The Normal

distribution

Business Analytics
MBMG-7104/ ITHS-2202/ IMAS-3101/ IMHS-3101
 What is normal distribution?

The Normal Distribution, also called

the Gaussian Distribution, is the most
significant continuous probability
distribution.

A normal distribution is a
 symmetric, bell-shaped curve
 that describes the distribution of
continuous random variables.
 The normal curve describes how data are
distributed in a population.
What is normal distribution?

……A normal distribution is a

 A large number of random variables are either nearly or
exactly represented by the normal distribution

 The normal distribution can be used to represent a wide

range of data, such as test scores, height measurements,
and weights of people in a population.
 What is normal distribution?

The normal distribution has two parameters,

 mean (μ ) and standard deviation (σ) .

 It is important to know these two parameters because they are

used to calculate probabilities associated with the normal
distribution.

 Mean : - It is the measure of central tendency, i.e. it provides us

an idea of the concentration of the observations about the
central part of the distribution.
 Standard deviation :- Standard deviation describes the
dispersion or spread the variables about the central value.
Normal distribution is defined by its
mean and standard dev.
 1 x 2
1  ( )
E(X)= = x
 2
e 2  dx

 1 x 2
Var(X)=2 = 1  ( )
( 

x2
 2
e 2  dx)   2

Standard Deviation(X)=
Normal Distribution Definition
 The Normal Distribution is defined by the probability density
function for a continuous random variable in a system.
 Let us say, f(x) is the probability density function and X is the
random variable.
 Hence, it defines a function which is integrated between the
range or interval (x to x + dx), giving the probability of
random variable X, by considering the values between x and
x+dx.
f(x) ≥ 0 ∀ x ϵ (−∞,+∞)

And  -∞∫+∞ f(x) = 1
Normal Distribution Formula
 The probability density function of normal or gaussian distribution is
given by;

Where,
x = the variable
μ = the population mean
σ = standard deviation of the population
e = the mathematical constant approximated by 2.71828
π = the mathematical constant approximated by 3.1415
Normal Distribution Curve

 The random variables following the

normal distribution are those whose
values can find any unknown value in a
given range.

 For example, finding the height of the

students in the school. Here, the
distribution can consider any value, but
it will be bounded in the range say, 0 to
6ft. This limitation is forced physically
in our query.
Normal Distribution Curve

 Whereas, the normal distribution doesn’t

even bother about the range. The range
can also extend to –∞ to + ∞ and still we
can find a smooth curve.

 These random variables are called

Continuous Variables, and the Normal
Distribution then provides here probability
of the value lying in a particular range for a
given experiment.
Normal Distribution Standard Deviation

 Generally, the normal distribution has any positive

standard deviation.

 The standard deviations are used to subdivide the

area under the normal curve. Each subdivided
section defines the percentage of data, which falls
into the specific region of a graph.
The Standardized Normal Distribution
 The standard normal distribution, also
called the z-distribution,

 is a special normal distribution where the

mean is 0 and the standard deviation is 1.

 Any normal distribution (with any mean

and standard deviation combination) can be
transformed into the standardized normal
distribution (Z)

 To compute normal probabilities need to

transform X units into Z units
The Standardized Normal Distribution
 The standard normal distribution, also
called the z-distribution,

 is a special normal distribution where the

mean is 0 and the standard deviation is 1.

 Any normal distribution (with any mean

and standard deviation combination) can be
transformed into the standardized normal
distribution (Z)

 To compute normal probabilities need to

transform X units into Z units
The Standardized Normal Distribution
 Translate from X to the standardized normal (the “Z” distribution) by
subtracting the mean of X and dividing by its standard deviation:

X μ
Z
σ
 Z scores tell you how many standard deviations from the mean each
value lies.
 Converting a normal distribution into a z-distribution allows you to
calculate the probability of certain values occurring and to compare
different data sets.
The Z distribution always has mean = 0 and
standard deviation = 1
The Standardized Normal Probability Density
Function

