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and then indicating the observed frequency of occurrences of each of these outcomes.

describes how outcomes are expected to vary.

The basic difference between the two is that while in a F D , an experiment has actually

been performed to get a listing of the frequencies of all possible outcomes, a P D is a

listing of probabilities of all the possible outcomes that could result if the experiment

were done.

If we are talking about the P D of a particular variable, what we mean is a list of distinct

numerical values of the variable along with their associated probabilities.

If we are talking about a three toss experiment and the variable x that we are interested

in is the no. of heads, then the P D is as given below.

x 0 1 2 3

Random Variable is one that takes different values in as a result of the outcomes of a

random experiment. A ll the values that a random variable can take are equally likely

and are known only after the conduct of the experiment.

A Discrete Random Variable is a random variable that can take only a limited no of

values ( no of heads , people, defects etc)while A Continuous Random Variable is

one that can take any value within a range(price of an item, height/weight of students in

a class etc).

that they describe. So, a P D listing out the probabilities of occurrence of a discrete

variable like say, the no of defects in a batch, is a discrete distribution while one listing

out the probabilities of occurrence of a continuous variable like say, the time taken by a

mechanic to repair a machine, is a continuous distribution.

Expected Value of a random variable is the value that one would expect it to take. For

example, one would expect to get 10 heads in 20 tosses. If one were to get 18 heads in

20 tosses, the fairness of the coin in use could be questioned.

To get the expected value of a discrete random variable, given its P D, we just get the

value of p1x1+p2x2+…..

Concepts of Expected Values play a very vital role in managerial decision making.

Binomial Distribution

Conditions to be satisfied:

1. Each observation can be defined only in 2 ways, say, either a success or failure.

2. Probability of success or failure remains the same during the time of the experiment

for every trial, for a specific no of trials.

3. The two possible outcomes are independent of each other.

Tossing of a fair coin a fixed no of times, success or failures of aspirants in an interview

etc. are examples. Each Bernoulli Process has its own characteristic probability, has

only two possible outcomes and the outcome in one trial has no effect on the other.

Let probability of getting a head be ‘p’ and probability of getting a tail be ‘q’; then

p = (1-q)

P( 2H ) = p2 ;

P(1H,1T ) = pq + qp ;

P( 2T) = q2

Then the expansion of (q +p)n gives the various terms of the B D.

In general, probability of ‘r’ successes in ‘n’ trials, where ‘p’ and ‘q’ are the

probabilities of success and failure respectively is given by

n

P(r) = Cr pr q(n-r)

Where ‘n’ is large, then calculations become very tedious and hence we can resort to

the use of binomial tables.

1. Find p and q.

n

2. Expand ( p + q ) , where ‘n’ is the no of possible outcomes,

3. Multiply each of the terms by ‘N’ (no of trials) to get the frequency distribution.

Limitations of Binomial Distributions:

We have to be careful in deciding whether a particular set of data can be approximated

by a binomial distribution, as both conditions 2 and 3 mentioned earlier have to be met.

Compliance of these two conditions is quite difficult. Still, there are many situations

where use of B D is prevalent.

Poisson Distribution

Poisson Process:

Average no of defectives in a batch, No of vehicles arriving at a check post in a specific

interval of time, No of calls received by a telephone operator, No of accidents in an

intersection etc., are examples of a Poisson Process.

Characteristics:

1. The events occur independently; i.e., the occurrence of a subsequent event is not at

all influenced by the occurrence of an earlier event.

period.

time period.

4. In an extremely small portion of the time period, the probability of two or more

occurrences of an event is negligible.

Poisson Probabilities:

If λ is the average no of arrivals of vehicles, in a specified time, at a check point,

and if the arrivals follow a Poisson distribution, then the probability that there

will be exactly x arrivals in the next period ( of specified time ), is given by

P(x) = [ λ x x e –λ ] ÷x!

There are tables for getting values of ex as well as the Poisson probabilities directly once

λ is defined and hence tedious calculations can be avoided.

1. Find the mean of the given distribution as λ.

2. Find P(X) for various values of the random variable from the tables.

3. Find the frequency of occurrence of each event by multiplying P(X) by N.

4. Compare with given data to check the goodness of fit.

Poisson as an approximation to Binomial:

The calculations involved in the B D are quite tedious as compared to P D. Also, the

binomial tables are not available for the entire range of data that one may encounter.

In such cases it is possible to approximate a P D for a B D provided:

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