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Business Statistics, 4e

by Ken Black
Chapter 5

Discrete Distributions

Discrete
Distributions
If you bet on a horse, thats
gambling. If you bet you can
pull a rabbit out of a hat, that
is entertainment. If you bet
cotton will go up three points,
that is business. See the
difference.

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-1

Learning Objectives
Distinguish between discrete random
variables and continuous random variables.
Know how to determine the mean and
variance of a discrete distribution.
Identify the type of statistical experiments
that can be described by the binomial
distribution, and know how to work such
problems.

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-2

Learning Objectives -- Continued


Decide when to use the Poisson distribution
in analyzing statistical experiments, and
know how to work such problems.
Decide when binomial distribution
problems can be approximated by the
Poisson distribution, and know how to work
such problems.

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-3

Discrete vs Continuous Distributions


Random Variable -- a variable which contains the
outcomes of a chance experiment
Discrete Random Variable -- the set of all possible
values is at most a finite or a countably infinite number of
possible values

Number of calls in a call center during a five-minute interval


Number of bad checks received by a restaurant in a month
Number of absent employees on a given day
Number of accidents in a gas company in a year
Number of efforts made in matrimony service

Continuous Random Variable -- takes on values at


every point over a given interval

Amount of insurance claims in a month?? Volume speaks


Retail prices of cereal boxes of same weight
Errors in measuring weight, length, volume
EI scores of employees in a big marketing company
Amount of deposits in a bank

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-4

Some Special Distributions


Discrete

binomial
Poisson
hypergeometric

Continuous

normal
uniform
exponential
t
chi-square
F

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-5

Discrete Distribution -- Example

Distribution of Daily
Crises
Number of
Probability
Crises

0
1
2
3
4
5

0.37
0.31
0.18
0.09
0.04
0.01

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

P
r
o
b
a
b
i
l
i
t
y

0.5
0.4
0.3
0.2
0.1
0

Number of Crises

5-6

Requirements for a
Discrete Probability Function
Probabilities are between 0 and 1,
inclusively

0 P( X ) 1 for all X

Total of all probabilities equals 1

P( X ) 1

over all x

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-7

Mean of the Crises Data Example

E X X P( X ) 115
.
X

P(X)

XP(X)

.37

.00

.31

.31

.18

.36

.09

.27

.04

.16

.01

.05

P
r
o
b
a
b
i
l
i
t
y

0.5
0.4
0.3
0.2

0.1
0

Number of Crises

1.15
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-8

Variance and Standard Deviation


of Crises Data Example

.
X P( X ) 141

P(X)

(X- )

(X- ) 2

(X- ) 2 P(X)

.37

-1.15

1.32

.49

.31

-0.15

0.02

.01

.18

0.85

0.72

.13

.09

1.85

3.42

.31

.04

2.85

8.12

.32

.01

3.85

14.82

.15

141
. 119
.

1.41
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-9

Binomial Distribution
Experiment involves n identical trials
Each trial has exactly two possible outcomes: success
and failure (although many outcomes, but can be divided thus)
Each trial is independent of the previous trials
p is the probability of a success on any one trial
q = (1-p) is the probability of a failure on any one
trial
p and q are constant throughout the experiment
X is the number of successes in the n trials (between 0 &
n)

Binomial Applications to be valid


Sampling with replacement
Sampling without replacement -- n < 5% N
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-10

Binomial Distribution
Binomial distribution is also known as the "Bernoulli distribution" after the Swiss
mathematician Jacob Bernoulli (1654-1705) who discovered it in 1700 and was
published in 1713, eight years after his death.

Which of the following could serve as binomial distribution?


A family planning for 3 children
Rolling a die in a game 5 times
Playing Russian Roulette
A mining company exploring for diamond in 20 locations
Writing an MCQ exam that has 15 questions
Insurance salesperson visiting 10 randomly selected families
3 customers entering a clothing store (buy? Success?)
a quality control manager randomly selecting 25 items to find
number of defectives
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-11

Binomial Distribution
Example of family planning for 3 children. Outcomes are:
GGG, GGB,GBG, GBB
BBB,BBG,BGB,BGG each equally likely
In how many ways combination of 2 girls (and a boy) is
possible? Answer is 3.
Professionally: no of possible combination is computed thus
n!
3!
Cx

3
n
x!(n x)! 2!1!