 The formula for the standardized normal probability density

function is

1 (1/2)Z 2
f(Z)  e
2π

Where e = the mathematical constant approximated by 2.71828

π = the mathematical constant approximated by 3.14159
Z = any value of the standardized normal distribution
Finding Normal Probabilities
Probability is measured by the area under the curve

f(X)
P (a ≤ X ≤ b)
= P (a < X < b)
(Note that the probability
of any individual value is
zero)

a b X
Probability as Area Under the Curve
Probability is measured by the area under the curve
The total area under the curve is 1.0, and the curve is
symmetric, so half is above the mean, half is below

f(X) P(   X  μ)  0.5
P(μ  X   )  0.5

0.5 0.5

μ X
P(   X   )  1.0
Comparing X and Z units
Example : If X is distributed normally with mean of ₹100 and
standard deviation of ₹50, the Z value for X = ₹ 200 is

₹100 ₹200 ₹X (μ = ₹100, σ = ₹50)

0 2.0 Z (μ = 0, σ = 1)

This says that X = ₹200 is two standard deviations (2 increments of ₹50 units) above the
mean of ₹100.
Note that the shape of the distribution is the same, only the scale has changed. We can express
the problem in the original units (X in Rs. ) or in standardized units (Z)
General Procedure
for Finding Normal Probabilities

To find P(a < X < b) when X is distributed

normally:

 Draw the normal curve for the problem in terms of X

 Translate X-values to Z-values

 Use the Standardized Normal Table

The Standardized Normal Table
The Cumulative Standardized Normal table gives the probability less
than a desired value of Z (i.e., from negative infinity to Z)

Example: 0.9772
P(Z < 2.00) = 0.9772

0 2.00 Z
Z 0.00 0.01 0.02 … The column gives the value of
Z to the second decimal point
0.0
The row shows
the value of Z 0.1
. The value within the
to the first .
decimal point . table gives the
2.0 .9772 probability from Z =  
up to the desired Z value
P(Z < 2.00) = 0.9772
2.0
 What is the area to the
The Standardized Normal
left of Z=1.51 in a
Table standard normal curve?

Area is 93.45%
Z=1.51

Z=1.51
 Finding Normal Probabilities

 LetX represent the time it takes (in

seconds) to download an image file
from the internet.

 Suppose X is normal distribution with a X

18.0
mean of18.0 seconds and a standard
18.6
deviation of 5.0 seconds. Find P(X <
18.6)
Finding Normal Probabilities
(continued)

 Let X represent the time it takes, in seconds to download an

image file from the internet.
 Suppose X is normal with a mean of 18.0 seconds and a
standard deviation of 5.0 seconds. Find P(X < 18.6)

X  μ 18.6  18.0
Z   0.12
σ 5.0
μ = 18 μ=0
σ=5 σ=1

18 18.6 X 0 0.12 Z

P(X < 18.6) P(Z < 0.12)

Solution: Finding P(Z < 0.12)

Standardized Normal Probability P(X < 18.6)

Table (Portion) = P(Z < 0.12)
Z .00 .01 .02 0.5478
0.0 .5000 .5040 .5080

0.1 .5398 .5438 .5478

0.2 .5793 .5832 .5871
Z
0.00
0.3 .6179 .6217 .6255
0.12
Finding Normal
Upper Tail Probabilities
 Suppose X is normal with mean 18.0 and
standard deviation 5.0.
 Now Find P(X > 18.6)

X
18.0
18.6
Finding Normal
Upper Tail Probabilities …
 Now Find P(X > 18.6)…
P(X > 18.6) = P(Z > 0.12) = 1.0 - P(Z ≤ 0.12)
= 1.0 - 0.5478 = 0.4522

0.5478
1.000 1.0 - 0.5478
= 0.4522

Z Z
0 0
0.12 0.12
Finding a Normal Probability Between
Two Values
 Suppose X is normal with mean 18.0 and standard deviation 5.0.
Find P(18 < X < 18.6)
Calculate Z-values:

X  μ 18  18
Z  0
σ 5
18 18.6 X
X  μ 18.6  18 0 0.12 Z
Z   0.12
σ 5 P(18 < X < 18.6)
= P(0 < Z < 0.12)
Solution: Finding P(0 < Z < 0.12)

