5871
Z
0.00
0.3 .6179 .6217 .6255
Statistics for Managers Using 0.12
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-26
 Upper Tail Probabilities

 Suppose X is normal with mean 8.0 and

standard deviation 5.0.
 Now Find P(X > 8.6)

X
Statistics for Managers Using 8.0
Microsoft Excel, 4e © 2004 8.6
Prentice-Hall, Inc. Chap 6-27
 Upper Tail Probabilities
(continued)
 Now Find P(X > 8.6)…
P(X > 8.6) = P(Z > 0.12) = 1.0 - P(Z ≤ 0.12)
= 1.0 - .5478 = .4522

.5478
1.000 1.0 - .5478
= .4522

Z Z
Statistics for Managers
0 Using 0
Microsoft Excel, 4e © 2004
0.12 0.12
Prentice-Hall, Inc. Chap 6-28
 Probability Between
Two Values
 Suppose X is normal with mean 8.0 and
standard deviation 5.0. Find P(8 < X < 8.6)

Calculate Z-values:

X −μ 8 − 8
Z= = =0
σ 5
8 8.6 X
X − μ 8.6 − 8 0 0.12 Z
Z= = = 0.12
σ 5 P(8 < X < 8.6)
Statistics for Managers Using
Microsoft Excel, 4e © 2004 = P(0 < Z < 0.12)
Prentice-Hall, Inc. Chap 6-29
 Solution: Finding P(0 < Z < 0.12)

Standardized Normal Probability P(8 < X < 8.6)

Table (Portion) = P(0 < Z < 0.12)
= P(Z < 0.12) – P(Z ≤ 0)
Z .00 .01 .02 = .5478 - .5000 = .0478
0.0 .5000 .5040 .5080 .0478
.5000
0.1 .5398 .5438 .5478
0.2 .5793 .5832 .5871

0.3 .6179 .6217 .6255 Z

Statistics for Managers Using 0.00
Microsoft Excel, 4e © 2004 0.12
Prentice-Hall, Inc. Chap 6-30
 Probabilities in the Lower Tail

 Suppose X is normal with mean 8.0 and

standard deviation 5.0.
 Now Find P(7.4 < X < 8)

X
Statistics for Managers Using 8.0
Microsoft Excel, 4e © 2004 7.4

Prentice-Hall, Inc. Chap 6-31

 Probabilities in the Lower Tail
(continued)

Now Find P(7.4 < X < 8)…

P(7.4 < X < 8)
= P(-0.12 < Z < 0) .0478
= P(Z < 0) – P(Z ≤ -0.12)
= .5000 - .4522 = .0478 .4522

The Normal distribution is

symmetric, so this probability
7.4 8.0 X
Statistics for Managers
is the same as P(0 < ZUsing
< 0.12) Z
-0.12 0
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-32
 Finding the X value for a
Known Probability

 Steps to find the X value for a known

probability:
1. Find the Z value for the known probability
2. Convert to X units using the formula:

X = μ + Zσ
Statistics for Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-33
 Finding the X value for a
Known Probability
(continued)

Example:
 Suppose X is normal with mean 8.0 and

standard deviation 5.0.

 Now find the X value so that only 20% of all

values are below this X

.2000

Statistics for Managers Using

? 8.0 X
Microsoft Excel, 4e © 2004 Z
? 0
Prentice-Hall, Inc. Chap 6-34
 Find the Z value for
20% in the Lower Tail

1. Find the Z value for the known probability

Standardized Normal Probability  20% area in the lower
Table (Portion) tail is consistent with a
Z … .03 .04 .05 Z value of -0.84

-0.9 … .1762 .1736 .1711

.2000
-0.8 … .2033 .2005 .1977
-0.7 … .2327 .2296 .2266
Statistics for Managers Using ? 8.0 X
Microsoft Excel, 4e © 2004 -0.84 0 Z
Prentice-Hall, Inc. Chap 6-35
 Finding the X value

2. Convert to X units using the formula:

X = μ + Zσ
= 8.0 + ( −0.84)5.0
= 3.80

So 20% of the values from a distribution

with mean 8.0 and standard deviation
5.0 are less
Statistics for Managers than 3.80
Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-36
 Assessing Normality

 Not all continuous random variables are

normally distributed
 It is important to evaluate how well the data set
is approximated by a normal distribution

Statistics for Managers Using

Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-37
 Assessing Normality
(continued)
 Construct charts or graphs
 For small- or moderate-sized data sets, do stem-and-
leaf display and box-and-whisker plot look
symmetric?
 For large data sets, does the histogram or polygon
appear bell-shaped?
 Compute descriptive summary measures
 Do the mean, median and mode have similar values?
 Is the interquartile range approximately 1.33 σ?

 Is the range approximately 6 σ?