Similarly in how many ways 1 girl is possible? 3 ways!!


in how many ways 0 girl is possible? 1 way!
in how many ways 3 girl is possible ? 1 way!
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-12

Binomial Distribution
A company received a shipment of a brand of 200 mobile phones. If 5% of
them are defective, what are the probabilities of drawing 0 to 3 defectives in
a draw of 3 mobiles .
P(DDD): (0.05)(0.05)(0.05) (0.95)0 =(0.05)3(0.95)0 =0.000125
P(DDN): (0.05)2 (0.95) = P(NDD)=P(DND) = 0.002375
P(DNN): (0.05)1 (0.95)2 = P(NDN)=P(NND) = 0.045125
P(NNN): (0.05)0 (0.95)3 = 0.953 = 0.857375

Expand this by using binomial formula:


P(getting 3 D) = 1* 0.000125 =.000125
P(getting 2 D) = 3*0.002375 = 0.007125
P(getting 1 D) = 3* 045125 = 0.135375
P(getting 0 D) = 1* 0.857375 = 0.857375
Formula is:

P(x) n c .p .q
x

n x

n!

.px .qn x
x! (n x)!

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-13

Binomial Distribution
Probability distribution table will look like this in the case
of family planning 3 children and r.v. x is no of girls.
x
0
1
2

f(x)
3!
(0.5) 0 (0.5)3
0!3!

0.125

3!
(0.5)1 (0.5) 2
1!2!

0.375

3!
(0.5) 2 (0.5)1
2!1!

0.375

3!
(0.5) 3 (0.5) 0
3! 0!

0.125

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-14

Binomial Distribution
EXERCISE : ()
Replicate the above probability distribution for 3 consumers
entering the clothing store on their purchase, where past
experience says that the probability of purchase for a
customer is 0.3. Consider y as a random variable for the
customers making a purchase. Answers: 0.343, 0.441, 0.189,
0.027 . One can draw a bar graph.

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-15

Binomial Distribution
Probability
function
P( X )
Mean
value
Variance
and
standard
deviation

X
n X
n!
q
for 0 X n
p
X ! n X !

n p

n pq

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

n pq
5-16

Binomial Distribution
EXERCISE:
According to US Census Bureau, approximately 6% of
all workers in Jackson, Mississippi, are unemployed. In
conducting a random telephone survey in Jackson, what
is the probability of getting two or fewer unemployed
workers in a sample of 20?
Answer: 0.8850

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-17

Binomial Distribution:
Demonstration Problem 5.3
n 20
p . 06
q . 94
P( X 2 ) P( X 0 ) P( X 1) P( X 2 )
. 2901. 3703. 2246 . 8850

20!
P( X 0)
0!(20 0)!
20!
P( X 1)
1!(20 1)!

.06 .94

20 0

.06 .94

20!
P ( X 2)
2!(20 2)!

20 1

.06 .94

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

(1)(1)(.2901) .2901

(20)(.06)(.3086) .3703

20 2

(190)(.0036)(.3283) .2246
5-18

n = 20
X

0.1

0.2

0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

0.122
0.270
0.285
0.190
0.090
0.032
0.009
0.002
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000

0.012
0.058
0.137
0.205
0.218
0.175
0.109
0.055
0.022
0.007
0.002
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000

Binomial
Table

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

PROBABILITY
0.3
0.4
0.5
0.001
0.007
0.028
0.072
0.130
0.179
0.192
0.164
0.114
0.065
0.031
0.012
0.004
0.001
0.000
0.000
0.000
0.000
0.000
0.000
0.000

0.000
0.000
0.003
0.012
0.035
0.075
0.124
0.166
0.180
0.160
0.117
0.071
0.035
0.015
0.005
0.001
0.000
0.000
0.000
0.000
0.000

0.000
0.000
0.000
0.001
0.005
0.015
0.037
0.074
0.120
0.160
0.176
0.160
0.120
0.074
0.037
0.015
0.005
0.001
0.000
0.000
0.000