P(18 < X < 18.6)

Standardized Normal Probability
Table (Portion) = P(0 < Z < 0.12)
= P(Z < 0.12) – P(Z ≤ 0)
Z .00 .01 .02 = 0.5478 - 0.5000 = 0.0478
0.0 .5000 .5040 .5080 0.0478
0.5000
0.1 .5398 .5438 .5478
0.2 .5793 .5832 .5871

0.3 .6179 .6217 .6255 Z

0.00
0.12
Probabilities in the Lower Tail

 Suppose X is normal with mean 18.0 and

standard deviation 5.0.
 Now Find P(17.4 < X < 18)

X
18.0
17.4
Probabilities in the Lower Tail
(continued)

Now Find P(17.4 < X < 18)…

P(17.4 < X < 18)

= P(-0.12 < Z < 0)
0.0478
= P(Z < 0) – P(Z ≤ -0.12)
= 0.5000 - 0.4522 = 0.0478
0.4522

The Normal distribution is

symmetric, so this probability
17.4 18.0 X
is the same as P(0 < Z < 0.12) Z
-0.12 0
Empirical Rule
What can we say about the distribution of values
around the mean? For any normal distribution:

f(X)
μ ± 1σ encloses about
68.26% of X’s
σ σ

μ-1σ μ μ+1σ X
68.26%
The Empirical Rule(continued)

 μ ± 2σ covers about 95.44% of X’s

 μ ± 3σ covers about 99.73% of X’s

2σ 2σ 3σ 3σ
μ x μ x
95.44% 99.73%
Given a Normal Probability
Find the X Value

 Steps
to find the X value for a known
probability:

1. Find the Z value for the known probability

2. Convert to X units using the formula:

X  μ  Zσ
Finding the X value for a Known
Probability (continued)
Example:
 Let X represent the time it takes (in seconds) to
download an image file from the internet.
 Suppose X is normal with mean 18.0 and standard
deviation 5.0
 Find X such that 20% of download times are less than
X.

0.2000

? 18.0 X
? 0 Z
Find the Z value for
20% in the Lower Tail

1. Find the Z value for the known probability

Standardized Normal Probability  20% area in the lower tail
Table (Portion) is consistent with a Z
value of -0.84
Z … .03 .04 .05

-0.9 … .1762 .1736 .1711

0.2000
-0.8 … .2033 .2005 .1977
-0.7 … .2327 .2296 .2266
? 18.0 X
-0.84 0 Z
Finding the X value

2. Convert to X units using the formula:

X  μ  Zσ
 18.0  (0.84)5.0
 13.8

So 20% of the values from a distribution with

mean 18.0 and standard deviation 5.0 are less
than 13.80
Exercise

 Q.1The mean weight of the students in this class is

80 kg, the standard deviation (SD) is 10.5 kg, find the
probability for :-

• Find P(X < 85.5)

• Find P(X > 85.5)
• Find P(80 < X < 85.5)
• Find P(75 < X < 80)
Exercise

Q.2 IQ tests are measured on a scale

which is N (100, 15). A woman wants to
form an 'Eggheads Society' which only
admits people with the top 1% of IQ
scores. What would she have to set as the
cut-off point in the test to allow this to
happen?
Exercise

Q3. A manufacturer does not know the mean and SD

of the diameters of ball bearings he is producing.
However, a sieving system rejects all bearings larger
than 2.4 cm and those under 1.8 cm in diameter. Out
of 1000 ball bearings 8% are rejected as too small and
5.5% as too big. What is the mean and standard
deviation of the ball bearings produced?
Exercise
Solution 3 :
Assume a normal distribution of N( 1 − 0.08)
So 1-0.08 = 0.92 = 92% area in the lower tail is consistent
with a Z value of =
Z value for 0.92 = 1.4
so 1.8 is 1.4 standard deviations below mean

Similarly for N ( 1 − 0.055) , area in the upper tail is

1-0.055 = 0.945, so from z-table the value of z = 1.6 ,

so 2.4 is 1.6 standard deviations above the mean.

Exercise
Thank you!