Chapter 8.1 & 8.

2
Humour For The Day
 Two random variables were talking in a bar.

 They thought they were being discrete but I

heard their chatter continuously.
Learning Goals
 By the end of the lesson, you will know:

- what continuous probability distribution is

- what normal distribution is and its characteristics
- how to read the z-score chart
- how to solve a normal distribution problem
Continuous Probability Distributions
 Uniform Probability Distribution
 Normal Probability Distribution
 Exponential Probability Distribution
f (x) Exponential
Uniform
f (x)

f (x)
Normal

x
x

x
Continuous Probability Distributions
A continuous random variable can assume
any value in an interval on the real line or in a
collection of intervals.
It is not possible to talk about the probability
of the random variable assuming a particular
value.

Instead, we talk about the probability of the

random variable assuming a value within a
given interval.
 Continuous Probability Distributions

The probability of the random variable assuming a

value within some given interval from x1 to x2 is
defined to be the area under the graph of the
probability density function between x1 and x2.

f (x) Exponential
Uniform
f (x)

f (x)
Normal

x
x x1 xx12 x2
x1 x 2
x
x1 x 2
Normal Probability Distribution
 The normal probability distribution is the most
important distribution for describing a
continuous random variable.

 It is widely used in statistical inference.

 Normal Probability Distribution

It has been used in a wide variety of applications:

Heights
of people
Scientific
measurements
 Normal Probability Distribution

It has been used in a wide variety of applications:

Test
scores
Amounts
of rainfall
 Normal Probability Distribution

Characteristics

The distribution is symmetric; its skewness

measure is zero.

x
Characteristics

The highest point on the normal curve is at the

mean, which is also the median and mode.

Mean,
x
Median
Mode
Characteristics

The entire family of normal probability

distributions is defined by its mean  and its
standard deviation  .

Standard Deviation 

x
Mean 
Characteristics

The mean can be any numerical value: negative,

zero, or positive.

x
-10 0 20
Characteristics

The standard deviation determines the width of the

curve: larger values result in wider, flatter curves.

 = 15

 = 25

x
Characteristics

Probabilities for the normal random variable are

given by areas under the curve. The total area
under the curve is 1 (.5 to the left of the mean and
.5 to the right).

.5 .5
x
 Normal Probability Distribution

Characteristics

68.26% of values of a normal random variable

are within +/- 1 standard deviation of its mean.

95.44% of values of a normal random variable

are within +/- 2 standard deviations of its mean.

99.72% of values of a normal random variable

are within +/- 3 standard deviations of its mean.
 Normal Probability Distribution

Characteristics
99.72%
95.44%
68.26%

x
  + 3
 – 3  – 1  + 1
 – 2  + 2
Standard Normal Probability Distribution

A random variable having a normal distribution

with a mean of 0 and a standard deviation of 1 is
said to have a standard normal probability
distribution.
Standard Normal Probability Distribution

The letter z is used to designate the standard

normal random variable.

=

z
0
Standard Normal Probability Distribution

Converting to the Standard Normal Distribution

𝑥 − 𝜇
𝑧= for population
𝜎

𝑥 − 𝑥ҧ
𝑧= for sample
𝑠

We can think of z as a measure of the number of

standard deviations x is from  (population mean)
or 𝑥ҧ (sample mean).
 Cumulative Probability
Probability that z ≤ 1 is the area under the
curve to the left of 1.

P( z  1)

z
0 1
 What is P(z ≤ 1)?
To find out, use the Cumulative Probabilities
Table for the Standard Normal Distribution
Z .00 .01 .02
●

.9 .8159 .8186 .8212

1.0 .8413 .8438 .8461
1.1 .8643 .8665 .8686
1.2 .8849 .8869 .8888
● P( z  1)
●
 a) What is P(z ≤2.46)?
Exercise 1
b) What is P(z ≥2.46)?

Answer:
a) .9931
b) 1 – 0.9931= 0.0069

2.46 z
Exercise 2
Answer:
a) What is P(z ≤ –1 .29)?
a) 0.0985
b) What is P(z ≥ – 1.29)? b) 1 – 0.0985=. 0.9015

Red-shaded
area is equal to Note that:
green- shaded P( z  1.29) = 1 − P( z  1.29)
area

-1.29 1.29 z

Note that, because of the symmetry, the area to the left

of -1.29 is the same as the area to the right of 1.29
 What is P(.00 ≤ z ≤1.00)?
Exercise 3
P(.00 ≤ z ≤1.00)=.3413

0 1 z
𝑃 0.00 ≤ 𝑧 ≤ 1
=𝑃 𝑧 ≤1 −𝑃 𝑧 ≤0
= .8413 − .5000
= 0.3413
Exercise 4
What is P(– 1.67 ≥ z ≥ 1.00)?

P(-1.67 ≤ z ≤1.00)=.7938

Thus P(-1.67 ≥ z ≥ 1.00)

=1 – 0.7938 = .2062

-1.67 0 1 z
𝑃 −1.67 ≤ 𝑧 ≤ 1
= 𝑃 𝑧 ≤ 1 − 1 − 𝑃 𝑧 ≤ 1.67
= .8413 − 0.0475
= .7938
Review Standard Deviation
 Is used to determine how varied the data is from the
mean.

Is used to determine for population Is used to determine for sample

Practice Problem
 Calculate the standard deviation of the following test data
by hand. Use the chart in the next slide to record the steps.

