Advance Numerical Analysis

Advanced Numerical Methods and Applied Statistics
Advanced Numerical Methods and Applied

Statistics
Chanchal Kundu
Department of Mathematics
Rajiv Gandhi Institute of Petroleum Technology
Rae Bareli, U.P., INDIA
August, 2014
Dr. Chanchal Kundu RGIPT, Rae Bareli

Advanced Numerical Methods and Applied Statistics Outline of the Course
1
Module 1: Advanced Numerical Methods.
2
Module 2: Probability Distribution.
3
Module 3: Applied Statistics.
Text Books
Applied Numerical Analysis by Gerald and Wheatley, Pearson
Education.
Probability and Statistics in Engineering by Hines,
Montgomery, Goldsman and Borror, JohnWiley and Sons
(Student Ed.).
Supplementary Books
Introductory Methods of Numerical Analysis by S.S. Sastry, 4th
Ed., PHI.
Introduction to Probability and Statistics by Susan Milton and
Arnold, 4th Ed., Tata MacGraw Hill.

1
2
3
Text Books
Education.
(Student Ed.).
Supplementary Books
Ed., PHI.

1
2
3
Text Books
Education.
(Student Ed.).
Supplementary Books
Ed., PHI.

1
2
3
Text Books
Education.
(Student Ed.).
Supplementary Books
Ed., PHI.

1
2
3
Text Books
Education.
(Student Ed.).
Supplementary Books
Ed., PHI.

1
2
3
Text Books
Education.
(Student Ed.).
Supplementary Books
Ed., PHI.

Introduction to Probability
Part I
Lecture 1: Introduction to Probability

Historical Background. . .
Business decisions are often based on analysis of uncertainties such
as the following:
Probability
1
What are the chances that sales will decrease if we increase
prices?
2
What is the likelihood that a new assembly method will
increase productivity?
3
How likely is it that the project will be completed on time?
4
What are the odds in favor of a new investment being
protable?
Probability is a numerical measure of the likelihood that an event
will occur.
Measure of the degree of uncertainty associated with the above
four events.

as the following:
Probability
1
prices?
2
3
4
protable?
will occur.
four events.

as the following:
Probability
1
prices?
2
3
4
protable?
will occur.
four events.

as the following:
Probability
1
prices?
2
3
4
protable?
will occur.
four events.

as the following:
Probability
1
prices?
2
3
4
protable?
will occur.
four events.

as the following:
Probability
1
prices?
2
3
4
protable?
will occur.
four events.

as the following:
Probability
1
prices?
2
3
4
protable?
will occur.
four events.

Introduction of Probability Concepts through Case
The Problem of a Medical Representative
Introduction to the Case
1
Mr. Chatterjee, a sales representative of Ranboxy in Kolkata
region.
2
He needs to meet 100 more doctors in the upcoming 27 days.
3
Invitation from Mr. Singh, regional manager of northern
region. (Lucknow).
4
Mr. Chatterjee requires 25 days to complete his target.
5
He cannt travel to meet the doctors due to (i) Bandh/Hartal
and (ii) Heavy rains.
6
There were bandh/hartal for 14 days in the last two years.
7
There is a one in 30 chance that, on any day in this season,
the roads are blocked due to ood in the city.

1
region.
2
3
region. (Lucknow).
4
5
6
7

1
region.
2
3
region. (Lucknow).
4
5
6
7

1
region.
2
3
region. (Lucknow).
4
5
6
7

1
region.
2
3
region. (Lucknow).
4
5
6
7

1
region.
2
3
region. (Lucknow).
4
5
6
7

1
region.
2
3
region. (Lucknow).
4
5
6
7

1
region.
2
3
region. (Lucknow).
4
5
6
7

The Problem of Medical Representative
Question 1
What conclusion did Mr. Chatterjee arrive at?
Question 2
What are the methods Mr. Chatterjee used to arrive at this
conclusion?

Question 1
What conclusion did Mr. Chatterjee arrive at?
Question 2
What are the methods Mr. Chatterjee used to arrive at this
conclusion?

