Module 8

Normal Distribution

Objectives:

At the end of the lesson the students are expected to:

1. be familiar with the properties of a normal and standard normal distribution;

2. learn the use of the normal distribution table;
3. solve and interpret z-scores;
4. find the areas under the normal curve; and
5. solve problems involving normal distribution.
NORMAL DISTRIBUTION (BELL CURVE)

The normal distribution is symmetrical on both sides of the mean. It is a continuous

probability distribution. It is often called the Bell Curve because its visual representation is
shaped like a bell but it is also known as Gaussian distribution which is named after Carl
Gauss who first described it.

The total area of the normal distribution curve sums to one which is represented by
the probability.

The data values in a normal distribution are clustered around the mean. This simply
means that if the value is far from the mean, the lower its probability to occur.

The mean, median, and mode will be the same value and is visually represented by
the peak of the curve.

Below is an example of the Bell Curve:

Properties of a Normal Distribution

a. It is bell-shaped.
b. The measures of central tendency are equal and are located at the center of the bell
or distribution.
c. It is unimodal.
d. The curve is symmetrical on both sides.
e. It is asymptotic to the x-axis.
f. The sum of the total area is 1 or 100%.

There are a lot of things we need to know before we are able to completely understand the
bell curve. Let us start with the basic concepts in dealing with the normal distribution.

Business Statistics
STANDARD DEVIATION

The standard deviation is the measure of how the numbers are spread out. The symbol for
the standard deviation is the Greek letter sigma (𝜎)

To compute for the standard deviation, we just have to get the square root of the variance.
The variance is the average of the squared differences from the Mean.

Example:

The grades of the top 5 employees that are nominated for the employee of the
month are as follows: 92, 93, 94, 95, and 96 respectively.

First, let us solve for the mean:

92 + 93 + 94 + 95 + 96
𝜇=
5
470
𝜇=
5
𝜇 = 94

Next, we calculate the difference of the grades from the mean:

96 − 94 =2
95 − 94 =1
94 − 94 =0
93 − 94 = −1
92 − 94 = −2

To calculate the variance, we get the square of each difference and get the average of
the results.

(2)2 + (1)2 + (0)2 + (−1)2 + (−2)2

𝜎2 =
5
4 + 1 + 0 + 1 + 4
𝜎2 =
5
10
𝜎2 =
5
𝜎2 = 2

Therefore, the variance is 2.

Taking the square root of the variance, the standard deviation is √2 or approximately 1.41

However, if we are computing for the sample (bigger population) then, we use 𝑁 − 1
when calculating the variance. From our example, instead of dividing 10 by 5, we divide it
by 4. But if it is from a population, then just proceed as we did in the example.

Using graphical representation:

Business Statistics
Using the standard deviation, we have a “standard” on determining the normal scores of the
employees.

Based on the percentage of the data, we will know where the data falls from the mean:

68.3% of the data falls within 1 standard deviation from the mean.

95.4% of the data falls within 2 standard deviations from the mean.

99.7% of the data falls within 3 standard deviations from the mean.

As shown in the figure, the standard deviation is equally divided in the symmetry.

Business Statistics
Example:

Sixty-eight percent (68%) of employees in the institution are between 1.2m and
1.8m tall.

First, we need to get the mean:

1.2𝑚 + 1.8𝑚
𝜇=
2
𝜇 = 1.5𝑚

68% is 1 standard deviation on both sides of the mean (a total of 2 standard deviations)

1.8𝑚 − 1.2𝑚
1 𝑠𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑑𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 =
2
0.6𝑚
=
2

= 0.3𝑚

Thus, the result is:

Business Statistics
Name: _____________________________________________ Date: _________________

Section: ___________ Professor: _____________________________ Score: ___________

Activity 1

1. Solve for the standard deviation of 10 employees who got the following grades from
their performance rating:
75, 77, 82, 83, 87, 90, 90, 92, 94, 97

2. 95% of the customers rated the product of Company X 90 and 95. Calculate the
mean and standard deviation and plot them in a bell curve.

STANDARD SCORE OR Z-SCORE

The z-score is the position of a raw score in terms of its distance from the mean. It is
measured in standard deviation units.

If the value lies above the mean, then the z-score is positive. Otherwise, it is negative.

A standard normal distribution is a normally shaped distribution with a mean of 0 and a

standard deviation of 1.

Below is an example of a standard normal distribution.