0.6

0.7

0.8

0.9

0.000
0.000
0.000
0.000
0.000
0.001
0.005
0.015
0.035
0.071
0.117
0.160
0.180
0.166
0.124
0.075
0.035
0.012
0.003
0.000
0.000

0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.001
0.004
0.012
0.031
0.065
0.114
0.164
0.192
0.179
0.130
0.072
0.028
0.007
0.001

0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.002
0.007
0.022
0.055
0.109
0.175
0.218
0.205
0.137
0.058
0.012

0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.002
0.009
0.032
0.090
0.190
0.285
0.270
0.122

5-19

n = 20
X
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

PROBABILITY
0.1
0.2
0.3
0.122
0.270
0.285
0.190
0.090
0.032
0.009
0.002
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000

0.012
0.058
0.137
0.205
0.218
0.175
0.109
0.055
0.022
0.007
0.002
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000

0.001
0.007
0.028
0.072
0.130
0.179
0.192
0.164
0.114
0.065
0.031
0.012
0.004
0.001
0.000
0.000
0.000
0.000
0.000
0.000
0.000

0.4
0.000
0.000
0.003
0.012
0.035
0.075
0.124
0.166
0.180
0.160
0.117
0.071
0.035
0.015
0.005
0.001
0.000
0.000
0.000
0.000
0.000

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

Using the
Binomial Table
Demonstration
Problem 5.4
n 20
p .40
P ( X 10) 20C10

.40 .60
10

10

01171
.

5-20

Binomial Distribution using Table:


Demonstration Problem 5.3
n = 20
X
0
1
2
3
4
5
6
7
8

20

PROBABILITY
0.05
0.06
0.07
0.3585 0.2901 0.2342
0.3774 0.3703 0.3526
0.1887 0.2246 0.2521
0.0596 0.0860 0.1139
0.0133 0.0233 0.0364
0.0022 0.0048 0.0088
0.0003 0.0008 0.0017
0.0000 0.0001 0.0002
0.0000 0.0000 0.0000

0.0000 0.0000 0.0000

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

n 20
p . 06
q . 94
P( X 2 ) P( X 0 ) P( X 1) P( X 2 )
. 2901. 3703. 2246 . 8850

P( X 2) 1 P( X 2) 1. 8850 .1150

n p (20)(. 06) 1. 20

n p q ( 20 )(. 06 )(. 94 ) 1.128

1.128 1. 062
5-21

Excels Binomial Function


n=

20

p=

0.06

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

P(X)

=BINOMDIST(A5,B$1,B$2,FALSE)

=BINOMDIST(A6,B$1,B$2,FALSE)

=BINOMDIST(A7,B$1,B$2,FALSE)

=BINOMDIST(A8,B$1,B$2,FALSE)

=BINOMDIST(A9,B$1,B$2,FALSE)

=BINOMDIST(A10,B$1,B$2,FALSE)

=BINOMDIST(A11,B$1,B$2,FALSE)

=BINOMDIST(A12,B$1,B$2,FALSE)

=BINOMDIST(A13,B$1,B$2,FALSE)

=BINOMDIST(A14,B$1,B$2,FALSE)
5-22

Graphs of Selected Binomial Distributions


n = 4 PROBABILITY
X
0.1
0.5
0
0.656
0.063
1
0.292
0.250
2
0.049
0.375
3
0.004
0.250
4
0.000
0.063

0.9
0.000
0.004
0.049
0.292
0.656

P(X)

P = 0.5
1.000
0.900
0.800
0.700
0.600
0.500
0.400
0.300
0.200
0.100
0.000
0

P = 0.9

1.000
0.900
0.800
0.700
0.600
0.500
0.400
0.300
0.200
0.100
0.000

P(X)

P(X)

P = 0.1

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

1.000
0.900
0.800
0.700
0.600
0.500
0.400
0.300
0.200
0.100
0.000
0

5-23

Poisson Distribution
A discrete distribution, rather than having 2
outcomes, it describes no of occurrences of
some events in some interval or region or
space.
Describes occurrences of rare events (law of
small numbers/improbable events)
Each occurrence is independent of any other
occurrences.
The number of occurrences in each interval
can vary from zero to infinity.
The expected number of occurrences must
hold constant throughout the experiment.
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-24