Statement of the Problem
Mr. Chatterjee would undertake going to Lucknow, only if he is
condent that he should be working for at least 25 days. This
means that the number of days that could be lost due to
bandh/hartal or ood should not exceed 1. In order to meet the
target, Mr. Chatterjee needs to compute the probability that not
more than one day is lost due to bandh/ood. If this probability is
suciently large, he may decide to accept the invitation.

Basic Terminology in Probability
1
Random Experiment.
2
Events and their Classications.
3
Sample Space.

1
Random Experiment.
2
3
Sample Space.

1
Random Experiment.
2
3
Sample Space.
RGIPT, Rae Bareli RGIPT, Rae Bareli
Dr. Dr. Chanchal Chanchal Kundu Kundu
Some Basic Relationships of Probability
Some Basic Relationships of Probability
There are some There are some basic probability relationships basic probability relationships that that
can be used to compute the probability of an event can be used to compute the probability of an event
without knowledge of all the sample point probabilities. without knowledge of all the sample point probabilities.
Complement of an Event
Complement of an Event Complement of an Event
Intersection of Two Events
Intersection of Two Events Intersection of Two Events
Mutually Exclusive Events
Mutually Exclusive Events Mutually Exclusive Events
Union of Two Events
Union of Two Events Union of Two Events
The complement of A is denoted by A
c
.
The complement of The complement of A A is denoted by is denoted by A A
c c
. .
The complement of event A is defined to be the event
consisting of all sample points that are not in A.
The The complement complement of event of event A A is defined to be the event is defined to be the event
consisting of all sample points that are not in consisting of all sample points that are not in A. A.
Event Event A A A A
c c
Sample
Space S
Sample
Space S
Venn
Venn
Diagram
Diagram
The union of events A and B is denoted by A B.
The union of events The union of events A A and and B B is denoted by is denoted by A A B B. .
The union of events A and B is the event containing
all sample points that are in A or B or both.
The The union union of events of events A A and and B B is the event containing is the event containing
all sample points that are in all sample points that are in A A or or B B or both. or both.
Union of Two Events
Union of Two Events
Sample
Space S
Sample
Space S
Event Event A A
Event Event B B
The intersection of events A and B is denoted by A .
The intersection of events The intersection of events A A and and B B is denoted by is denoted by A A . .
The intersection of events A and B is the set of all
sample points that are in both A and B.
The The intersection intersection of events of events A A and and B B is the set of all is the set of all
sample points that are in both sample points that are in both A A and and B B. .
Sample
Space S
Sample
Space S
Event Event A A
Event Event B B
Intersection of A and B Intersection of A and B
Two events are said to be mutually exclusive if the
events have no sample points in common.
Two events are said to be Two events are said to be mutually exclusive mutually exclusive if the if the
events have no sample points in common. events have no sample points in common.
Two events are mutually exclusive if, when one event
occurs, the other cannot occur.
Two events are mutually exclusive if, when one event Two events are mutually exclusive if, when one event
occurs, the other cannot occur. occurs, the other cannot occur.
Sample
Space S
Sample
Space S
Event Event A A
Event Event B B
RGIPT, Rae Bareli
Dr. Chanchal Kundu
6.17
Basic Relationships of Probability
Complement of Event
Intersection of Events
Union of Events
A A
c
A B
A B
A B
Assigning Probabilities
Assigning Probabilities
Classical Method Classical Method
Relative Frequency Method Relative Frequency Method
Subjective Method Subjective Method
Assigning probabilities based on the assumption Assigning probabilities based on the assumption
of of equally likely outcomes equally likely outcomes
Assigning probabilities based on Assigning probabilities based on experimentation experimentation
or historical data or historical data
Assigning probabilities based on Assigning probabilities based on judgment judgment

