Continuous Probability Distributions

Vishal Mishra (IBS, Hyderabad)
Probability Distributions
Continuous Probability Distributions:
• Associated with continuous random variable, that may take any possible value (in an
interval).
• Theoretically infinite values are possible for a continuous random variable.
• Continuous probability distributions are not defined for point probability (i.e.
probability that the random variable takes a value).
• Continuous probability distributions are used to find probability (that a random
variable takes a value) in an interval.
Comparison between Discrete and Continuous Probability Distributions:
f(x)
0.2
f (x)
0.15
0.1
0.05
x
0
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 25 25
Discrete Distribution Continuous Distribution

f(x) = probability function or probability mass function f(x) = probability density function
• The function that is used to calculate probability for a continuous random variable is
called as a (probability) density function.
• This function (unlike discrete probability functions) does not give the probability
value directly. Integral calculus is used for calculating the area under the curve,
where the equation of the curve is given by the probability density function.
Probability tables can also be used for this purpose.
Uniform
f (x)
Uniform Continuous Distribution

x
f (x) Normal
Normal Distribution
Exponential Distribution
f (x) Exponential
x
Continuous Probability Distributions: Calculating probability
Continuous Probability Distributions: Shape of Distributions
Skewness
Left Skewed OR
Negative Skewed
Right Skewed OR
Positive Skewed
Kurtosis
(Peak)
Normal Distribution:
• Bell shaped symmetric distribution (skewness is zero)

• Mean Median Mode are same
• Many real life phenomenon follow Normal distribution
• Theoretical distribution has values of random variable from – infinity to + infinity
Probability density function 1 −(𝑥−𝜇) 2 /2𝜎 2

𝑓 𝑥 = 𝑒
𝜎 2𝜋
Two key parameters:
Mean: μ
Standard Deviation: σ
• Mean can be any value. Larger value of S.D. means fatter curve/distribution
• Area under the curve is probability, so total area = 1; 0.5 to the left and 0.5 to the right of
the mean
• Relation between probability, area and percentage of observations
• 68.26% values lie within 1 S.D. of the mean (μ - 1σ, μ + 1σ)

Normal Distribution: Intervals and Area
Standard Normal Probability Distribution: Distribution whose mean is zero and S.D. is 1
Standard Normal Probability Distribution (Standard Normal Variable, z): Distribution whose
mean is zero and S.D. is 1
What is the probability that a Standard Normal Variable takes a value

• i) below zero
• ii) above zero
• iii) less than equal to zero = less than zero; p(z<0) = p (z <=0)
• iv) greater than equal to zero
• v) below -1
• vi). below 1
• vii). above +1
• viii). above -1
• ix). between -1 and +1
Standard Normal Probability Distribution : Some Graphical Illustrations
1. Area on the left of

mean = p(z < 0)
2. Area on the right of

mean = p(z > 0)
3. Area on the left of

z value of -1 =
p( z < -1)
v). Probability of z < -1 in a Standard Normal Probability Distribution

1. Area to the left
of z = 0 : p(z<0)
= 0.5
2. Area between
z = 0 and z = -1
: p(-1< z <0) = 0.3413
3. Area to the left

of z= -1 : p(z< -1) =
p(z < 0) – p (-1 < z < 0) = 0.5 – 0.3413 =0.1587

Standard Normal Probability Distribution (Standard Normal Variable, z): Distribution

whose mean is zero and S.D. is 1
vi). p(z<1) = p(-ꚙ <= z <= 1) = p(-ꚙ < z < 1 ) = 0.5 + p (-1<z<0) =
vii). p(z>1) = 1 – p (z<1) = 1-p(z<=1) =
viii). p(z>-1) = 1 – p (z<-1) =
ix). p(-1< z <1) = p (-1<z<0) + p (0<z<1) =
Continuous Probability Distributions: Graphical illustrations of area/probability
1. p(z < 1)
= p(-ꚙ < z < 1)
2. p(z < 1.5)
3. p(z >1)
4. P(z > 1.5)
5. p(1 < z <2)
=p(z<2) – p(z<1)
6. P(-2.5 < z < -2)
Standard Normal Probability Distribution (Standard Normal Variable (SNV, z)):

Distribution whose mean is zero and S.D. is 1
What is the probability that a SNV takes a value

• i). below 1.5
• ii). above 1.5
• iii). between 1 and 1.5
• iv). between -2.5 and -2
• v). between 1.23 and 2.78 = p (1.23 < z < 2.78) = p(z<2.78) – p(z<1.23)=
• vi). more than 4 ; vii). less than 4
Continuous Probability Distributions: Normal Distribution Table
Continuous Probability Distributions: Normal Distribution Table
Normal Probability Distribution: Calculating probabilities: Using probability tables.
1. p(z<1.5) = p(z<=1.5) = p(-ꚙ <= z <= 1.5) = p(-ꚙ < z < 1.5 ) = 0.9332
2. p(z>1.5) = 1- p (z<1.5) = 1 – 0.9332 = 0.0668
3. p(1< z < 1.5) = p(z < 1.5) – p (z < 1) = 0.9332 – 0.8413 = 0.0919
4. p (-2.5 < z < -2) = p(z < -2) – p (z < -2.5) = 0.0228 – 0.0062 = 0.0166
5. p(1.23 < z < 2.78) = p(z < 2.78) – p(z < 1.23) = 0.9973 – 0.8907 = 0.1066
Standard Normal Probability Distribution: Distribution whose mean is zero and S.D. is 1
Any normal distribution can be converted to standard normal distribution by doing the
following transformation xi −μ
𝑧𝑖 =
Z- score σ
Normal Probability Distribution:
Problem: The operations manager of a logistics company wants to implement an
initiative to reduce operating cost. This requires assessing the current distance travelled
by trucks in its fleet. The manager estimated that the mean distance travelled by a
truck is 20000 kms in a month with a standard deviation of 3000 kms. If the distance
travelled by a truck can be assumed to approximately follow a normal distribution, then
calculate the following
1. Probability that a randomly selected truck covers less than 20000 kms
2. Probability that a randomly selected truck covers more than 20000 kms
3. Probability that a randomly selected truck covers exactly 20000 kms
4. Probability that a randomly selected truck covers between 17000 and 23000 kms
𝑋−μ
Z=
σ
Using the z-transformation to convert any normal distribution to standard normal distribution
𝑋−μ
Z=
σ
1. P(X<20000) = P(X<=20000) = P(Z<=0) = P(Z<0) = 0.5 (both logically and also from the table)
Z = (20000-20000)/3000 = 0
2. P(X>20000) = P(X>=20000) = P(Z>=0) = P(Z>0) = 0.5 (both logically and also from the table)
3. P(X=20000) = P(Z=0) = 0 (Point probability; Area of a point)