Business Statistics
The formula for calculating the z-score is as follows:

(𝑥 − 𝜇)
𝑧=
𝜎

Where: 𝑥 = 𝑠𝑐𝑜𝑟𝑒
𝜇 = 𝑚𝑒𝑎𝑛
𝜎 = 𝑠𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑑𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛

In finding the area of a z-score, we use the z-score table (Check page 10)

For example, we have a z-score value of 0.44. Looking at the z-score table, we see that 0.44
has a corresponding area of 0.6700

The value 0.6700 is what we call the 𝑝 − 𝑣𝑎𝑙𝑢𝑒 and it translates to 67% of the standard
normal distribution to the left of the z-score:

To solve for the area to the right of the curve, all we have to do is subtract the
corresponding area 0.6700 to 1:

1 − 0.6700 = 0.3300

Thus, the area to the right of the bell curve, is 0.3300

Business Statistics
If you have a negative z-score, you can disregard the negative sign in using the same table,
and then subtract the area from 1.

Example:

The satisfactory rating in a company has an average of 80 with a standard deviation

of 6. What is the z-score for a company who earned a 75?

First, we find the z-score:

75 − 80
𝑧=
6
5
𝑧=−
6
𝑧 = −0.83

Then, we look for the 𝑝 − 𝑣𝑎𝑙𝑢𝑒 of 0.83 in the z-score table:

0.7967 is to be subtracted from 1 since it has a negative z-score:

1 − 0.7967 = 0.2033

Thus, we are going to use 0.2033 in the bell curve which translates to 20.33%:

To solve for the area on the right, the data earlier, 0.7967, is the area on the right.

Business Statistics
Name: _____________________________________________ Date: _________________

Section: ___________ Professor: _____________________________ Score: ___________

Activity 2

1. In a car company meeting, a group of executives compared the amount of sales each
has in their respective branches in a year. The average number of cars they sell is 43
with a standard deviation of 2. What is the z-score corresponding to 20 cars sold?

Business Statistics
Finding the Area under the Curve between two values

Example:

Determine the area under the standard normal distribution between 𝑧 = 0 and
𝑧 = 0.83

Since, there is no 𝑝 − 𝑣𝑎𝑙𝑢𝑒 for 0, the middle is obviously the starting point. So all
we have to look for is the 𝑝 − 𝑣𝑎𝑙𝑢𝑒 of 0.83:

Since it is to the right of the curve, we subtract 0.5 from 0.7967.

0.7967 − 0.5 = 0.2967

Thus, the area between 0 and 0.83 is 0.2967 or 29.67%

In any case that it doesn’t start with 0, find the 𝑝 − 𝑣𝑎𝑙𝑢𝑒 of both z-scores, subtract
the 𝑝 − 𝑣𝑎𝑙𝑢𝑒𝑠, and plot them in the bell curve.

Business Statistics
Name: _____________________________________________ Date: _________________

Section: ___________ Professor: _____________________________ Score: ___________

Activity 3

1. The books sold by ABC Company are found to have an average length of 350 pages with a
standard deviation of 100 pages. What is the z-score corresponding to a book of length 70-
90 pages?

Business Statistics
Name: ______________________________________________ Date: __________________

Section: ______________ Professor: ________________________ Score: _____________

Activity 4

I. For the following sets of data, find the mean, variance, and standard deviation:

a. 2 6 8 8 8 8 11 12 14 15

b. 87 88 90 92 92 95 96 96 96 98

II. Solve for the z-score and plot them in a bell curve.

1. Find the area between 𝑧 = −1.18 and 𝑧 = 2.1 and plot them in a normal curve.

2. In a certain barangay, the monthly food expenditures of families average P4,500

with a standard deviation of P750. What percentages of these expenditures are
between P3,900 and P5,850?

3. The daily income of a customer service representative is normally distributed with a

mean of P700 and a standard deviation of P50. What is the z-value for the income
who earns P800 daily? What about P450?

Business Statistics
REFERENCES

Sirug, W. S. (2018), Introduction to Business Statistics

Blay, B. E. (2013), Elementary Statistics
https://www.zcalculator.com
https://www.youtube.com/watch?v=aztcS-3MwHO&features
https://www.mathsisfun.com/data/standard-deviation.html
https://www.simplypsychology.org/normaldistribution.html
https://www.thoughtco.com/z-scores-worksheet-3126534

Business Statistics