Poisson distribution

The Poisson distribution is a discrete distribution for the counts of events that
occur randomly in a given interval of time (or space).
If we let x = the number of events in a given interval.
Then, if the mean number of events per interval is 𝜆
The probability of observing x events in a given interval is given by
𝜆2
𝑃(𝑋 − 𝑥) = 𝑒 𝜆 𝑥! where: x = 0, 1, 2, 3, 4, ⋯

Note: 𝑒 is a mathematical constant, 𝑒 ≈ 2.718282. There should be a button on

your calculator 𝑒 𝑥 that calculates the power of 𝑒.

If the probability of x is distribution in this way, we write

𝑋 ~ 𝑃𝑜 (𝜆)
𝜆 is the parameter of distribution. We say x follows a Poisson distribution with
parameter x.

Note: A Poisson random variable can take on any positive integer’s value. In
contrast, the binomial distribution always as a finite upper limit.

Definition:
The Poisson distribution may be used to approximate the binomial if the
probability of success is “small” (such as 0.01) and the number of trials is “large”
(such as 1,000). You will verify the relationship in the homework exercises. 𝑛 is the
number of trials and 𝑝 is the probability of a success.
The random variable 𝑥 = the number of occurrences in the interval of
interest.
Properties of Poisson distribution:
 It is a discrete distribution.
 Each occurrence is independent of the other occurrences.
 It describes discrete occurrences over an interval.
 The occurrences in each interval can range from zero to infinity.
 The mean number of occurrence must be constant throughout the
experiment.
Poisson distribution: Mean or Expected Value

∞
𝑒 −𝜇 𝜇 𝑥
𝐸(𝑋) = ∑ 𝑥 ∙
𝑥!
𝑥=0
∞
𝑒 −𝜇 𝜇 𝑥
= ∑𝑥 ∙
𝑥!
𝑥=1
∞
𝑒 −𝜇 𝜇 𝑥−1
= 𝜇∑
(𝑥 − 1)!
𝑥=1

Poisson distribution: Variance

∞
𝑒 −𝜇 𝜇 𝑥
𝐸𝑋(𝑋 − 1) = ∑ 𝑥(𝑥 − 1)
𝑥!
𝑥=0
∞
2
𝑒 −𝜇 𝜇 𝑥
=𝑝 ∑
𝑥2 !
𝑥=2
Example 1:
If electricity power failures occur according to a Poisson distribution with an
average of 3 failures every twenty weeks, calculate the probability that there will not
be more than one failure during a particular week.
Solution:

The average number of failures per week is 𝜇 = 320 = 0.15

"Not more than one failure" means we need to include the probabilities for “0
failures" plus "1 failure".

𝑒 −0.15 + 0.150 𝑒 −0.15 0.151

𝑃(𝑥0 ) + 𝑃(𝑥1 ) = +
0! 1!
= 0.98981

Example 2:

A life insurance salesman sells on the average 3 life insurance policies per
week. Use Poisson's law to calculate the probability that in a given week he will sell

a. Some policies
b. 2 or more policies but less than 5 policies.

Solution:
Here, 𝜇 = 3
a. Some policies

𝑃(𝑋 > 0) = 1 − 𝑃(𝑥 0 )

𝑒 −𝜇 𝜇 𝑥
𝑃(𝑋) =
𝑥!
𝑒 −3 30
𝑃 = (𝑥0 ) = 0!

= 4.9787 × 10−2
Probability

𝑃(𝑋 ≥ 0)
= 1 − 𝑃(𝑥 0 )
= 1 − 0.9787 × 102
= 0.95021

b. 2 or more policies but less than 5 policies.

𝑃(2 ≤ 𝑋 < 5)

= 𝑃(𝑥 2 ) + 𝑃(𝑥 3 ) + 𝑃(𝑥 4 )

𝑒 −3 32 𝑒 −3 33 𝑒 −3 34
= + +
2! 3! 4!

= 0.61611

Example 3:

A shop sells five of shirt every day, then while probability of selling three
shirts today?

Solution:

Mean value for 1 day, 𝑚 = 5

Probability of selling 3 shirts,

𝑃(3; 5) = 𝑒 −5

53 0.006737947 × 125
=
3! 5!

= 0.00701869

Hence, the probability of selling three shirts is 0.00701869 when at the

average 5 shirts are being sold each day.