TULSIRAMJI GAIKWAD-PATIL College of Engineering and Technology

Wardha Road, Nagpur - 441108

Accredited withNAACA+Grade
Approved by AICTE, New Delhi, Govt. of Maharashtra
(An Autonomous Institution Affiliated to RTM Nagpur University, Nagpur)
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Master of Business Administration
First Semester
Subject:- Quantitative Techniques
Topic:- Probability Distribution
Module 3
Subject In-Charge:- Prof. Ankita Bawane

A probability distribution is a mathematical function that describes the probability of different

possible values of a variable. Probability distributions are often depicted using graphs or probability
tables.
Example: Probability distribution. We can describe the probability distribution of one coin flip using a
probability table:
Outcom Probability
e

Heads Tails

.5 .5

Common probability distributions include the binomial distribution, Poisson distribution, and uniform
distribution. Certain types of probability distributions are used in hypothesis testing, including
the standard normal distribution, the F distribution, and Student’s t distribution.

What is a probability distribution?

A probability distribution is an idealized frequency distribution.

A frequency distribution describes a specific sample or dataset. It’s the number of times each possible
value of a variable occurs in the dataset.
The number of times a value occurs in a sample is determined by its probability of occurrence.
Probability is a number between 0 and 1 that says how likely something is to occur:

 0 means it’s impossible.

 1 means it’s certain.
The higher the probability of a value, the higher its frequency in a sample.
More specifically, the probability of a value is its relative frequency in an infinitely large sample.
Infinitely large samples are impossible in real life, so probability distributions are theoretical. They’re
idealized versions of frequency distributions that aim to describe the population the sample was drawn
from.
Probability distributions are used to describe the populations of real-life variables, like coin tosses or the
weight of chicken eggs. They’re also used in hypothesis testing to determine p values.
Example: Probability distributions are idealized frequency distributions Imagine that an egg farmer
wants to know the probability of an egg from her farm being a certain size.
The farmer weighs 100 random eggs and describes their frequency distribution using a histogram:

She can get a rough idea of the probability of different egg sizes directly from this frequency
distribution. For example, she can see that there’s a high probability of an egg being around 1.9 oz., and
there’s a low probability of an egg being bigger than 2.1 oz.

Suppose the farmer wants more precise probability estimates. One option is to improve her estimates by
weighing many more eggs.

A better option is to recognize that egg size appears to follow a common probability distribution called
a normal distribution. The farmer can make an idealized version of the egg weight distribution by
assuming the weights are normally distributed:
Since normal distributions are well understood by statisticians, the farmer can calculate precise
probability estimates, even with a relatively small sample size.
Variables that follow a probability distribution are called random variables. There’s special notation
you can use to say that a random variable follows a specific distribution:

 Random variables are usually denoted by X.

 The ~ (tilde) symbol means “follows the distribution.”
 The distribution is denoted by a capital letter (usually the first letter of the distribution’s name),
followed by brackets that contain the distribution’s parameters.

For example, the following notation means “the random variable X follows a normal distribution with a
mean of µ and a variance of σ2.”

There are two types of probability distributions:

 Discrete probability distributions

 Continuous probability distributions

Discrete probability distributions

A discrete probability distribution is a probability distribution of a categorical or discrete variable.

Discrete probability distributions only include the probabilities of values that are possible. In other
words, a discrete probability distribution doesn’t include any values with a probability of zero. For
example, a probability distribution of dice rolls doesn’t include 2.5 since it’s not a possible outcome of
dice rolls.
The probability of all possible values in a discrete probability distribution add up to one. It’s certain (i.e.,
a probability of one) that an observation will have one of the possible values.

Probability tables
A probability table represents the discrete probability distribution of a categorical variable. Probability
tables can also represent a discrete variable with only a few possible values or a continuous variable
that’s been grouped into class intervals.
A probability table is composed of two columns:

 The values or class intervals

 Their probabilities

Example: Probability tableA robot greets people using a random greeting. The probability distribution of
the greetings is described by the following probability table:
Greeting Probability

“Greetings, human!” .6

“Hi!” .1

“Salutations, organic life-form.” .2

“Howdy!” .1

Notice that all the probabilities are greater than zero and that they sum to one.

Probability mass functions

A probability mass function (PMF) is a mathematical function that describes a discrete probability
distribution. It gives the probability of every possible value of a variable.
A probability mass function can be represented as an equation or as a graph.
Example: Probability mass functionImagine that the number of sweaters owned per person in the United
States follows a Poisson distribution.
The probability mass function of the distribution is given by the formula:

Where:

 is the probability that a person has exactly sweaters

 is the mean number of sweaters per person ( , in this case)
 is Euler’s constant (approximately 2.718)

This probability mass function can also be represented as a graph:

Notice that the variable can only have certain values, which are represented by closed circles. You can
have two sweaters or 10 sweaters, but you can’t have 3.8 sweaters.
The probability that a person owns zero sweaters is .05, the probability that they own one sweater is .15,
and so on. If you add together all the probabilities for
possible number of sweaters a person can own, it will equal exactly 1.

Continuous probability distributions

A continuous probability distribution is the probability distribution of a continuous variable.

A continuous variable can have any value between its lowest and highest values. Therefore, continuous
probability distributions include every number in the variable’s range.
The probability that a continuous variable will have any specific value is so infinitesimally small that it’s
considered to have a probability of zero. However, the probability that a value will fall within a certain
interval of values within its range is greater than zero.