Test Scores: 22, 99, 102, 33, 57, 75, 100, 81, 62, 29

n = 10
σ𝑥
Mean = 𝒙
ഥ =
𝑛
22 + 99 + 102 + 33 + 57 + 75 + 100 + 81 + 62 + 29
ഥ =
𝒙
10
22 + 99 + 102 + 33 + 57 + 75 + 100 + 81 + 62 + 29
ഥ =
𝒙
10
ഥ
𝒙 = 66
 Difference from the mean (Difference from the mean)
Test Score (x – x) (x – x)2
(x)
22 22 – 66 = – 44 1936
99 99 – 66 = 33 1089
102 102 – 66 = 36 1296
33 33 – 66 = – 33 1089
57 57 – 66 = – 9 81
75 75 – 66 = 9 81
100 100 – 66 = 34 1156
81 81 – 66 = 15 225
62 62 – 66 = – 4 16
29 29 – 66 = – 37 1369
Sum of (Difference from the mean)

σ(x – x) 8338
 𝟐
σ(𝒙−ഥ
𝒙)
 Standard deviation =
(𝒏−𝟏)

𝟖𝟑𝟑𝟖
 Standard deviation =
(𝟏𝟎−𝟏)

 Standard deviation = 926.44

 Standard deviation = 30.4

 The standard deviation for this set of data is 30.4.

What does this mean?
 Within 1 standard deviation:
 66 ± 1(30.4)
 Range of 1 S.D. = 35.6 – 96.4
 This covers approximately 65-68% of the population

 Within 2 standard deviation:

 66 ± 2(30.4)
 Range of 2 S.D. = 5.2 – 126.8
 This covers approximately 97% of the population
Standard Normal Probability Distribution
Example: Pep Zone

Pep Zone sells auto parts and supplies

including
a popular multi-grade motor oil. When the
stock of this oil drops to 20 gallons, a
replenishment order is placed.

Pep
Zone
5w-20
Motor Oil
 Example: Pep Zone

The store manager is concerned that sales are being

lost due to lack of stock (stockout) while waiting for an
order.
It has been determined that demand during
replenishment lead-time is normally Pep
distributed with a mean of 15 gallons and Zone
5w-20
a standard deviation of 6 gallons. Motor Oil

The manager would like to know the

probability of a stockout, P(x > 20). (Demand
exceeding 20 gallons)
 Pep

Solving for the Stockout Probability Zone

5w-20
Motor Oil

Step 1: Convert x to the standard normal distribution.

𝑥 − 𝑥ҧ 20 −15
𝑧= 𝑧= 𝑧 = 0.83
𝑠 6

Step 2: Find the area under the standard normal

curve to the left of z = 0.83.
 Cumulative Probability Table for Pep
Zone
5w-20

the Standard Normal Distribution

Motor Oil

z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09
. . . . . . . . . . .
.5 .6915 .6950 .6985 .7019 .7054 .7088 .7123 .7157 .7190 .7224
.6 .7257 .7291 .7324 .7357 .7389 .7422 .7454 .7486 .7517 .7549
.7 .7580 .7611 .7642 .7673 .7704 .7734 .7764 .7794 .7823 .7852
.8 .7881 .7910 .7939 .7967 .7995 .8023 .8051 .8078 .8106 .8133
.9 .8159 .8186 .8212 .8238 .8264 .8289 .8315 .8340 .8365 .8389
. . . . . . . . . . .

P(z < .83)

Solving for the Stockout Probability Pep
Zone
5w-20
Motor Oil

Step 3: Compute the area under the standard normal

curve to the right of z = .83.

P(z > .83) = 1 – P(z < .83)

= 1- .7967
= .2033

Probability
of a stockout P(x > 20)
The normal curve is read from the left to the
right (from lowest to highest). Pep
Zone
5w-20
Motor Oil

Solving for the Stockout Probability

Area = 1 - .7967
Area = .7967
= .2033

z
0 .83
 Pep
Zone
5w-20
Motor Oil

If the manager of Pep Zone wants the probability

of a stockout to be no more than .05, what should
the reorder point be?
 Pep
Solving for the Reorder Point Zone
5w-20
Motor Oil

Area = .9500

Area = .0500

z
0 z.05
 Standard Normal Probability Distribution
Pep
Zone
5w-20
Motor Oil

Solving for the Reorder Point

Step 1: Find the z-value that cuts off an area of .05
in the right tail of the standard normal
distribution.
z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09
. . . . . . . . . . .
1.5 .9332 .9345 .9357 .9370 .9382 .9394 .9406 .9418 .9429 .9441
1.6 .9452 .9463 .9474 .9484 .9495 .9505 .9515 .9525 .9535 .9545
1.7 .9554 .9564 .9573 .9582 .9591 .9599 .9608 .9616 .9625 .9633
1.8 .9641 .9649 .9656 .9664 .9671 .9678 .9686 .9693 .9699 .9706
1.9 .9713 .9719 .9726 .9732
We.9738
look.9744 .9750
up the .9756 .9761 .9767
complement
. . . . . of the
. tail .area (1
. - .05. = .95). .
 Standard Normal Probability Distribution
Pep
Zone

Solving for the Reorder Point

5w-20
Motor Oil

Step 2: Convert z.05 to the corresponding value of x.

 Standard Normal Probability Distribution
Pep
Zone

Solving for the Reorder Point

5w-20
Motor Oil

Step 2: Convert z.05 to the corresponding value of x.

x =  + z.05
= 15 + 1.645(6)
= 24.87 or 25

A reorder point of 25 gallons will place the probability

of a stockout during leadtime at (slightly less than) .05.
 Pep
Zone
5w-20
Motor Oil

Solving for the Reorder Point

By raising the reorder point from 20 gallons to

25 gallons on hand, the probability of a stockout
decreases from about .20 to .05.
This is a significant decrease in the chance that Pep
Zone will be out of stock and unable to meet a
customer’s desire to make a purchase.
Homework
 p 419, 1 – 3 & p. 430, 1 – 13