Normal

Distribution
Management Science
Karl Guass
(1977-1855)

 Mathematician-Astronomers
 Guassian Distribution
 “Prince of Mathematicians”
 Contribution in Mathematics
& Science
 The Importance of Normal
Distribution in Management Science

•Management Situation
•Fits many Natural Phenomena
Characteristic of The Normal Probability
Distribution
The curve has a single peak
It is bell-shaped
Characteristic of The Normal Probability
Distribution
The curve has a single peak
It is bell-shaped
Characteristic of The Normal Probability
Distribution
The curve has a single peak
It is bell-shaped
The mean lies at the
center of the distribution
Two tails extend indefinitely and
never touch the horizontal axis.
  𝝁 Located the center

𝜎
 

Measures the spread

around the center
Curve A

Curve B

Curve C
Curve C
Curve A
Density Curve A
equal to 1
100%
Curve B

Curve C
Lower Higher Highest
Mean Mean Mean
 Highest mean &
Least spread

Higher mean
& less spread
Lowest mean &
most spread
26 20 5 13 18 13
13 19 7 19 9 22
33 5 10 18 9 9
10 18 3 10 10 7
13 17 13 17 17 17

Daily Car Sales Lot

26 20 5 13 18 13
13 19 7 19 9 22
33 5 10 18 9 9
10 18 3 10 10 7
13 17 13 17 17 17

420
Mean sales per day =
30
=14 per day
  

x̄ =
  =
 𝑥− 𝜇
  𝑧=
𝜎
Standard Deviation

σ Stigma
A standard deviation is a statistic that measures the
dispersion of a dataset relative to its mean and is
calculated as the square root of the variance. The
standard deviation is calculated as the square root of
variance by determining each data point's deviation
relative to the mean.
Standard Deviation

•
• 
26 20 5 13 18 13
13 19 7 19 9 22
33 5 10 18 9 9
10 18 3 10 10 7
13 17 13 17 17 17

Daily Car Sales Lot

 

𝜎 =6 . 49
 
 
2
Σ 𝑥1
𝜎=
 
𝑁 √−𝜇
2

7144
𝜎=
√30
− 14
𝜎 =√ 238.13 −196
 
2

 
𝜎 =6.49
 14+6.49 14-6.49
20.49 7.51

14
 

14+(2x6.49) 14-(2x6.49)
26.98 1.02
Two interval 1 deviation to the right of the mean
 Formula
𝑥− 𝜇
  𝑧=
𝜎
𝑧 Standard units
 

𝑥 Variable
 

 
𝜇 Mean
 
𝜎 Standard Deviations
 𝑥− 𝜇
 

𝑧=
𝜎
𝑧
 
Standard units
𝑥
 
Variable
𝜇 Mean
 

𝜎 Standard Deviations
 
 𝑥− 𝜇
 

𝑧=
𝜎
𝑧
 
Standard units
𝑥
 
Variable
𝜇 Mean
 

𝜎 Standard Deviations
 
• An Account Receivable auditor examining customer
account for client. Past records indicate that the mean
amount per account is 5,000 and that this particular
random variable has a standard deviations of 1,000.
 

𝜎 =1,000
 
• An Account Receivable auditor examining customer account for client. Past
records indicate that the mean amount per account is 5,000 and that this
particular random variable has a standard deviations of 1,000.

Example 1
What is the probability that an account
selected at random will have a balance of
more than 5,000?

.5 or 50%
• An Account Receivable auditor examining customer account for client. Past records
indicate that the mean amount per account is 5,000 and that this particular random
variable has a standard deviations of 1,000.

Example 2
What is the probability that an account
selected at random will have a balance
between 5,000 and 6,500?
• 

Z=1.5
Z=.93319
.5-.93319
.43319 or 4%
• An Account Receivable auditor examining customer account for client. Past
records indicate that the mean amount per account is 5,000 and that this
particular random variable has a standard deviations of 1,000.

Example 3
What is the probability that an account
drawn at a random will have of more than
7,000?
• 

Z=2
Z=.97725
1-.97725
.02275 or 2.27%
 • An Account Receivable auditor examining customer account for client. Past
records indicate that the mean amount per account is 5,000 and that this
particular random variable has a standard deviations of 1,000.

Example 4
What is the probability that an account
selected at random will have a balance
between 5,500 and 6,500?
•   

Z=1.5 Z=.5
Z=.93319 Z=.69146
.93319
-.69146
.24173
Reporter: Lagura, Winona
PCBET 01 601A
Topic: Normal Distribution
Chapter 2