Poisson Distribution
The average number of successes ( for mean)
that occurs in a specified region/interval is
known (space or time).
The probability that a success will occur is
proportional to the size of the region/interval.
The probability that a success will occur in an
extremely small region/interval is virtually zero.
used to describe no of random arrivals per
some interval of time or given length, area,
volume or region.
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-25

Poisson Distribution: Applications

Number of telephone calls per minute at a small


business
Arrivals at queuing systems

No of arrivals at airports -- people, airplanes


No of times a tire blows on a commercial plane per
week, no of times a machine breaks down
banks -- people, loan applications, post office

Defects in manufactured goods

number of defects per 1,000 feet of extruded copper


wire
number of blemishes per square foot of painted
surface
number of errors per typed page

Accidents/disease in a region
- no of accidents in an area ; nuclear decay of atoms
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-26

Poisson Distribution
Probability function: As N becomes large &
P small in the limit, Binomial distribution
transforms into Poisson Distribution.
X e
P( X )
for
X!
where :

X 0,1,2,3,...

x #of occurrence per interval


long run average
e 2.718282 ... (the base of natural logarithms)
Mean value
Variance
Standard deviation

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-27

Poisson Distribution: Demonstration


Problem 5.7
3. 2 customers/ 4 minutes

3. 2 customers/ 4 minutes

X = 10 customers/ 8 minutes

X = 6 customers/ 8 minutes

Adjusted

Adjusted

= 6. 4 customers/ 8 minutes

= 6. 4 customers/ 8 minutes

e
X

P(X) =

e
X

P(X) =

X!

P( X = 10) = 6.4 e
10 !
10

6. 4

X!

P( X = 6) = 6.4 e
6!
6

0. 0528

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

6.4

0.1586

5-28

Poisson distribution
Poisson distribution to hold, value must remain constant during
the experiment period. Hence a given lambda cant be applied to
a problem if lambda changes, eg: the number of flaws per pair of
jeans might vary from Monday to Friday. If arrivals of no of
planes differ from hours of hours then old lambda is not useful.
EX: In a corporation, an average of 1.6 telephone calls are
received in the afternoons at an interval of 15 minutes. Find the
probability of receiving more than 2 calls in the afternoons.

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-29

Poisson Distribution: Probability Table

X
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18

0.5
0.6065
0.3033
0.0758
0.0126
0.0016
0.0002
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000

1.5
0.2231
0.3347
0.2510
0.1255
0.0471
0.0141
0.0035
0.0008
0.0001
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000

1.6
0.2019
0.3230
0.2584
0.1378
0.0551
0.0176
0.0047
0.0011
0.0002
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

3.0
0.0498
0.1494
0.2240
0.2240
0.1680
0.1008
0.0504
0.0216
0.0081
0.0027
0.0008
0.0002
0.0001
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000

3.2
0.0408
0.1304
0.2087
0.2226
0.1781
0.1140
0.0608
0.0278
0.0111
0.0040
0.0013
0.0004
0.0001
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000

6.4
0.0017
0.0106
0.0340
0.0726
0.1162
0.1487
0.1586
0.1450
0.1160
0.0825
0.0528
0.0307
0.0164
0.0081
0.0037
0.0016
0.0006
0.0002
0.0001

6.5
0.0015
0.0098
0.0318
0.0688
0.1118
0.1454
0.1575
0.1462
0.1188
0.0858
0.0558
0.0330
0.0179
0.0089
0.0041
0.0018
0.0007
0.0003
0.0001

7.0
0.0009
0.0064
0.0223
0.0521
0.0912
0.1277
0.1490
0.1490
0.1304
0.1014
0.0710
0.0452
0.0263
0.0142
0.0071
0.0033
0.0014
0.0006
0.0002

8.0
0.0003
0.0027
0.0107
0.0286
0.0573
0.0916
0.1221
0.1396
0.1396
0.1241
0.0993
0.0722
0.0481
0.0296
0.0169
0.0090
0.0045
0.0021
0.0009

