APPLICATION OF

SPREADSHEETS
1. BASIC PROBABILITY
2. BINOMIAL DISTRIBUTION
3. POISSON DISTRIBUTION
BASIC PROBABILITY

Probability is how likely an event is to occur.

Whenever we are unsure about the exact outcome of an event, we find out its probability.
The analysis of events governed by probability is called statistics.
Probability is always between 0 and 1.
Formula

P(E)= Number of favourable outcomes/ Total number of outcomes

Example

The best example for understanding probability is flipping a coin:

There are two possible outcomes—heads or tails.
What’s the probability of the coin landing on Heads?
P(H) = ?
We know that the likelihood is half/half, or 50%.
Probability of an event = (no of ways it can happen) / (total number of outcomes)
P(H)= 1/2
Conclusion

The probability of an event can only be between 0 and 1 and can also be written as a
percentage.
The probability of event A is often written as P(A).
If P(A) > P(B), then event A has a higher chance of occurring than event B.
If P(A) = P(B), then event A and B are equally likely to occur.
BINOMIAL DISTRIBUTION

A frequency distribution of the possible number of successful outcomes in a given number of

trials in each of which there is the same probability of success.
Binomial distribution is a common probability distribution that models the probability of
obtaining one of two outcomes under a given number of parameters.
It summarizes the number of trials when each trial has the same chance of attaining one
specific outcome.
The value of a binomial is obtained by multiplying the number of independent trials by the
successes.
Formula
Criteria of binomial distribution

1. Fixed trials
The process under investigation must have a fixed number of trials that cannot be
altered in the course of the analysis.
In the binomial probability formula, the number of trials is represented by the
letter “n.”
An example of a fixed trial may be coin flips, free throws, wheel spins, etc.
2. Independent trials
The other condition of a binomial probability is that the trials are independent of each
other. In simple terms, the outcome of one trial should not affect the outcome of the
subsequent trials.
An example of independent trials may be tossing a coin or rolling a dice. When tossing a
coin, the first event is independent of the subsequent events.
3. Fixed probability of success
In a binomial distribution, the probability of getting a success must remain the same for the
trials we are investigating. For example, when tossing a coin, the probability of getting
successful outcomes is ½ or 0.5 for every trial we conduct, since there are only two possible
outcomes
4. Two mutually exclusive outcomes
In binomial probability, there are only two mutually
exclusive outcomes, i.e., success or failure.
While success is generally a positive term, it can be
used to mean that the outcome of the trial agrees with
what you have defined as a success, whether it is a
positive or negative outcome.
In statistics and probability theory, two events are
mutually exclusive if they cannot occur at the same
time.
Example
Q. If a coin is tossed 5 times, using binomial distribution find the probability exactly 2 heads.
Sol.
According to the problem:
Number of trials: n=5
Probability of head: p= 1/2 and hence the probability of tail, q =1/2 (1-p)

For exactly two heads:

x=2
Using binomial distribution formula,
P(x=2) = 5C2 x p^2 x q^5-2 = 5! / 2! 3! × (½)^2× (½)^3
P(x=2) = 5/16
POISSON DISTRIBUTION

A Poisson distribution is a tool that helps to predict the probability of certain events
happening when you know how often the event has occurred. It gives us the probability of
a given number of events happening in a fixed interval of time.
Example

Q. The average number of major storms in your city is 2 per year. What is the probability that
exactly 3 storms will hit your city next year?

Sol. Put the following in Poisson's formula:

λ = 2 (average number of storms per year, historically)
x = 3 (the number of storms we think might hit next year)
e = 2.71828 (e is Euler’s number, a constant)
P(x) = (e-λ) (λx) / x!
= (2.71828 – 2) (23) / 3!
= (0.13534) (8) / 6
= 0.180
The probability of 3 storms happening next year is 0.180, or 18%
 POISSON VS BINOMIAL
DISTRIBUTION
POISSON DISTRIBUTION
If the question has an average
probability of an event happening per unit
(i.e., per unit of time, cycle,
event) and you want to find the
probability of a certain number of events
happening in a period of time (or a
number of events), then we use the
Poisson Distribution.
BINOMIAL DISTRIBUTION
If we are given an exact probability and
we want to find the probability of the
event happening a certain number of
times out of x (e.g., 10 times out of 100,
or 99 times out of 1000), we
use Binomial Distribution.
THANK YOU.

Presentation by: Lavanya Chamoli

Het Unadkat
Garvita Khanwani
Vishal Chitoor Jaikant