Problem: The operations manager of a logistics company wants to implement an
initiative to reduce operating cost. This requires assessing the current distance travelled
by the trucks in its fleet. The manager estimated that the mean distance travelled by a
truck is 20000 kms in a month with a standard deviation of 3000 kms. If the distance
travelled by a truck can be assumed to approximately follow a normal distribution, then
calculate the following
Problem: The operations manager of a logistics company wants to implement an initiative to
reduce operating cost. This requires assessing the current distance travelled by the trucks in its
fleet. The manager estimated that the mean distance travelled by a truck is 20000 kms in a
month with a standard deviation of 3000 kms. If the distance travelled by a truck can be
assumed to approximately follow a normal distribution, then calculate the following
10. Specify the distance covered by 60 percent of the trucks

10. We have to find that value of distance that is travelled by 60 percent of the trucks.
• Note that 100 percent (working) trucks would have travelled a distance >= 0.
• Also, that almost no truck would have covered a distance of, say 70,000.
10. We have to find that value of distance that is travelled by 60 percent of the trucks.
• Note that 100 percent (working) trucks would have travelled a distance greater than 0.
• Also, that almost no truck would have covered a distance of, say 70,000.
• Extending the same logic the distance travelled by 60 percent of the trucks would be <
20000. If that distance is called xk.
Then p( x > xk ) = 0.60

this implies that p( x < xk ) = 0.40
10.
Since cumulative probability for xk is 0.40, z-value for this xk (from the table)
(the closest value to 0.4 from the table is 0.4013, for which z-value is -0.25)
we take this z-values as approximate value for cumulative probability of 0.40 and substitute it
in the equation, xk−μ ,
Z=
σ
-0.25 = (xk - 20000)/3000
xk = 20000 – (3000) * (0.25)
xk = 19250 kms
Problem: The time taken to solve a problem in an MCQ based test follows a normal
distribution with a mean of 45 seconds and a standard deviation of 20 seconds. What is the
probability that a given question will take more than a minute to solve.
P (x > 60)?
P (x > 60) = 1 – p (x <60)
= 1 – p (z < 0.75)
= 1 – 0.7734
= 0.2266
Problem: The share price of technology companies in a stock exchange for the last decade
show a mean of INR 1750 with a standard deviation of INR 450. If the share price follows a
normal distribution then calculate the following:
The probability that a given company’s share price will lie between 2000 and 2500.
p( 2000 < x < 2500)

= P ( 0.56 < z < 1.67)
Using z = (x - µ) / σ
= P ( z < 1.67) – p ( z < 0.56)

= 0.9525 – 0.7123
= 0.2402
Problem: The share price of technology companies in a stock exchange for the last decade
show a mean of INR 1750 with a standard deviation of INR 450. If the share price follows a
normal distribution then calculate the price which is the cut-off for a company to belong to top
1% of the companies (in terms of share price).
P(x < = xk) = 0.99
From the table, Z- value

Corresponding to cumulative
Probability of 0.99, z = 2.33
Using z = (xk - µ) / σ
xk = µ + z σ
xk = 1750 + 2.33 * 450
xk = 2798.5

Continuous Probability Distributions

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Continuous Probability Distributions

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Vishal Mishra (IBS, Hyderabad)

Discrete Distribution Continuous Distribution

Uniform Continuous Distribution

• Bell shaped symmetric distribution (skewness is zero)

Probability density function 1 −(𝑥−𝜇) 2 /2𝜎 2

• Relation between probability, area and percentage of observations

• 68.26% values lie within 1 S.D. of the mean (μ - 1σ, μ + 1σ)

What is the probability that a Standard Normal Variable takes a value

1. Area on the left of

2. Area on the right of

3. Area on the left of

v). Probability of z < -1 in a Standard Normal Probability Distribution

3. Area to the left

p(z < 0) – p (-1 < z < 0) = 0.5 – 0.3413 =0.1587

Standard Normal Probability Distribution (Standard Normal Variable, z): Distribution

Standard Normal Probability Distribution (Standard Normal Variable (SNV, z)):

What is the probability that a SNV takes a value

2. p(z>1.5) = 1- p (z<1.5) = 1 – 0.9332 = 0.0668

3. P(X=20000) = P(Z=0) = 0 (Point probability; Area of a point)

10. Specify the distance covered by 60 percent of the trucks

Then p( x > xk ) = 0.60

P (x > 60) = 1 – p (x <60)

p( 2000 < x < 2500)

= P ( z < 1.67) – p ( z < 0.56)

P(x < = xk) = 0.99

From the table, Z- value

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