Statistics for Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-38
 Assessing Normality
(continued)

 Observe the distribution of the data set

 Do approximately 2/3 of the observations lie within
mean ± 1 standard deviation?
 Do approximately 80% of the observations lie within
mean ± 1.28 standard deviations?
 Do approximately 95% of the observations lie within
mean ± 2 standard deviations?
 Evaluate normal probability plot
 Is the normal probability plot approximately linear
with
Statistics for positive slope?
Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-39
 The Normal Probability Plot

 Normal probability plot

 Arrange data into ordered array
 Find corresponding standardized normal quantile
values
 Plot the pairs of points with observed data values on
the vertical axis and the standardized normal quantile
values on the horizontal axis
 Evaluate the plot for evidence of linearity
Statistics for Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-40
 The Normal Probability Plot
(continued)

A normal probability plot for data

from a normal distribution will be
approximately linear:

X
90

60

30

-2 Using
Statistics for Managers -1 0 1 2 Z
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-41
 Normal Probability Plot
(continued)

Left-Skewed Right-Skewed
X 90 X 90
60 60
30 30
-2 -1 0 1 2 Z -2 -1 0 1 2 Z

Rectangular
X 90 Nonlinear plots indicate
a deviation from
60
normality
Statistics for
30 Managers Using
Microsoft Excel, 4e © 2004
-2 -1 0 1 2 Z
Prentice-Hall, Inc. Chap 6-42
 The Uniform Distribution
Probability
Distributions

Continuous
Probability
Distributions

Normal

Uniform

Statistics for Managers Using Exponential

Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-43
 The Uniform Distribution

 The uniform distribution is a

probability distribution that has equal
probabilities for all possible
outcomes of the random variable

 Also called a rectangular distribution

Statistics for Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-44
 The Uniform Distribution
(continued)

The Continuous Uniform Distribution:

1
if a ≤ X ≤ b
b−a
f(X) =
0 otherwise

where
f(X) = value of the density function at any X value
a = minimum value of X
Statistics b = maximumUsing
for Managers value of X

Microsoft Excel, 4e © 2004

Prentice-Hall, Inc. Chap 6-45
 Properties of the
Uniform Distribution

 The mean of a uniform distribution is

a +b
μ=
2

 The standard deviation is

(b - a)2
σ=
12
Statistics for Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-46
 Uniform Distribution Example

Example: Uniform probability distribution

over the range 2 ≤ X ≤ 6:

1
f(X) = 6 - 2 = .25 for 2 ≤ X ≤ 6

f(X)
a +b 2 +6
μ= = =4
.25 2 2

(b - a)2 (6 - 2)2
σ= = = 1.1547
X 12 12
Statistics for2 Managers Using6
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-47
 The Exponential Distribution
Probability
Distributions

Continuous
Probability
Distributions

Normal

Uniform

Statistics for Managers Using Exponential

Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-48
 The Exponential Distribution

 Used to model the length of time between two

occurrences of an event (the time between
arrivals)

 Examples:

Time between trucks arriving at an unloading dock

Time between transactions at an ATM Machine

Time between phone calls to the main operator

Statistics for Managers Using

Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-49
 The Exponential Distribution

 Defined by a single parameter, its mean λ

(lambda)
 The probability that an arrival time is less than
some specified time X is
− λX
P(arrival time < X) = 1 − e
where e = mathematical constant approximated by 2.71828
λ = the population mean number of arrivals per unit
Statistics for Managers of the continuous variable where 0 < X < ∞
Using
X = any value
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-50
 Exponential Distribution
Example

Example: Customers arrive at the service counter at

the rate of 15 per hour. What is the probability that the
arrival time between consecutive customers is less
than three minutes?

 The mean number of arrivals per hour is 15, so λ = 15

 Three minutes is .05 hours
 P(arrival time < .05) = 1 – e-λX = 1 – e-(15)(.05) = .5276
 So there is a 52.76% probability that the arrival time
between
Statistics successive
for Managers customers is less than three
Using
minutes
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-51
 Sampling Distributions

Sampling
Distributions

Sampling Sampling
Distributions Distributions
of the of the
Mean Proportion
Statistics for Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-52
 Sampling Distributions

 A sampling distribution is a
distribution of all of the possible
values of a statistic for a given size
sample selected from a population

Statistics for Managers Using

Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-53
 Developing a
Sampling Distribution

 Assume there is a population …

C D
A B
 Population size N=4
 Random variable, X,
is age of individuals
 Values of X: 18, 20,
22, 24 (years)

Statistics for Managers Using

Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-54
 Developing a
Sampling Distribution
(continued)

Summary Measures for the Population Distribution:

