Discrete

Probability
Models

Kaustav Banerjee

IIM Lucknow

July 2021

K Banerjee (IIML) Discrete Models July 2021 1 / 19

Unfair coin
Flip a coin three times: Ω = {HHH, HHT, HTH, THH, TTH, THT, HTT, TTT}
Assign X: number of heads in 3 flips of a coin ⇒ ΩX = {0, 1, 2, 3}
If the coin is fair, each outcome has probability 1/8. What if we do
not know whether the coin is fair or not?
Let θ ∈ (0,1) be the probability of getting a head with a single flip.
Notice: (1) the outcomes of a single flip are binary (2) successive
flips are independent and (3) θ remains constant across flips.
x P(X = x|θ = 1/2) P(X = x|θ)
0 1/8 (1 − θ)3
1 3/8 3θ(1 − θ)2
2 3/8 3θ2 (1 − θ)
3 1/8 θ3
1 1

K Banerjee (IIML) Discrete Models July 2021 2 / 19

Binomial distribution
A random variable X counting the number of success in n repetitions
of an experiment, has a binomial distribution with PMF
 
n x
P(X = x) = θ (1 − θ)n−x , x = 0, 1, 2, ..., n
x

where n and θ ∈ (0, 1) are two parameters.

Model assumptions
1. the experiment has dichotomous (success-failure) outcomes
2. successive trials are independent
3. success/failure probability remains same across the trials
Model characteristics
1. E(X) = nθ, V(X) = nθ(1 − θ)
2. If X1 ∼ B(n1 , θ) ⊥ X2 ∼ B(n2 , θ) ⇒ X1 + X2 ∼ B(n1 + n2 , θ)

K Banerjee (IIML) Discrete Models July 2021 3 / 19

 0.00 0.05 0.10 0.15 0.20 0.25
Probability

0 2 4 6 8 10

Outcomes

Figure: Binomial distribution for n = 10, θ = 0.5

K Banerjee (IIML) Discrete Models July 2021 4 / 19

 0.20
Probability

0.10
0.00

0 2 4 6 8 10

Outcomes

Figure: Binomial distribution for n = 10, θ = 0.25

K Banerjee (IIML) Discrete Models July 2021 5 / 19

 0.20
Probability

0.10
0.00

0 2 4 6 8 10

Outcomes

Figure: Binomial distribution for n = 10, θ = 0.75

K Banerjee (IIML) Discrete Models July 2021 6 / 19

Applications

1. Survey finds 30% of workers take public transportation daily. In a sample of 10

workers, what is the probability that exactly three workers take public
transportation daily? what is the probability that at least three workers take
public transportation daily?
2. A company accepts a lot from a particular supplier if the defective components
in the lot do not exceed 1%. Suppose a random sample of five items from a
recent shipment is tested. Assuming that 1% of the shipment is defective, what
is the probability that no items in the sample are defective? what is the
probability that exactly one item in the sample is defective? What is the
expected number of defective items in the sample? How precise is this expected
number of defective items in the sample?
3. If you buy a lottery ticket in 50 lotteries, in each of which your chance of
winning a prize is 1/100, what is the probability that you will win a prize (a) at
least once? (b) exactly once? (c) at least twice?

K Banerjee (IIML) Discrete Models July 2021 7 / 19

Lottery problem

X denotes the number of wins out of 50 lotteries. Further let θ be the

probability of winning a prize in a lottery. Observe the probabilities:
Probability B(n = 50, θ = 0.01) P(λ = 0.5)
P(X ≥ 1) 0.395 0.393
P(X = 1) 0.305 0.303
P(X ≥ 2) 0.089 0.090

If n → ∞ and θ → 0 so that λ = nθ remains constant, we find that:

 
n x λx
θ (1 − θ)n−x → e−λ
x x!

This is Poisson approximation to Binomial probability distribution.