Probability density functions

A probability density function (PDF) is a mathematical function that describes a continuous
probability distribution. It provides the probability density of each value of a variable, which can be
greater than one.
A probability density function can be represented as an equation or as a graph.
In graph form, a probability density function is a curve. You can determine the probability that a value
will fall within a certain interval by calculating the area under the curve within that interval. You can use
reference tables or software to calculate the area.
The area under the whole curve is always exactly one because it’s certain (i.e., a probability of one) that
an observation will fall somewhere in the variable’s range.
A cumulative distribution function is another type of function that describes a continuous probability
distribution.
Example: Probability density functionThe probability density function of the normal distribution of egg
weight is given by the formula:

Where:

 is the probability density of egg weight

 is the mean egg weight in the population ( oz., in this case)
 is the standard deviation of egg weight in the population ( oz., in this case)

The probability of an egg being exactly 2 oz. is zero. Although an egg can weigh very close to 2 oz., it is
extremely improbable that it will weigh exactly 2 oz. Even if a regular scale measured an egg’s weight
as being 2 oz., an infinitely precise scale would find a tiny difference between the egg’s weight and 2 oz.
The probability that an egg is within a certain weight interval, such as 1.98 and 2.04 oz., is greater than
zero and can be represented in the graph of the probability density function as a shaded region:

The shaded region has an area of .09, meaning that there’s a probability of .09 that an egg will weigh
between 1.98 and 2.04 oz. The area was calculated using statistical software.
Common continuous probability distributions
Distribution Description Example

Normal Describes data with values that become less probable the farther SAT scores
distribution they are from the mean, with a bell-shaped probability density
function.

Continuous Describes data for which equal-sized intervals have equal The amount of time cars
uniform probability. wait at a red light

Log-normal Describes right-skewed data. It’s the probability distribution of a The average body weight of
random variable whose logarithm is normally distributed. different mammal species

Exponential Describes data that has higher probabilities for small values than Time between earthquakes
large values. It’s the probability distribution of time between
independent events.

How to find the expected value and standard deviation

You can find the expected value and standard deviation of a probability distribution if you have a
formula, sample, or probability table of the distribution.
Note: Nominal variables don’t have an expected value or standard deviation.
The expected value is another name for the mean of a distribution. It’s often written as E(x) or µ. If you
take a random sample of the distribution, you should expect the mean of the sample to be approximately
equal to the expected value.

 If you have a formula describing the distribution, such as a probability density function, the
expected value is usually given by the µ parameter. If there’s no µ parameter, the expected value
can be calculated from the other parameters using equations that are specific to each distribution.

 If you have a sample, then the mean of the sample is an estimate of the expected value of the
population’s probability distribution. The larger the sample size, the better the estimate will be.

 If you have a probability table, you can calculate the expected value by multiplying each
possible outcome by its probability, and then summing these values.

Example: Expected valueAmerican robins lay between two and four eggs in their nests. Imagine that this
probability table describes the probability distribution of the number of robin eggs per nest:
Eggs Probability

2 0.2

3 0.5

4 0.3
What is the expected value of robin eggs per nest?

Multiply each possible outcome by its probability:

Eggs (x) Probability (P(x)) x * P(x)

2 .2 2 * 0.2 = 0.4

3 .5 3 * 0.5 = 1.5

4 .3 4 * 0.3 = 1.2

Sum the values:

E(x) = 0.4 + 1.5 + 1.2

E(x) = 3.1 eggs

The standard deviation of a distribution is a measure of its variability. It’s often written as σ.

 If you have a formula describing the distribution, such as a probability density function, the
standard deviation is sometimes given by the σ parameter. If there’s no σ parameter, the standard
deviation can often be calculated from other parameters using formulas that are specific to each
distribution.

 If you have a sample, the standard deviation of the sample is an estimate of the standard
deviation of the population’s probability distribution. The larger the sample size, the better the
estimate will be.

 If you have a probability table, you can calculate the standard deviation by calculating the
deviation between each value and the expected value, squaring it, multiplying it by its
probability, and then summing the values and taking the square root.
 TULSIRAMJI GAIKWAD-PATIL College of Engineering and Technology
Wardha Road, Nagpur - 441108
Accredited withNAACA+Grade
Approved by AICTE, New Delhi, Govt. of Maharashtra
(An Autonomous Institution Affiliated to RTM Nagpur University, Nagpur)
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Date: 16/07/2022

Department of Master of Business Administration

Session 2021-22

Guest Lecture Notice

Subject: Department of Master of Business Administration Guest Lecture at 03.00 pm o
16.07.2022 through OFFLINE mode at Aryabhata Hall.

It’s our indeed pleasure to cordially invite you for the Guest Lecture at M.B.A. Departmen
scheduled through OFFLINE mode on 16.07.2022 (Saturday) at 03.00 pm.

HOD, M.B.A.
 TULSIRAMJI GAIKWAD-PATIL College of Engineering and T
Wardha Road, Nagpur - 441108
Accredited withNAACA+Grade
Approved by AICTE, New Delhi, Govt. of Maharashtra
(An Autonomous Institution Affiliated to RTM Nagpur University
---------------------------------------------------------------------------------------------------------

Department of Master of Business Administratio

Session 2021-22

Guest Lecture Notice

Subject: Department of Master of Business Administration Guest Le
16.07.2022 through OFFLINE mode at Aryabhata Hall.

It’s our indeed pleasure to cordially invite you for the Guest Lecture
scheduled through OFFLINE mode on 16.07.2022 (Saturday) at 03.00 pm.