Classical Denition
Denition
Let E be a random experiment, S be the sample space containing
n event points all of which are known to be equally likely. If any
event A connected with E contains m(A) of these events points,
then the probability of A is dened by
P(A) =
m(A)
n
=
Nubmer of favorable events
Total number of events
Example:
Classical Method
Classical Method
If an experiment has If an experiment has n n possible outcomes, this method possible outcomes, this method
would assign a probability of 1/ would assign a probability of 1/n n to each outcome. to each outcome.
Experiment: Rolling a die Experiment: Rolling a die
Sample Space: Sample Space: S S = {1, 2, 3, 4, 5, 6} = {1, 2, 3, 4, 5, 6}
Probabilities: Each sample point has a Probabilities: Each sample point has a
1/6 chance of occurring 1/6 chance of occurring
Example
Example
Relative Frequency Method
Number of Number of
Polishers Rented Polishers Rented
Number Number
of Days of Days
0 0
1 1
2 2
3 3
4 4
4 4
6 6
18 18
10 10
2 2
Lucas Tool Rental would like to assign Lucas Tool Rental would like to assign
probabilities to the number of car polishers probabilities to the number of car polishers
it rents each day. Office records show the following it rents each day. Office records show the following
frequencies of daily rentals for the last 40 days. frequencies of daily rentals for the last 40 days.
Example: Lucas Tool Rental Example: Lucas Tool Rental
Each probability assignment is given by Each probability assignment is given by
dividing the frequency (number of days) by dividing the frequency (number of days) by
the total frequency (total number of days). the total frequency (total number of days).
4/40
4/40 4/40
Probability Probability
Number of Number of
Polishers Rented Polishers Rented
Number Number
of Days of Days
0 0
1 1
2 2
3 3
4 4
4 4
6 6
18 18
10 10
2 2
40 40
.10 .10
.15 .15
.45 .45
.25 .25
.05 .05
1.00 1.00
Probability as a Numerical Measure
Probability as a Numerical Measure
of the Likelihood of Occurrence
of the Likelihood of Occurrence
0
0
1
1 .5
.5
Increasing Likelihood of Occurrence Increasing Likelihood of Occurrence
Probability: Probability:
The event The event
is very is very
unlikely unlikely
to occur. to occur.
The occurrence The occurrence
of the event is of the event is
just as likely as just as likely as
it is unlikely. it is unlikely.
The event The event
is almost is almost
certain certain
to occur. to occur.

Rules for Probability
1
0 P(A) 1 and P(

A) = 1 P(A).
2
P(O) = 0 and P(S) = 1.
3
If A
1
, A
2
, A
3
, . . . be a nite or innite sequence of pairwise
mutually exclusive events, then
P(A
1
+A
2
+A
3
+ ) = P(A
1
) +P(A
2
) +P(A
3
) +

1
0 P(A) 1 and P(

A) = 1 P(A).
2
P(O) = 0 and P(S) = 1.
3
If A
1
, A
2
, A
3
P(A
1
+A
2
+A
3
+ ) = P(A
1
) +P(A
2
) +P(A
3
) +

1
0 P(A) 1 and P(

A) = 1 P(A).
2
P(O) = 0 and P(S) = 1.
3
If A
1
, A
2
, A
3
P(A
1
+A
2
+A
3
+ ) = P(A
1
) +P(A
2
) +P(A
3
) +

Addition Law
P(A B) = P(A) +P(B) P(A B).
Exercise
Consider the previous year situation of IITK in Quantitative
Methods for Decision Making. Of 200 students taking the course,
160 passed the mid term, 140 end term; 124 both the exams.
After reviewing the grades, the instructor decided to give a passing
grade to any student who passed at least one of the two exams.
What is the probability of a student receiving a passing grade in
this course?

Addition Law
P(A B) = P(A) +P(B) P(A B).
Exercise
Consider the previous year situation of IITK in Quantitative
Methods for Decision Making. Of 200 students taking the course,
160 passed the mid term, 140 end term; 124 both the exams.
After reviewing the grades, the instructor decided to give a passing
grade to any student who passed at least one of the two exams.
What is the probability of a student receiving a passing grade in
this course?

Conditional Probability
P(B|A) =
P(AB)
P(A)
provided P(A) = 0.
Exercise
For two events A and B,
P(A) = 0.5, P(B) = 0.6, P(A B) = 0.4. Find
P(A|B), P(B|A). Are A and B independent?