μ=
∑ X i P(x)
N .3
18 + 20 + 22 + 24 .2
= = 21
4 .1
0
σ=
∑ (X − μ)
i
2

= 2.236
18 20 22 24 x
N A B C D
Statistics for Managers Using Uniform Distribution
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-55
 Developing a
Sampling Distribution
(continued)
Now consider all possible samples of size n=2
1st 2nd Observation
Obs 16 Sample
18 20 22 24
Means
18 18,18 18,20 18,22 18,24
1st 2nd Observation
20 20,18 20,20 20,22 20,24 Obs 18 20 22 24
22 22,18 22,20 22,22 22,24 18 18 19 20 21
24 24,18 24,20 24,22 24,24 20 19 20 21 22
16 possible samples 22 20 21 22 23
Statistics (sampling with
for Managers Using
replacement)
24 21 22 23 24
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-56
 Developing a
Sampling Distribution
(continued)

Sampling Distribution of All Sample Means

16 Sample Means Sample Means

Distribution
1st 2nd Observation _
Obs 18 20 22 24 P(X)
.3
18 18 19 20 21
.2
20 19 20 21 22
.1
22 20 21 22 23
Statistics for Managers Using 0 _
24 21Excel,
Microsoft 22 4e23© 2004
24 18 19 20 21 22 23 24 X
(no longerChap
uniform)
6-57
Prentice-Hall, Inc.
 Developing a
Sampling Distribution
(continued)

Summary Measures of this Sampling Distribution:

μX =
∑ X i
=
18 + 19 + 21 +  + 24
= 21
N 16

σX =
∑ ( X i − μ X
) 2

(18 - 21)2 + (19 - 21)2 +  + (24 - 21)2

= = 1.58
Statistics for Managers Using 16
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-58
 Comparing the Population with its
Sampling Distribution
Population Sample Means Distribution
N=4 n=2
μ = 21 σ = 2.236 μX = 21 σ X = 1.58
_
P(X) P(X)
.3 .3

.2 .2

.1 .1

0 0 _
Statistics
18 for Managers
20 24 X
22 Using 18 19 20 21 22 23 24
X
MicrosoftA Excel,B 4e ©
C 2004D
Prentice-Hall, Inc. Chap 6-59
 Sampling Distributions
of the Mean

Sampling
Distributions

Sampling Sampling
Distributions Distributions
of the of the
Mean Proportion
Statistics for Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-60
 Standard Error of the Mean

 Different samples of the same size from the same

population will yield different sample means
 A measure of the variability in the mean from sample to
sample is given by the Standard Error of the Mean:

σ
σX =
n
 Note that the standard error of the mean decreases as
Statisticsthe
forsample
Managers
sizeUsing
increases
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-61
 If the Population is Normal
 If a population is normal with mean μ and
standard deviation σ, the sampling distribution
of X is also normally distributed with

σ
μX = μ and σX =
n

Statistics (This assumes that

for Managers sampling is with replacement or
Using
sampling is without replacement from an infinite population)
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-62
 Z-value for Sampling Distribution
of the Mean
 Z-value for the sampling distribution of X :

( X − μX ) ( X − μ)
Z= =
σX σ
n
where: X = sample mean
μ = population mean
σ = population standard deviation
n = sample
Statistics for Managers Using size
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-63
 Finite Population Correction
 Apply the Finite Population Correction if:
 the sample is large relative to the population

(n is greater than 5% of N)
and…
 Sampling is without replacement

( X − μ)
Then Z=
σ N −n
Statistics for Managers Using n N − 1
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-64
 Sampling Distribution Properties

Normal Population


μx = μ Distribution

μ x
(i.e. x is unbiased ) Normal Sampling
Distribution
(has the same mean)

μx
Statistics for Managers Using
Microsoft Excel, 4e © 2004
x
Prentice-Hall, Inc. Chap 6-65
 Sampling Distribution Properties
(continued)

 For sampling with replacement:

As n increases, Larger
σ x decreases sample size

Smaller
sample size

Statistics for Managers Using

Microsoft Excel, 4e © 2004 μ x
Prentice-Hall, Inc. Chap 6-66
 If the Population is not Normal
 We can apply the Central Limit Theorem:
 Even if the population is not normal,
 …sample means from the population will be
approximately normal as long as the sample size is
large enough.

Properties of the sampling distribution:

σ
μ x = μ and
Statistics for Managers Using
σx =
Microsoft Excel, 4e © 2004 n
Prentice-Hall, Inc. Chap 6-67
 Central Limit Theorem

the sampling
As the n↑
distribution
sample
becomes
size gets
almost normal
large
regardless of
enough…
shape of
population

Statistics for Managers Using

Microsoft Excel, 4e © 2004 x
Prentice-Hall, Inc. Chap 6-68
 If the Population is not Normal
(continued)

Population Distribution
Sampling distribution
properties:
Central Tendency
μx = μ
μ x
Variation Sampling Distribution
σ (becomes normal as n increases)
σx = Larger
n Smaller
sample size
sample
size
(Sampling with
Statisticsreplacement)
for Managers Using
Microsoft Excel, 4e © 2004
μx x
Prentice-Hall, Inc. Chap 6-69
 How Large is Large Enough?