5-30

Poisson Distribution: Using the


Poisson Tables

X
0
1
2
3
4
5
6
7
8
9
10
11
12

0.5
0.6065
0.3033
0.0758
0.0126
0.0016
0.0002
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000

1.5
0.2231
0.3347
0.2510
0.1255
0.0471
0.0141
0.0035
0.0008
0.0001
0.0000
0.0000
0.0000
0.0000

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

1.6
0.2019
0.3230
0.2584
0.1378
0.0551
0.0176
0.0047
0.0011
0.0002
0.0000
0.0000
0.0000
0.0000

3.0
0.0498
0.1494
0.2240
0.2240
0.1680
0.1008
0.0504
0.0216
0.0081
0.0027
0.0008
0.0002
0.0001

1. 6
P( X 4) 0. 0551

5-31

Poisson
Distribution:
Using the
Poisson
Tables

X
0
1
2
3
4
5
6
7
8
9
10
11
12

0.5
0.6065
0.3033
0.0758
0.0126
0.0016
0.0002
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000

1.5
0.2231
0.3347
0.2510
0.1255
0.0471
0.0141
0.0035
0.0008
0.0001
0.0000
0.0000
0.0000
0.0000

1.6
0.2019
0.3230
0.2584
0.1378
0.0551
0.0176
0.0047
0.0011
0.0002
0.0000
0.0000
0.0000
0.0000

3.0
0.0498
0.1494
0.2240
0.2240
0.1680
0.1008
0.0504
0.0216
0.0081
0.0027
0.0008
0.0002
0.0001

1. 6
P( X 5) P( X 6) P( X 7) P( X 8) P( X 9)
. 0047. 0011. 0002. 0000 . 0060

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-32

Poisson
Distribution:
Using the
Poisson
Tables

X
0
1
2
3
4
5
6
7
8
9
10
11
12

0.5
0.6065
0.3033
0.0758
0.0126
0.0016
0.0002
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000

1.5
0.2231
0.3347
0.2510
0.1255
0.0471
0.0141
0.0035
0.0008
0.0001
0.0000
0.0000
0.0000
0.0000

1.6
0.2019
0.3230
0.2584
0.1378
0.0551
0.0176
0.0047
0.0011
0.0002
0.0000
0.0000
0.0000
0.0000

3.0
0.0498
0.1494
0.2240
0.2240
0.1680
0.1008
0.0504
0.0216
0.0081
0.0027
0.0008
0.0002
0.0001

1. 6
P( X 2 ) 1 P( X 2 ) 1 P( X 0 ) P( X 1)
1. 2019. 3230 . 4751

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-33

Poisson Distribution: Graphs


1. 6

0.35
0.30

0.14

0.25

0.12

0.20

0.10
0.08

0.15

0.06

0.10

0.04

0.05
0.00
0

6. 5

0.16

0.02
1

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

0.00
0

10

12

14

5-34

16

Excels Poisson Function


=

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

1.6

P(X)

=POISSON(D5,E$1,FALSE)

=POISSON(D6,E$1,FALSE)

=POISSON(D7,E$1,FALSE)

=POISSON(D8,E$1,FALSE)

=POISSON(D9,E$1,FALSE)

=POISSON(D10,E$1,FALSE)

=POISSON(D11,E$1,FALSE)

=POISSON(D12,E$1,FALSE)

=POISSON(D13,E$1,FALSE)

=POISSON(D14,E$1,FALSE)
5-35

Poisson Approximation
of the Binomial Distribution
Binomial probabilities are difficult to
calculate when n is large.
Under certain conditions binomial
probabilities may be approximated by
Poisson probabilities.
If n 20 and n p 7, the approximation is acceptable
.