Conditional Probability
P(B|A) =
P(AB)
P(A)
provided P(A) = 0.
Exercise
For two events A and B,
P(A) = 0.5, P(B) = 0.6, P(A B) = 0.4. Find
P(A|B), P(B|A). Are A and B independent?

?

THANK YOU

Random Variable and Distribution Function
Part II
Lecture 2: Random Variables, Distribution
Function and Properties

Random Variables
A random variable is a numerical description of the outcome
of an experiment.
A variable that takes on dierent values as a result of the
outcomes of a random experiment.
Probability Function/ Distribution
A function, denoted by f(x), that provides the probability that
a discrete random variable X takes on some specic value.
Two requirements: f(x) 0 and
f(x) = 1 must always be

satised.
A list of the outcomes of a random experiment with the
probabilities we would expect to see associated with these
outcomes.

Random Variables
of an experiment.

satised.
outcomes.

Random Variables
of an experiment.

satised.
outcomes.

Random Variables
of an experiment.

satised.
outcomes.

Random Variables
of an experiment.

satised.
outcomes.

Random Variables
of an experiment.

satised.
outcomes.
RGIPT, Rae Bareli
Dr. Chanchal Kundu
Example
The Statistical Abstract of the United States is published
annually. It contains a wide variety of information based on
the census as well as other sources. The objective is to
provide information about a variety of different aspects of
the lives of the countrys residents. One of the questions
asked households to report the number of color televisions in
the household. The following table summarizes the data.
Develop the probability distribution of the random variable
defined as the number of color televisions per household.
RGIPT, Rae Bareli
Dr. Chanchal Kundu
Example
.
Number of Color Televisions Number of Households (1,000s)
0 1,218
1 32,379
2 37,961
3 19,387
4 7,714
5 2,842
Total 101,501
RGIPT, Rae Bareli
Dr. Chanchal Kundu
Example
Probability distributions can be estimated from relative
frequencies.
1,218 101,501 = 0.012
e.g. P(X=4) = P(4) = 0.076 = 7.6%
RGIPT, Rae Bareli
Dr. Chanchal Kundu
Example
E.g. what is the probability there is at least one television but
no more than three in any given household?
at least one television but no more than three
P(1 X 3) = P(1) + P(2) + P(3) = .319 + .374 + .191 = .884

Discrete Random Variables
1
Example.
2
Probability mass function.
3
Probability distribution function.
4
Requirements for a valid discrete probability distribution.

1
Example.
2
3
4

1
Example.
2
3
4

1
Example.
2
3
4

Exercise
The following table shows a partial probability distribution for the
MRA Companys projected prots (in thousands of dollars) for the
rst year of operation (the negative value denotes a loss). Find the
missing value of f(200). What is the probability that MRA will be
protable? What is the probability that MRA will make at least
$100,000?
x f(x)
-100 0.10
0 0.20
50 0.30
100 0.25
150 0.10
200

New Statement of the Problem
In order to solve the problem we need to to dene the following
random variable:
X = Total number of days lost out of the remaining 27 days.
Here X is a discrete random variable which can take any of the
values 0, 1, 2, . . . , 27. Now the problem of our interest can be
re-stated using this random variable X as
Compute the probability that X 1, i.e., the Probability that
X = 0 or 1.

Important Discrete Distributions
Part III
Lecture 3-4: Some Important Discrete
Distributions

Bernoulli Process
1
The experiment consists of a sequence of n identical trials.
2
The sequence of trial consists of two outcomes called success
and failure.
3
Probabilities of the two outcomes do not change from one
trial to the next.
4
The trials are independent.
Conditions 2, 3, and 4 Bernoulli trials
In addition, condition 1 Binomial experiment