K Banerjee (IIML) Discrete Models July 2021 8 / 19

Poisson distribution

Let X be a random variable counting the number of occurrence over

an interval of time/space. X has a Poisson distribution with PMF

λx
P(X = x) = e−λ , x = 0, 1, 2, ...
x!
where λ > 0 is a parameter.
Model assumptions
1. probability of occurrence is same for two intervals of equal length
2. occurrence or nonoccurrence is independent of the interval
Model characteristics
1. E(X) = λ, V(X) = λ
2. If X1 ∼ P(λ1 ) ⊥ X2 ∼ P(λ2 ) ⇒ X1 + X2 ∼ P(λ1 + λ2 )

K Banerjee (IIML) Discrete Models July 2021 9 / 19

 0.0 0.1 0.2 0.3 0.4 0.5 0.6
Probability

0 5 10 15 20

Outcomes

Figure: Poisson distribution for λ = 0.5

K Banerjee (IIML) Discrete Models July 2021 10 / 19

 0.20
0.15
Probability

0.10
0.05
0.00

0 5 10 15 20

Outcomes

Figure: Poisson distribution for λ = 4

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 0.12
Probability

0.08
0.04
0.00

0 5 10 15 20

Outcomes

Figure: Poisson distribution for λ = 8

K Banerjee (IIML) Discrete Models July 2021 12 / 19

Applications
1. Phone calls arrive at the rate of 48/hour at the reservation desk of Airways.
(a) Find the probability of receiving three calls in a 5-minute interval of time.
(b) Find the probability of receiving exactly 10 calls in 15 minutes.
(c) Suppose no calls are currently on hold. If the agent takes 5 minutes to
complete the current call, how many callers do you expect to be waiting by that
time? What is the probability that none will be waiting?
(d) If no calls are currently being processed, what is the probability that the
agent can take 3 minutes for personal time without being interrupted by a call?
2. A new automated production process averages 1.5 breakdowns per day.
Because of the cost associated with a breakdown, management is concerned
about the possibility of having three or more breakdowns during a day. Assume
that breakdowns occur randomly, that the probability of a breakdown is the same
for any two time intervals of equal length, and that breakdowns in one period are
independent of breakdowns in other periods. What is the probability of having
three or more breakdowns during a day?

K Banerjee (IIML) Discrete Models July 2021 13 / 19

Geometric distribution
Let X be a random variable counting the number of failures before
the 1st success. X has geometric distribution with PMF

P(X = x) = (1 − θ)x θ, x = 0, 1, 2, ...

where θ ∈ (0, 1) is a parameter.

Model assumptions
1. the experiment has dichotomous (success-failure) outcomes
2. successive trials are independent
3. success/failure probability remains same across the trials
Model characteristics
1. E(X) = (1 − θ)/θ, V(X) = (1 − θ)/θ2
2. For integers s > t, P(Y > s|Y > t) = P(Y > s − t)
Y: number of trials to get the 1st success ⇒ Y = X + 1

K Banerjee (IIML) Discrete Models July 2021 14 / 19

Negative binomial distribution
Let X be a random variable counting the number of failures before
the k’th success. X has negative binomial distribution with PMF
 
k+x−1 k
P(X = x) = θ (1 − θ)x , x = 0, 1, 2, ...
x

where θ ∈ (0, 1) is a parameter.

Model assumptions
1. the experiment has dichotomous (success-failure) outcomes
2. successive trials are independent
3. success/failure probability remains same across the trials
Model characteristics
1. E(X) = k(1 − θ)/θ, V(X) = k(1 − θ)/θ2

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 0.10
Probability

0.06
0.02

0 5 10 15 20

Outcomes

Figure: Negative binomial distribution for k = 2, θ = 0.25

K Banerjee (IIML) Discrete Models July 2021 16 / 19

 0.20
Probability

0.10
0.00

0 5 10 15 20

Outcomes

Figure: Negative binomial distribution for k = 2, θ = 0.5

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 0.5
0.4
Probability

0.3
0.2
0.1
0.0

0 5 10 15 20

Outcomes

Figure: Negative binomial distribution for k = 2, θ = 0.75

K Banerjee (IIML) Discrete Models July 2021 18 / 19

Applications

1. Probability that a light bulb will fail in any given day is 0.001.
(a) Obtain the probability that it will last at least 10 days
(b) Obtain the probability that it will last at least 20 days
(c) Obtain the probability that it will last at least 30 days, having lasted 10 days
2. A couple decides to have children till they have a girl child. What is the
expected number of children they would have, given that the sex ratio is 940
females to 1000 males?
3. A survey reveals that 25% people invest in mutual funds. In order to
understand these investors by a follow up study, the decision is to continue with
the survey till meeting 30 such investors. How many people the survey is
expected to meet? Provide an interval of likely values for the number of people
to be surveyed.

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