Discrete Probability Distributions

Discrete Probability Distributions

Binomial Probability Distribution

Random Variables

A random variable is a numerical description of the outcome of an

experiment.

A discrete random variable may assume either a finite number of

values or an infinite sequence of values.

A continuous random variable may assume any numerical value in

an interval or collection of intervals.

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Discrete Example:
Let x = number of TVs
Example:
Let x = number of
Random sold at the store in
one day, where x can
customers arriving in
one day, where x can
Variable take on 5 values (0, 1, take on the values 0,
2, 3, 4) 1, 2, . . .

We can count the TVs We can count the

sold, and there is a customers arriving,
finite upper limit on but there is no finite
the number that upper limit on the
might be sold (which number that might
is the number of TVs arrive.
in stock).

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Random Variable
• A discrete random variable has • A continuous random variable
only a finite number of possible has a continuum of possible
values. values.
• Usually, a discrete distribution • whereas a continuous
results from a count, distribution results from a
• Its treatment we will see today. measurement.
• a proper treatment of
continuous distributions requires
calculus.
 Discrete Probability Distributions
• The probability distribution for a random variable describes how probabilities
are distributed over the values of the random variable.
• We can describe a discrete probability distribution with a table, graph, or
formula.

Number
Units Sold of Days
0 80 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
Discrete Probability Distributions
• In addition to tables and graphs, a formula that gives the probability function,
f(x), for every value of x is often used to describe the probability distributions.

• The probability distribution is defined by a probability function, denoted by f(x),

that provides the probability for each value of the random variable.

• The required conditions for a discrete probability function are:

Discrete Probability
Distributions

• Examples:

• Several discrete probability

distributions specified by
formulas are the discrete-
uniform, binomial, Poisson, and
hypergeometric distributions.

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This Photo by Unknown Author is licensed under CC BY
Discrete Probability Distributions
• The discrete uniform probability distribution is the simplest example of a
discrete probability distribution given by a formula.
• The discrete uniform probability function is

where: n = the number of values the

random variable may assume
• The values of the random variable are equally likely.
Summary Measures of a Probability Distribution
• The mean, is a weighted sum of the possible values:

• It is also called the expected value E(X).

• It is also called Payoff

• The weights are the probabilities.

• The expected value does not have to be a value the random
variable can assume.
Payoff or mean or E(X)
• Suppose you are invited to play a game in which you roll
a single die. The payoff to this game is $1 if you roll a 1;
$2 if you roll a 2; $3 if you roll a 3; and so on. What is the
expected value for a single roll of the die? Each possible
outcome has a probability, so the expected value is:

• At first glance, the expected value of $3.50 might

appear to be a relatively useless figure
But, E(X) can be very useful!!
• It can tell you whether a particular event is “fair,”
• Suppose you have the chance to play the above game for $3 a throw.

• Does it make sense to play? Should you play?

• Yes, because the expected value of the outcome

($3.50) is higher than the cost of playing ($3.00). This
does not guarantee that you will make money by
playing once, but it does help clarify which risks are
worth taking and which are not.
To measure the variability in a probability distribution
• Variance of a probability distribution, σ2 , Var(X) is:

• Variance (another formula) is:

• A more natural measure of variability is the standard

deviation, denoted by σ or Stdev(X).
Example
• Question: Two cards are drawn successively with replacement from a well
shuffled pack of 52 cards. Find the mean and variance of the number of aces.
• Solution: Let X be a random variable denoting the number of aces. Possible
values of X: 0, 1, and 2
Example
Example
Example
Example
Variance and Standard Deviation
• The variance summarizes the variability in the values of a random variable.

• The variance is a weighted average of the squared deviations of a random

variable from its mean. The weights are the probabilities.

• The standard deviation, σ , is defined as the positive square root of the

variance.
Expected Value

Example:
x f(x) xf(x)
0 .40 .00
1 .25 .25
2 .20 .40
3 .05 .15
4 .10 .40
Variance

Example:
X x– μ (x – μ )2 f(x) (x–μ )2 f(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
Variance of daily sales =
Empty cell
Empty cell Empty cell Empty cell

σ 2 = 1.660

Standard deviation of daily sales = 1.2884 TVs

Binomial Probability Distribution

The binomial distribution is a discrete distribution

• Define X to be the random number of successes in the n trials.
• Then X has a binominal distribution with parameters n and p.

Four Properties of a Binomial Experiment

1. The experiment consists of a sequence of n identical trials.
2. Two outcomes, success and failure, are possible on each trial.
3. The probability of a success, denoted by p, does not change from trial to trial.
(This is referred to as the stationarity assumption.)
4. The trials are independent.
Binomial Probability Distribution
• Our interest is in the number of successes occurring in the n trials.
• Let x denote the number of successes occurring in the n trials.
• Binomial Probability Function:

where:
x = the number of successes
p = the probability of a success on one trial
n = the number of trials
f(x) = the probability of x successes in n trials
n! = n(n – 1)(n – 2) ….. (2)(1)
Binomial Probability
Distribution
Function

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Binomial Probability Distribution
Example:
Evans Electronics is concerned about a low retention rate for its 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.
Choosing 3 hourly employees at random, what is the probability that 1 of them
will leave the company this year?
Binomial Probability Distribution
Example:
• The probability of the first employee leaving and the second and third
employees staying, denoted (S, F, F), is given by
p(1 – p)(1 – p)
• With a 0.10 probability of an employee leaving on any one trial, the probability
of an employee leaving on the first trial and not on the second and third trials is
given by
(0.10)(0.90)(0.90) = (0.10)(0.90)2 = 0.081
Binomial Probability Distribution (6 of 11)

Example:
Two other experimental outcomes result in one success and two failures. The
probabilities for all three experimental outcomes involving one success follow.

Experimental Probability of
Outcome Experimental Outcome

(S, F, F) p(1 – p)(1 – p) = (.1)(.9)(.9) = .081

(F, S, F) (1 – p)p(1 – p) = (.9)(.1)(.9) = .081
(F, F, S) (1 – p)(1 – p)p = (.9)(.9)(.1) = .081
Empty cell

Total = .243
Binomial Probability Distribution

Example:
Using the probability function with p = 0.10, n = 3, and x = 1
Binomial Probability Distribution (8 of 11)

Example: Evans Electronics

Binomial Probabilities Table
• Statisticians have developed tables that give probabilities and cumulative
probabilities for a binomial experiment random variable.
• These tables can be found in some statistics textbooks.
• With modern calculators and the capability of statistical software
packages, such tables are almost unnecessary.
Binomial Probability Distribution
Using Tables of Binomial Probabilities
p
n x p = .10 p = .15 p = .20 p = .25 p =.30 p = .35 p =.40 p =.45 p =.50
= .05
3 0 .8574 .7290 .6141 .5120 .4219 .3430 .2746 .2160 .1664 .1250

3 1 .1354 .2430 .3251 .3840 .4219 .4410 .4436 .4320 .4084 .3750

3 2 .0071 .0270 .0574 .0960 .1406 .1890 .2389 .2880 .3341 .3750

3 3 .0001 .0010 .0034 .0080 .0156 .0270 .0429 .0640 .0911 .1250
Binomial Probability Distribution
• The expected value is:

• The variance is:

• The standard deviation is:

Binomial Probability Distribution

Example: Evans Electronics

• The expected value is:

• The variance is:

• The standard deviation is:

The Binomial
Distribution

• In Excel

• BINOM.DIST and BINOM.INV

Mr. Godbole

• CASE

• Excel

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In next class
• Discuss question 1 of Godbole’s case
• Normal distribution
• Quiz (on LMS)