Bernoulli Process
1
2
and failure.
3
trial to the next.
4

Bernoulli Process
1
2
and failure.
3
trial to the next.
4

Bernoulli Process
1
2
and failure.
3
trial to the next.
4

Bernoulli Process
1
2
and failure.
3
trial to the next.
4

Bernoulli Process
1
2
and failure.
3
trial to the next.
4

Binomial Distribution
f(x) =
n!
x!(n x)!
p
x
(1 p)
nx
, x = 0, 1, . . . , n
where
n = number of trials
p = probability of success in one trial
x = number of success in n trials
f(x) = probability of x success in n trials.
Mean: = np.
Variance:
2
= np(1 p)

f(x) =
n!
x!(n x)!
p
x
(1 p)
nx
, x = 0, 1, . . . , n
where
n = number of trials
p = probability of success in one trial
x = number of success in n trials
f(x) = probability of x success in n trials.
Mean: = np.
Variance:
2
= np(1 p)
( )
!
( ) (1 )
!( )!
x n x
n
f x p p
x n x

=
( )
!
( ) (1 )
!( )!
x n x
n
f x p p
x n x

=
!
!( )!
n
x n x
!
!( )!
n
x n x
( )
(1 )
x n x
p p

( )
(1 )
x n x
p p

I I Binomial Probability Function Binomial Probability Function

Probability of a particular
sequence of trial outcomes
with x successes in n trials
Probability of a particular Probability of a particular
sequence of trial outcomes sequence of trial outcomes
with x successes in with x successes in n n trials trials
Number of experimental
outcomes providing exactly
x successes in n trials
Number of experimental Number of experimental
outcomes providing exactly outcomes providing exactly
x x successes in successes in n n trials trials
I I Example: Evans Electronics Example: Evans Electronics
Evans is concerned about a low retention rate for Evans is concerned about a low retention rate for
employees. In recent years, management has seen a employees. In recent years, management has seen a
turnover of 10% of the hourly employees annually. turnover of 10% of the hourly employees annually.
Thus, for any hourly employee chosen at random, Thus, for any hourly employee chosen at random,
management estimates a probability of 0.1 that the management estimates a probability of 0.1 that the
person will not be with the company next year. person will not be with the company next year.
I I Using the Binomial Probability Function Using the Binomial Probability Function
Choosing 3 hourly employees at random, what is Choosing 3 hourly employees at random, what is
the probability that 1 of them will leave the company the probability that 1 of them will leave the company
this year? this year?
f x
n
x n x
p p
x n x
( )
!
!( )!
( )
( )
=

1 f x
n
x n x
p p
x n x
( )
!
!( )!
( )
( )
=

1
1 2
3!
(1) (0.1) (0.9) 3(.1)(.81) .243
1!(3 1)!
f = = =
1 2
3!
(1) (0.1) (0.9) 3(.1)(.81) .243
1!(3 1)!
f = = =
Let Let: p : p = .10, = .10, n n = 3, = 3, x x = 1 = 1

3(.1)(.9) .52 employees = = 3(.1)(.9) .52 employees = =
E E( (x x) = ) = = 3(.1) = .3 employees out of 3 = 3(.1) = .3 employees out of 3
Var( Var(x x) = ) =
2 2
= 3(.1)(.9) = .27 = 3(.1)(.9) = .27
I I Expected Value Expected Value
I I Variance Variance
I I Standard Deviation Standard Deviation

Exercise
Consider the experiment of customers entering the Bata store. If,
based on the experience of 3 customers, the store manager
estimates that the probability of a customer making a purchase is
0.3. What is the probability that exactly two of the next three
customers make a purchase? Find the expected number of
customers making a purchase. Also nd the variance and standard
deviation.
Suppose that during the next month Bata store expects 1000
customers to enter the store. What is the expected number of
customers who will make a purchase?
Solution to the case of Medical Representative
Calculate P(X 1) = P(X = 0) +P(X = 1).

Exercise
Consider the experiment of customers entering the Bata store. If,
based on the experience of 3 customers, the store manager
estimates that the probability of a customer making a purchase is
0.3. What is the probability that exactly two of the next three
customers make a purchase? Find the expected number of
customers making a purchase. Also nd the variance and standard
deviation.
Suppose that during the next month Bata store expects 1000
customers to enter the store. What is the expected number of
customers who will make a purchase?
Solution to the case of Medical Representative
Calculate P(X 1) = P(X = 0) +P(X = 1).