Poisson approximation
Use n p.
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-36

Poisson Approximation
of the Binomial Distribution
Binomial

Binomial

Poisson

n 50

1. 5

p . 03

0.2231

0.2181

-0.0051

0.3347

0.3372

0.0025

2
3

0.2510
0.1255

0.2555
0.1264

0.0045
0.0009

0.0471

0.0459

-0.0011

0.0141

0.0131

0.0035

7
8
9

0.0008
0.0001
0.0000

X
Error

Poisson n 10 , 000
3. 0 p . 0003

Error

0.0498

0.0498

0.0000

0.1494

0.1493

0.0000

0.2240

0.2241

0.0000

0.2240

0.2241

0.0000

0.1680

0.1681

0.0000

-0.0010

0.1008

0.1008

0.0000

0.0030

-0.0005

0.0504

0.0504

0.0000

0.0006
0.0001
0.0000

-0.0002
0.0000
0.0000

0.0216

0.0216

0.0000

0.0081

0.0081

0.0000

0.0027

0.0027

0.0000

10

0.0008

0.0008

0.0000

11

0.0002

0.0002

0.0000

12

0.0001

0.0001

0.0000

13

0.0000

0.0000

0.0000

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-37

Hypergeometric Distribution
What if trials are not independent, hence P
changes ? What distribution?
Sampling without replacement from a finite
population
The number of objects in the population is
denoted N.
Each trial has exactly two possible outcomes,
success and failure.
Trials are not independent
X is the number of successes in the n trials
The binomial is an acceptable approximation, if
n < 5% N. Otherwise it is not.
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-38

Hypergeometric Distribution
Probability function

N is population size
P( x )
n is sample size
A is number of successes in population
x is number of successes in sample

Mean
value

Cn

An

Variance and standard deviation

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

ACx N ACn x

A( N A)n( N n)

( N 1)

5-39

Hypergeometric Distribution:
Probability Computations
24 people of whom 8 are women apply for a job. If 5 applicants
selected randomly, what is probability that 3 sampled are women?
N = 24
X=8

P( x 3)

n=5
x

1 0.3426
2 0.3689
3 0.1581
4 0.0264
5 0.0013
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

Cn

P(x)

0 0.1028

ACx N ACn x

8C 3 24 8C5 3

C5
56120

42,504
.1581
24

5-40

Hypergeometric Distribution: Graph


N = 24

0.40

X=8

0.35

n=5

0.30
0.25

P(x)

0.1028

0.3426

0.3689

0.1581

0.0264

0.0013

0.20
0.15
0.10
0.05
0.00
0

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-41

Hypergeometric Distribution:
Demonstration Problem 5.11
N = 18
n=3
A = 12

X
0
1
2
3

P(X)
0.0245
0.2206
0.4853
0.2696

P ( x 1) P ( x 1) P ( x 2) P ( x 3)

12 C1 18 12C 3 1

C3
.2206.4853.2696
18

12 C 2 18 12 C 3 2
18

C3

12 C 3 18 12C 3 3
18

C3

.9755
Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-42

Hypergeometric Distribution:
Binomial Approximation (large n)
Hypergeometric
N = 24
X=8
n=5
x
0
1
2
3
4
5

P(x)
0.1028
0.3426
0.3689
0.1581
0.0264
0.0013

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

Binomial
n=5
p = 8/24 =1/3
P(x)
0.1317
0.3292
0.3292
0.1646
0.0412
0.0041

Error
-0.0289
0.0133
0.0397
-0.0065
-0.0148
-0.0028

5-43

Hypergeometric Distribution:
Binomial Approximation (small n)
Hypergeometric
N = 240
X = 80
n=5

x
0
1
2
3
4
5

P(x)
0.1289
0.3306
0.3327
0.1642
0.0398
0.0038

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

Binomial
n=5
p = 80/240 =1/3

P(x)
0.1317
0.3292
0.3292
0.1646
0.0412
0.0041

Error
-0.0028
0.0014
0.0035
-0.0004
-0.0014
-0.0003
5-44

Excels Hypergeometric Function


N = 24
A= 8
n= 5

P(X)

=HYPGEOMDIST(A6,B$3,B$2,B$1)

=HYPGEOMDIST(A7,B$3,B$2,B$1)

=HYPGEOMDIST(A8,B$3,B$2,B$1)

=HYPGEOMDIST(A9,B$3,B$2,B$1)

=HYPGEOMDIST(A10,B$3,B$2,B$1)

=HYPGEOMDIST(A11,B$3,B$2,B$1)
=SUM(B6:B11)

Business Statistics, 4e, by Ken Black. 2003 John Wiley & Sons.

5-45

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