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Normal Distribution

Characterizing a Normal

Distribution

To completely characterize a normal

distribution, we need to know only 2

things:

– The mean ---

– The standard deviation ---

HAND CALCULATIONS FOR

THE NORMAL DISTRIBUTION

• Probability tables have been created

for the normal distribution expressed

in terms of z, where

• z = the number of standard

deviations x is from its mean, , i.e.

x

z

TYPES OF NORMAL TABLES

• Two types of normal tables

– Tables giving probabilities from z = 0 to a

positive value of z

– Cumulative normal tables giving probabilities

from z = -∞ to any value of z

• Excel uses this approach

0 z Z

Normal Curve with X and Z Scales

Probabilities from 0 to z

a X

Some tables give probability of falling

between 0 and a positive z value

µ a X

0 z Z

Curve with X and Z Scales

Cumulative Probabilities from -∞ to z

a X

µ a X

A cumulative normal table gives

the probability of falling between

-∞ and any z value

Calculating Normal Probabilities

Using Cumulative Probabilities

LEFT TAIL PROBABILITIES

P(X<a) or P(Z<z) = area between -∞ and a (or z)

– Probability to the left

– Cumulative normal table value

EXCEL:

=NORMDIST(a,µ,σ,TRUE) or

=NORMSDIST(z)

Calculating Normal Probabilities

Using Cumulative Probabilities

RIGHT TAIL PROBABILITIES

P(X>a) or P(Z>z) = area between a (or z) and +∞

• Probability to the right

• 1 - (Cumulative normal table value)

EXCEL:

=1-NORMDIST(a,µ,σ,TRUE) or

=1-NORMSDIST(z)

Calculating Normal Probabilities

Using Cumulative Probabilities

IN BETWEEN PROBABILITIES

P(a<X<b) or P(z

a

<Z<z

b

)

– Probability between a and b on the X scale or

between z

a

and z

b

on the Z scale

– (Cumulative normal table value for z

b

) -

(Cumulative normal table value for z

a

)

EXCEL:

=NORMDIST(b,µ,σ,TRUE) - NORMDIST(a,µ,σ,TRUE)

or =NORMSDIST(z

b

) - NORMSDIST(z

a

)

Calculating x Values from

Cumulative Normal Probabilities

Determining the x value such that the

probability of getting a value less than x is p

– Find the cumulative normal probability, p,

(approximately) in the table (to the left of x)

and note the corresponding z value

– x = µ + zσ

EXCEL:

= NORMINV(p,µ,σ) or

= µ + NORMSINV(p)*σ

EXAMPLE

• Flight times from LAX to New York:

– Are distributed normal

– The average flight time is 320 minutes

– The standard deviation is 20 minutes

Probability a flight takes

exactly 315 minutes

• P(X = 315 ) = 0

– Since X is a continuous random variable

Probability a flight takes less

than 335 minutes

.4332

σ = 20

320 X

335

0 Z

20

320 335

0.75

EXCEL

=NORMDIST(335,320,20,TRUE)

OR =NORMSDIST(.75)

FROM TABLE

.7734

Probability a flight takes more

than 325 minutes

.4332

σ = 20

320 X

0 Z

20

320 325

0.25

EXCEL

=1-NORMDIST(325,320,20,TRUE)

OR =1-NORMSDIST(.25)

325

FROM TABLE

.5987

1 - .5987 =

.4013

Probability a flight takes

between 303 and 348 minutes

.4332

σ = 20

320 X

20

320 303

303 348

-0.85 0 Z

20

320 348

1.40

EXCEL

=NORMDIST(348,320,20,TRUE)-NORMDIST(303,320,20,TRUE)

OR =NORMSDIST(1.40)-NORMSDIST(-0.85)

.9192 - .1977 =

.7215

FROM TABLE

.9192

FROM TABLE

.1977

75% of the flights arrive within

how many minutes?

.4332

σ = 20

320 X

0 Z

EXCEL

=NORMINV(.75,320,20)

OR =320 + NORMSINV(.75)*20

x

.7500 is to the

left of x

Try to find .7500 in the middle

of the cumulative normal table.

0.67

The closest value is .7486 which

corresponds to a z-value of 0.67.

x = 320 + .67(20)

333.4

85% of the flights take at least

how many minutes?

.4332

σ = 20

320 X

0 Z

EXCEL

=NORMINV(.15,320,20)

OR =320 + NORMSINV(.15)*20

x

.8500 is to the

right of x

Thus,

1-.8500 = .1500

is to the left of x

Try to find .1500 in the middle

of the cumulative normal table.

-1.04

The closest value is .1492

which corresponds to a

z-value of -1.04

x = 320 + (-1.04)(20)

299.2

EXCEL CALCULATONS USING x

EXCEL CALCULATONS USING z

REVIEW

• Normal distribution is completely

characterized by µ and σ

• Calculation of:

– “<” probabilities, “>” probabilities, and “in

between” probabilities using:

• Cumulative probability table

• NORMDIST and NORMSDIST functions

– “x values” and “z values” corresponding to a

cumulative probability using:

• Cumulative probability table

• NORMINV and NORMSINV functions

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