Poisson Distribution
Poisson distribution is useful when we are dealing with the number
of occurrences of an event over a specied interval of time or
space.
1
Number of leaks in 100 miles of pipeline.
2
Telephone calls going through a switchboard system.
3
Number of repairs needed in 10 miles of highway.
4
Number of arrival at a car wash in one hour.
5
The demand of patients for service at a health Institution.
Assumptions:
The probability of an occurrence of the event is the same for any
two intervals of equal length.
The occurrence or nonoccurrence of the event in any interval is
independent of the occurrence or nonoccurrence in any other
interval.

space.
1
2
3
4
5
Assumptions:
interval.

space.
1
2
3
4
5
Assumptions:
interval.

space.
1
2
3
4
5
Assumptions:
interval.

space.
1
2
3
4
5
Assumptions:
interval.

space.
1
2
3
4
5
Assumptions:
interval.

space.
1
2
3
4
5
Assumptions:
interval.

space.
1
2
3
4
5
Assumptions:
interval.

Probability function
f(x) =

x
e
x!
, for x = 0, 1, 2, . . .
where
= mean or average number of occurrences in an interval
x = number of occurrences in the interval
f(x) = probability of x occurrences in the interval
MERCY MERCY
I I Example: Mercy Hospital Example: Mercy Hospital
Patients arrive at the Patients arrive at the
emergency room of Mercy emergency room of Mercy
Hospital at the average Hospital at the average
rate of 6 per hour on rate of 6 per hour on
weekend evenings. weekend evenings.
What is the What is the
probability of 4 arrivals in probability of 4 arrivals in
30 minutes on a weekend evening? 30 minutes on a weekend evening?
I I Using the Poisson Probability Function Using the Poisson Probability Function
4 3
3 (2.71828)
(4) .1680
4!
f

= =
4 3
3 (2.71828)
(4) .1680
4!
f

= =
MERCY MERCY
= 6/hour = 3/half = 6/hour = 3/half- -hour, hour, x x = 4 = 4

Exercise
A radioactive emits on the average 2.5 particles per second.
Calculate the probability that two or more particles will be emitted
in an interval of 4 seconds.
Poisson approximation to the Binomial law
Binomial probability

x
e
x!
, ( = np and x = 0, 1, 2, . . .)
Example What is the probability that in a company of 500
employee only one will have BDay on New Years day?

Exercise

x
e
x!
, ( = np and x = 0, 1, 2, . . .)

Exercise

x
e
x!
, ( = np and x = 0, 1, 2, . . .)

Normal Distributions
Part IV
Lecture 5: Important Continuous Distributions

Continuous Random Variables
The random variables that may assume any
value in a certain interval or collection of
intervals are called continuous random
variables
Example
1
The drilling depth required to reach oil in an oshore drilling
operation.
2
The lifetime of the picture tube in a new television set.
3
The ight time of an airplane travelling from Delhi to Kolkata.
Probability density function.
Requirements for a valid probability density function.

variables
Example
1
operation.
2
3

variables
Example
1
operation.
2
3

variables
Example
1
operation.
2
3

variables
Example
1
operation.
2
3

variables
Example
1
operation.
2
3

Dierences between discrete and continuous random variables
For discrete we talk about the probability of the random
variable taking on a particular value. In continuous we talk
about the probability of the random variable taking value
within some given interval.
The height of a continuous probability density function is not
a probability.
The probability of the random variable taking on a value
within some given interval is dened to be the area under the
graph of the pdf in the interval.
The probability that a continuous random variable takes on
any particular value is zero.

a probability.

a probability.

