REVIEW

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