Discrete Probability Models

Arun Kumar, Ravindra Gokhale, and Nagarajan Krishnamurthy

Quantitative Techniques-I, Term I, 2012 Indian Institute of Management Indore

Probability Models

Standard probability models (probability distributions) are available in the literature and have been studied in detail. These models can mimic many real life scenarios very well and have mathematically tractable representation.

Discrete Probability Distributions

Binomial Distribution* Poisson Distribution* Hypergeometric Distribution Geometric Distribution Multinomial Distribution

Bernoulli Experiment

An experiment that results in only two outcomes.

Example

1 2

3 4 5

Toss of a coin. Choice of voters (Democratic candidate or Republican candidate). An item is defective or not. Pass or fail. Have a disease when you have certain symptoms or does not have the disease.

Binomial Experiment

*Repeated Bernoulli experiments.

Binomial Experiment

n identical Bernoulli trials. Label one of the outcomes as success and other as failure. P(success)=p and P(failure)=1 p . p and 1 p are the same for all trials. Trials are independent.

Exercise 1

A jar contains ve balls: three red and two white. Two balls are randomly selected without replacement from the jar, and the number of x red balls are recorded. Explain why x is or is not a binomial random variable?

Binomial Distribution

Probability of k success in n trial is P(X = k ) = where k {0, 1, 2, 3, . . . , n}. n p k (1 p )nk k

n k

and Factorial

Understanding the Distribution Formula

Probability of k successes is p k . Probability of n k failures is (1 p )nk . n k successes in n trials can happen in k ways.

Exercise 2

Let x be a binomial random variable with n = 10 and p = 0.4. Find these values: a) P(x=4)

Exercise 2

b) P (x 4)

Exercise 2

c) P (x > 4)

Exercise 2

d) P (x 4)

Shape of Binomial Distribution

For p = 0.5, the shape of the distribution is symmetric. As p get closer to 0 or 1, the shape of the distribution becomes skewed.

Mean and Variance

*Mean=np . *Variance=np (1 p ) = npq . *Standard deviation= npq

Exercise 2

e) Mean and variance.

Exercise 3

US Public Health Service

Poisson distribution

Poisson distribution is appropriate for a random variable that counts the number of occurrences of an event of interest in a given time interval.

Assumption

Poisson distribution assumes that events occur independently.

Example

Trac accidents in a day. Speed limit violations in an hour. Customers arriving at a bank in a day.

Poisson Distribution From Binomial Distribution

Poisson Distribution

If =average number of events in an specied time interval then chance that k events will happen in that time is P (X = k ) = where k 0, 1, 2, 3, . . .. k e , k!

Mean and Variance

*Mean=.

*Variance= . *Standard deviation= .

Exercise 4

Let X be a Poisson random variable with mean = 2. Calculate the following probabilities: a) P(X=0)

Exercise 4

b) P(X = 1)

c) P(X > 1)

Exercise 4

d) P(X = 5)

Exercise 5
Airport Safety: The increased number of small commuter planes in major airports has heightened concern over air safety. An eastern airport has recorded a monthly average of ve near misses on landings and takeos in the past 5 years. 1 Find the probability that during a given month there are no near-misses on landings and takeos at the airport. 2 Find the probability that during a given month there are ve near-misses. 3 Find the probability that there are at least ve near-misses during a particular month.

Exercise 6

Twenty people are asked to select a number from 0 to 9. Eight of them choose a 4,5, or 6. 1 If the choice of any one number is as likely as any other, what is the probability of observing eight or more choices of the numbers 4,5, or 6? 2 What conclusions would you draw from the results of part a?

Exercise 7

In a food processing and packaging plant, there are, on an average, two packaging machine breakdowns per week. 1 What is the probability that there are no machine breakdowns in a given week? 2 Calculate the probability that there are no more than two machine breakdowns in two weeks?

Extra Problem

When arrival probabilities are modeled by a Poisson Distribution, the probability of 2 arrivals in 2 hours is not equal to twice the probability of 1 arrival in 1 hour, why?

Poisson Process vs. Poisson Distribution