a probability.
Continuous Probability Distributions
Continuous Probability Distributions
I I The probability of the random variable assuming a The probability of the random variable assuming a
value within some given interval from value within some given interval from x x
1 1
to to x x
2 2
is is
defined to be the defined to be the area under the graph area under the graph of the of the
probability density function probability density function between between x x
1 1
and and x x
2 2
. .
f (x) f (x)
x x
Uniform Uniform
x
1
x x
1 1
x
2
x x
2 2
x x
f f ( (x x) )
Normal Normal
x
1
x x
1 1
x
2
x x
2 2
x
1
x x
1 1
x
2
x x
2 2
Exponential Exponential
x x
f (x) f (x)
x
1
x x
1 1
x
2
x x
2 2
Exponential Probability Distribution
Exponential Probability Distribution
I I The exponential probability distribution is useful in The exponential probability distribution is useful in
describing the time it takes to complete a task. describing the time it takes to complete a task.
I I The exponential random variables can be used to The exponential random variables can be used to
describe: describe:
Time between
vehicle arrivals
at a toll booth
Time between Time between
vehicle arrivals vehicle arrivals
at a toll booth at a toll booth
Time required
to complete
a questionnaire
Time required Time required
to complete to complete
a questionnaire a questionnaire
Distance between
major defects
in a highway
Distance between Distance between
major defects major defects
in a highway in a highway
SLOW

Exponential Distribution
Probability density function
f(x) =
e
x
, x 0,
0, x < 0.
Exercise
Suppose that the amount of time one spends in a bank is
exponentially distributed with mean ten minutes, i.e., = 1/10.
What is the probability that a customer will spend more than
fteen minutes in the bank?

Exponential Distribution
f(x) =
e
x
, x 0,
0, x < 0.
Exercise
Suppose that the amount of time one spends in a bank is
exponentially distributed with mean ten minutes, i.e., = 1/10.
What is the probability that a customer will spend more than
fteen minutes in the bank?

Importance of Normal Distribution
1
Most of the distributions (Binomial, Poisson, etc.) occurring
in practice can be approximated by normal distribution. Also
many of the sampling distributions (Students, F, Chi-square,
etc.) tend to normality for large samples.
2
Even if a variable is not normally distributed, it can sometimes
be brought to normal form by simple transformation of
variable.
3
Normal distribution nds large applications in statistical
Quality Control in industry for setting control limits.

1
2
variable.
3

1
2
variable.
3
Heights
of people
Heights Heights
of people of people
Normal Probability Distribution
I I It has been used in a wide variety of applications: It has been used in a wide variety of applications:
Scientific
measurements
Scientific Scientific
measurements measurements
Amounts
of rainfall
Amounts Amounts
of rainfall of rainfall
I I It has been used in a wide variety of applications: It has been used in a wide variety of applications:
Test
scores
Test Test
scores scores

f(x) =
1
2
e
1
2
(
x
)
2
for < x < ,
where = mean of the random variable.
2
= variance of the random variable.
Standard Normal Distribution
A random variable that has a mean 0 and standard deviation 1.
The normal random variable X with mean and standard
deviation can be converted to standard normal random variable
by
Z =
X
.
The distribution is symmetric; its skewness
measure is zero.
The distribution is The distribution is symmetric symmetric; its ; its skewness skewness
measure is zero. measure is zero.
I I Characteristics Characteristics
x x
The entire family of normal probability
distributions is defined by its mean and its
standard deviation .
The entire family of normal probability The entire family of normal probability
distributions is defined by its distributions is defined by its mean mean and its and its
standard deviation standard deviation . .
Standard Deviation Standard Deviation
Mean Mean
x x
The highest point on the normal curve is at the
mean, which is also the median and mode.
The The highest point highest point on the normal curve is at the on the normal curve is at the
mean mean, which is also the , which is also the median median and and mode mode. .
x x
- -10 10 0 0 20 20
The mean can be any numerical value: negative,
zero, or positive.
The mean can be any numerical value: negative, The mean can be any numerical value: negative,
zero, or positive. zero, or positive.
x x
= 15 = 15
= 25 = 25
The standard deviation determines the width of the
curve: larger values result in wider, flatter curves.
The standard deviation determines the width of the The standard deviation determines the width of the
curve: larger values result in wider, flatter curves. curve: larger values result in wider, flatter curves.
x x
Probabilities for the normal random variable are
given by areas under the curve. The total area
under the curve is 1 (.5 to the left of the mean and
.5 to the right).
Probabilities for the normal random variable are Probabilities for the normal random variable are
given by given by areas under the curve areas under the curve. The total area . The total area
under the curve is 1 (.5 to the left of the mean and under the curve is 1 (.5 to the left of the mean and
.5 to the right). .5 to the right).
.5 .5 .5 .5
x x
of values of a normal random variable
are within of its mean.
of values of a normal random variable of values of a normal random variable
are within of are within of its mean. its mean.
68.26%
68.26% 68.26%
+/- 1 standard deviation
+/ +/- - 1 standard deviation 1 standard deviation
95.44%
95.44% 95.44%
+/- 2 standard deviations
+/ +/- - 2 standard deviations 2 standard deviations
99.72%
99.72% 99.72%
+/- 3 standard deviations
+/ +/- - 3 standard deviations 3 standard deviations
x x
3 3 1 1
2 2
+ 1 + 1
+ 2 + 2
+ 3 + 3

