BINOMIAL DISTRIBUTION IN ENGINEERING

The Binomial Distribution is one of the discrete probability distribution. It is used when there are exactly two mutually exclusive outcomes of a trial.These outcomes are appropriately labeled Success andFailure. The Binomial Distribution is used to obtain the probability of observing r successes in n trials, with the probability of success on a single trial denoted by p.

In Engineering: It is very important in measuring statisticsIn engineering the binomial distribution is used when a researcher is interested in the occurrence of an event, not in its magnitude. For instance, in aEngineering trial, a building may survive or fail. The Engineer studies the number of survived buildings, and not how long the building survives after earthquake as example. Another example is whether a person is ambitious or not. Here, the binomial distribution describes the number of ambitious persons, and not how ambitious they are. This event is a binary variable: It either occurs or it doesn't.For example, when a building is built with a new cement typeit is either be good or not; when a coin is flipped, the result is either a head or tail. The binary outcome associated with each event is typically referred to as either a "success" or a "failure." In general, a binomial distribution is used to characterize the number of successes over a series of observations (or trials), where each observation is referred to as a "Bernoulli trial."

By making some simplifying assumptions about how a stocks price can change from one period to the next, it is possible to forecast the future price of the stock by means of a decision tree. To illustrate this point, lets consider the following example. Suppose the price of Company As stock is currently $100. Now lets assume that from one period to the next, the stock can go up by 17.5 percent or go down by 15 percent. In addition, let us assume that there is a 50 percent chance that the stock will go up and a 50 percent chance that the stock will go down. It is also assumed that the price movement of a stock (or of the stock market) today is completely independent of its movement in the past; in other words, the price will rise or fall today by a random amount. A sequence of these random increases and decreases is known as a random walk.

One would use binomial distribution if and only if the experiment satisfies the following conditions: 1. There is a fixed number of trials. 2. Each trial is independent of one another. 3. There are only two possible outcomes (a Success or a Failure). 4. The probability of success, p, is the same for every trial.

An example of an experiment that has a binomial distribution would be a coin toss. 1. You would toss the coin a n (a fixed number) times. 2. The result of aa previous toss does not affect the present toss (trials are independent). 3. There are only two outcomes - Heads or Tails. 4. The probability of success (whether a head is considered a success or a tail is considered a success) is constant at 50%.