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CHAPTER 5
Discrete Probability
Distributions
© Copyright McGraw-Hill 2004
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Objectives

Construct a probability distribution for a
random variable.

Find the mean, variance, and expected value
for a discrete random variable.

Find the exact probability for X successes in n
trials of a binomial experiment.
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Objectives (cont’d.)

Find the mean, variance, and standard
deviation for the variable of a binomial
distribution.

Find probabilities for outcomes of variables
using the Poisson, hypergeometric, and
multinomial distributions.
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Introduction

Many decisions in business, insurance, and
other real-life situations are made by
assigning probabilities to all possible
outcomes pertaining to the situation and
then evaluating the results.
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Introduction (cont’d.)

This chapter explains the concepts and
applications of probability distributions. In
addition, special probability distributions,
such as the binomial, multinomial, Poisson,
and hypergeometric distributions are
explained.
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Random Variables

A random variable is a variable whose values
are determined by chance.
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Discrete Probability Distribution

A discrete probability distribution consists of
the values a random variable can assume and
the corresponding probabilities of the values.
The probabilities are determined theoretically
or by observation.
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Calculating the Mean

In order to find the mean for a probability
distribution, one must multiply each possible
outcome by its corresponding probability and
find the sum of the products.
  X1  P( X1 )  X 2  P( X 2 )  X 3  P( X 3 )  . . .  X n  P( X n )
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Rounding Rule

The mean, variance, and standard deviation
should be rounded to one more decimal place
than the outcome, X.
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Variance of a Probability Distribution

The variance of a probability distribution is
found by multiplying the square of each
outcome by its corresponding probability,
summing those products, and subtracting the
square of the mean.

The formula for calculating the variance is:
 2  [ X 2  P( X )]   2

The formula for the standard deviation is:
 
2
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Expected Value

Expected value or expectation is used in
various types of games of chance, in
insurance, and in other areas, such as
decision theory.
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Expected Value (cont’d.)

The expected value of a discrete random
variable of a probability distribution is the
theoretical average of the variable. The
formula is:
  EX    X  P X 

The symbol E(X) is used for the expected
value.
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The Binomial Distribution

Many types of probability
problems have only two
possible outcomes or they
can be reduced to two
outcomes.

Examples include: when a
coin is tossed it can land
on heads or tails, when a
baby is born it is either a
boy or girl, etc.
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The Binomial Experiment

The binomial experiment is a probability
experiment that satisfies these requirements:
1. Each trial can have only two possible
outcomes—success or failure.
2. There must be a fixed number of trials.
3. The outcomes of each trial must be
independent of each other.
4. The probability of success must remain
the same for each trial.
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The Binomial Experiment (cont’d.)

The outcomes of a binomial experiment and
the corresponding probabilities of these
outcomes are called a binomial distribution.
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Notation for the Binomial Distribution
P( S )
P( F )
p

The symbol for the probability of success

The symbol for the probability of failure

The numerical probability of success
q

The numerical probability of failure
P( S )  p
and
n
The number of trials
X

P (F )  1  p  q
The number of successes
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Binomial Probability Formula

In a binomial experiment, the probability of
exactly X successes in n trials is
n!
P( X ) 
 p X  q n X
(n  X )! X !
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Binomial Distribution Properties
The mean, variance, and standard deviation of
a variable that has the binomial distribution
can be found by using the following formulas.
mean
 np
variance
2  n  p q
standard deviation
  n  p q
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Other Types of Distributions

The multinomial distribution is similar to the
binomial distribution but has the advantage
of allowing one to compute probabilities when
there are more than two outcomes.

The multinomial distribution is a general
distribution, and the binomial distribution is
a special case of the multinomial distribution.
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Poisson Distribution

The Poisson distribution is a discrete
probability distribution that is useful when n
is large and p is small and when the
independent variables occur over a period of
time.

The Poisson distribution can be used when
there is a density of items distributed over a
given area or volume, such as the number of
defects in a given length of videotape.
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Formula for the Poisson Distribution

The probability of X occurrences in an interval
of time, volume, area, etc., for a variable
where  is the mean number of occurrences
per unit (area, time, volume, etc.) is
e  X
P(X, ) 
X!

where
X  0, 1, 2,...
The letter e is a constant approximately equal
to 2.7183.
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Poisson Distribution (cont’d.)

The Poisson distribution can also be used to
approximate the binomial distribution when n
is large and   np is small (e.g., less than 5).
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Hypergeometric Distribution

When sampling is done without replacement,
the binomial distribution does not give exact
probabilities, since the trials are not
independent. The smaller the size of the
population, the less accurate the binomial
probabilities will be. The hypergeometric
distribution is a distribution of a variable that
has two outcomes when sampling is done
without replacement.
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Formula for the Hypergeometric Distribution

Given a population with only two types of
objects (females and males, defective and
nondefective, etc.) such that there are a items
of one kind and b items of another kind and
a  b equals the total population, the
probability P ( X ) of selecting without
replacement a sample of size n with X items of
type a and n  X items of type b is
P(X ) 
a C X  b Cn  X
(a b )Cn
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Applications of Hypergeometric Distribution

Objects are often manufactured and shipped
to a company. The company selects a few
items and tests to see whether they are
satisfactory or defective. The company must
know the probability of getting a specific
number of defects to make the decision to
accept or reject the whole shipment based on
a small sample. To do this, the company uses
the hypergeometric distribution.
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Summary

A probability distribution can
be graphed, and the mean,
variance, and standard
deviation can be found.

The mathematical expectation
can also be calculated for a
probability distribution.

Expectation is used in
insurance and games of
chance.
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Summary (cont’d.)

The most common probability distributions
are the binomial, multinomial, Poisson, and
hypergeometric distributions.

The binomial distribution is used when there
are only two outcomes for an experiment, a
fixed number of trials, the probability is the
same for each trial, and the outcomes are
independent of each other.
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Summary (cont’d.)

The multinomial distribution is an extension
of the binomial distribution and is used when
there are three or more outcomes for an
experiment.

The hypergeometric distribution is used when
sampling is done without replacement.

The Poisson distribution is used in special
cases when independent events occur over a
period of time, area, or volume.
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Conclusion

Many decisions in
business, insurance,
and other real-life
situations are made by
assigning probabilities
to all possible outcomes
pertaining to the
situation and then
evaluating the results.
© Copyright McGraw-Hill 2004
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