68.26% 68.26%
95.44% 95.44%
99.72% 99.72%

f(x) =
1
2
e
1
2
(
x
)
2
for < x < ,
2
Standard Normal Distribution
A random variable that has a mean 0 and standard deviation 1.
The normal random variable X with mean and standard
deviation can be converted to standard normal random variable
by
Z =
X
.

Grear Tire Problem
Suppose that the Grear Tire Company just developed a new
steel-belted radial tire that will be sold through a national chain of
discount stores. Because the tire is a new product, Grears
Management believes that the mileage guarantee oered with the
tire will be an important factor in the consumer acceptance of the
product. Before nalizing the tire mileage guarantee policy, Grears
management wants some probability information concerning the
number of miles the tires will last.
From actual road tests with the tires, Grears engineering group
estimates the mean tire mileage at 36500 miles and standard
deviation 5000 miles. What percentage of the tire, then, can be
expected to last more than 40000 miles?

Normal Distribution as an approximation of Binomial Distribution
Binomial Distribution Normal Distribution
(mean() = np and standard deviation() =

npq)
Exercise
On the basis of past experience, automobile inspectors in
Pennsylvania have noticed that 5 percent of all cars coming in for
their annual inspection fail to pass. Using the normal
approximation to the binomial, nd the probability that between 7
and 18 of the next 200 cars to enter the Lancaster inspection
station will fail the inspection.

Normal Distribution as an approximation of Binomial Distribution
Binomial Distribution Normal Distribution
(mean() = np and standard deviation() =

npq)
Exercise
On the basis of past experience, automobile inspectors in
Pennsylvania have noticed that 5 percent of all cars coming in for
their annual inspection fail to pass. Using the normal
approximation to the binomial, nd the probability that between 7
and 18 of the next 200 cars to enter the Lancaster inspection
station will fail the inspection.

Log-normal Distribution
The positive random variable X is said to have a log-normal
distribution if lnX is normally distributed.
Log normal distribution arises in problems of economics, biology,
geology, etc. In particular, it arises in the study of dimensions of
particles under pulverisation.
f
X
(u) =
1
u
2
e
1
2
(
ln u
)
2
for u > 0,
2

Log-normal Distribution
The positive random variable X is said to have a log-normal
distribution if lnX is normally distributed.
Log normal distribution arises in problems of economics, biology,
geology, etc. In particular, it arises in the study of dimensions of
particles under pulverisation.
f
X
(u) =
1
u
2
e
1
2
(
ln u
)
2
for u > 0,
2

?

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Advance Numerical Analysis

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Advanced Numerical Methods and Applied Statistics

Advanced Numerical Methods and Applied

f(x) = 1 must always be

f(x) = 1 must always be

f(x) = 1 must always be

f(x) = 1 must always be

f(x) = 1 must always be

f(x) = 1 must always be

I I Binomial Probability Function Binomial Probability Function

Let Let: p : p = .10, = .10, n n = 3, = 3, x x = 1 = 1

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