 For most distributions, n > 30 will give a

sampling distribution that is nearly normal
 For fairly symmetric distributions, n > 15
 For normal population distributions, the
sampling distribution of the mean is always
normally distributed

Statistics for Managers Using

Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-70
 Example

 Suppose a population has mean μ = 8 and

standard deviation σ = 3. Suppose a random
sample of size n = 36 is selected.

 What is the probability that the sample mean is

between 7.8 and 8.2?

Statistics for Managers Using

Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-71
 Example
(continued)

Solution:
 Even if the population is not normally
distributed, the central limit theorem can be
used (n > 30)
 … so the sampling distribution of x is
approximately normal
 … with mean μx = 8
σ 3
Statistics
 …andfor Managers
standard deviation σ x = n = 36 = 0.5
Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-72
 Example
(continued)
Solution (continued):
 
 7.8 - 8 μ X
- μ 8.2 - 8 
P(7.8 < μ X < 8.2) = P < < 
 3 σ 3 
 36 n 36 
= P(-0.5 < Z < 0.5) = 0.3830
Population Sampling Standard Normal
Distribution Distribution Distribution .1915
??? +.1915
? ??
? ? Sample Standardize
? ? ?
?
Statistics for Managers Using -0.5 0.5
7.8 8.2 μz = 0 Z
μ = 8 X
Microsoft Excel, 4e © 2004 μ X
= 8 x
Prentice-Hall, Inc. Chap 6-73
 Sampling Distributions
of the Proportion

Sampling
Distributions

Sampling Sampling
Distributions Distributions
of the of the
Mean Proportion
Statistics for Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-74
 Population Proportions, p
p = the proportion of the population having
some characteristic
 Sample proportion ( ps ) provides an estimate
of p:
X number of items in the sample having the characteristic of interest
ps = =
n sample size

 0 ≤ ps ≤ 1
 ps has a binomial distribution
(assuming sampling with replacement from a finite population or
Statistics for Managers Using
without replacement from an infinite population)
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-75
 Sampling Distribution of p
 Approximated by a
Sampling Distribution
normal distribution if: P( ps)
.3

np ≥ 5 .2
.1
and 0
0 .2 .4 .6 8 1 ps
n(1− p) ≥ 5

where p(1 − p)
μps = p and σps =
Statistics for Managers Using n
Microsoft Excel, 4e ©(where
2004 p = population proportion)
Prentice-Hall, Inc. Chap 6-76
 Z-Value for Proportions
Standardize ps to a Z value with the formula:

ps − p ps − p
Z= =
σ ps p(1 − p)
n
 If sampling is without replacement
and n is greater than 5% of the
p(1 − p) N − n
population size, then σ p must use σ ps =
the finite population correction n N −1
Statistics for Managers Using
factor:
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-77
 Example

 If the true proportion of voters who support

Proposition A is p = .4, what is the probability
that a sample of size 200 yields a sample
proportion between .40 and .45?

 i.e.: if p = .4 and n = 200, what is

P(.40 ≤ ps ≤ .45) ?
Statistics for Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-78
 Example
(continued)
 if p = .4 and n = 200, what is
P(.40 ≤ ps ≤ .45) ?

p(1 − p) .4(1 − .4)

Find σ ps : σ ps = = = .03464
n 200

Convert to  .40 − .40 .45 − .40 

standard P(.40 ≤ p s ≤ .45) = P ≤Z≤ 
 .03464 .03464 
normal:
Statistics for Managers Using = P(0 ≤ Z ≤ 1.44)
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-79
 Example
(continued)
 if p = .4 and n = 200, what is
P(.40 ≤ ps ≤ .45) ?

Use standard normal table: P(0 ≤ Z ≤ 1.44) = .4251

Standardized
Sampling Distribution Normal Distribution

.4251

Standardize

.40 .45 0 1.44

Statistics for Managers Usingps Z
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-80
 Chapter Summary
 Presented key continuous distributions
 normal, uniform, exponential
 Found probabilities using formulas and tables
 Recognized when to apply different distributions
 Applied distributions to decision problems

Statistics for Managers Using

Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-81
 Chapter Summary
(continued)

 Introduced sampling distributions

 Described the sampling distribution of the mean
 For normal populations
 Using the Central Limit Theorem
 Described the sampling distribution of a
proportion
 Calculated probabilities using sampling
distributions
Statistics for Managers Using
Microsoft Excel, 4e © 2004
Prentice-Hall, Inc. Chap 6-82