Probability Distributions

• Central Location
– Mean
• Spread
– Standard Deviation
• Shape
– Symmetric, skewed, mound-shaped
• Outliers
– Unusual or unlikely measurements

Bond Business School Data Analytics for Decision Making – Lecture 2c 1

Mean
• Probability-weighted average
• Sum up 𝑂𝑢𝑡𝑐𝑜𝑚𝑒 × 𝑃𝑟𝑜𝑏𝑎𝑏𝑖𝑙𝑖𝑡𝑦
𝜇𝑋 = ∑𝑥𝑝 𝑥
Necklace sales Probability Probability*Sales
0 0.05 0
1 0.15 0.15
2 0.35 0.7
3 0.25 0.75
4 0.2 0.8
Sum 1 2.4

Bond Business School Data Analytics for Decision Making – Lecture 2c 2

Mean Daily Sales
• 2.4 necklaces per day

• Not a possible value

• Long-run average

Bond Business School Data Analytics for Decision Making – Lecture 2c 3