1 1 Slide MA4704Gerry Golding Normal Probability Distribution n The normal probability distribution is the most important distribution for describing a

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MA4704MA4704 Gerry GoldingGerry Golding

Normal Probability DistributionNormal Probability Distribution

The The normal probability distributionnormal probability distribution is the most is the most important distribution for describing a important distribution for describing a continuous random variable.continuous random variable.

It is widely used in statistical inference.It is widely used in statistical inference.

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HeightsHeightsof peopleof peopleHeightsHeights

of peopleof people


It has been used in a wide variety of It has been used in a wide variety of applications:applications:

ScientificScientific measurementsmeasurements

ScientificScientific measurementsmeasurements

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AmountsAmounts

of rainfallof rainfall

AmountsAmounts

of rainfallof rainfall


It has been used in a wide variety of It has been used in a wide variety of applications:applications:

TestTest scoresscoresTestTest

scoresscores

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Normal Probability Density FunctionNormal Probability Density Function

2 2( ) / 21( )

2xf x e

2 2( ) / 21( )

2xf x e

= mean= mean

= standard deviation= standard deviation

= 3.14159= 3.14159

ee = 2.71828 = 2.71828

where:where:

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The distribution is The distribution is symmetricsymmetric; its skewness; its skewness measure is zero.measure is zero. The distribution is The distribution is symmetricsymmetric; its skewness; its skewness measure is zero.measure is zero.


CharacteristicsCharacteristics

xx

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The entire family of normal probabilityThe entire family of normal probability distributions is defined by itsdistributions is defined by its meanmean and its and its standard deviationstandard deviation . .

The entire family of normal probabilityThe entire family of normal probability distributions is defined by itsdistributions is defined by its meanmean and its and its standard deviationstandard deviation . .



Standard Deviation Standard Deviation

Mean Mean xx

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The The highest pointhighest point on the normal curve is at the on the normal curve is at the meanmean, which is also the , which is also the medianmedian and and modemode.. The The highest pointhighest point on the normal curve is at the on the normal curve is at the meanmean, which is also the , which is also the medianmedian and and modemode..



xx

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-10-10 00 2020

The mean can be any numerical value: negative,The mean can be any numerical value: negative, zero, or positive.zero, or positive. The mean can be any numerical value: negative,The mean can be any numerical value: negative, zero, or positive.zero, or positive.

xx

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= 15= 15

= 25= 25

The standard deviation determines the width of theThe standard deviation determines the width of thecurve: larger values result in wider, flatter curves.curve: larger values result in wider, flatter curves.The standard deviation determines the width of theThe standard deviation determines the width of thecurve: larger values result in wider, flatter curves.curve: larger values result in wider, flatter curves.

xx

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Probabilities for the normal random variable areProbabilities for the normal random variable are given by given by areas under the curveareas under the curve. The total area. The total area under the curve is 1 (.5 to the left of the mean andunder the curve is 1 (.5 to the left of the mean and .5 to the right)..5 to the right).

Probabilities for the normal random variable areProbabilities for the normal random variable are given by given by areas under the curveareas under the curve. The total area. The total area under the curve is 1 (.5 to the left of the mean andunder the curve is 1 (.5 to the left of the mean and .5 to the right)..5 to the right).



.5.5 .5.5

xx

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of values of a normal random variableof values of a normal random variable are within of its mean.are within of its mean.

of values of a normal random variableof values of a normal random variable are within of its mean.are within of its mean.68.26%68.26%68.26%68.26%

+/- 1 standard deviation+/- 1 standard deviation+/- 1 standard deviation+/- 1 standard deviation



+/- 2 standard deviations+/- 2 standard deviations+/- 2 standard deviations+/- 2 standard deviations



+/- 3 standard deviations+/- 3 standard deviations+/- 3 standard deviations+/- 3 standard deviations

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xx – – 33 – – 11

– – 22 + 1+ 1

+ 2+ 2 + 3+ 3

68.26%68.26%95.44%95.44%99.72%99.72%

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Standard Normal Probability DistributionStandard Normal Probability Distribution

A random variable having a normal distributionA random variable having a normal distribution with a mean of 0 and a standard deviation of 1 iswith a mean of 0 and a standard deviation of 1 is said to have a said to have a standard normal probabilitystandard normal probability distributiondistribution..

A random variable having a normal distributionA random variable having a normal distribution with a mean of 0 and a standard deviation of 1 iswith a mean of 0 and a standard deviation of 1 is said to have a said to have a standard normal probabilitystandard normal probability distributiondistribution..

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00zz

The letter The letter z z is used to designate the standardis used to designate the standard normal random variable.normal random variable. The letter The letter z z is used to designate the standardis used to designate the standard normal random variable.normal random variable.


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Converting to the Standard Normal Converting to the Standard Normal DistributionDistribution


zx

zx

We can think of We can think of zz as a measure of the number of as a measure of the number ofstandard deviations standard deviations xx is from is from ..

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Example: Pep ZoneExample: Pep Zone

Pep Zone sells auto parts and supplies Pep Zone sells auto parts and supplies includingincluding

a popular multi-grade motor oil. When thea popular multi-grade motor oil. When the

stock of this oil drops to 20 gallons, astock of this oil drops to 20 gallons, a

replenishment order is placed.replenishment order is placed. PepZone5w-20Motor Oil

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The store manager is concerned that sales The store manager is concerned that sales are beingare being

lost due to stockouts while waiting for an order.lost due to stockouts while waiting for an order.

It has been determined that demand duringIt has been determined that demand during

replenishment lead-time is normallyreplenishment lead-time is normally

distributed with a mean of 15 gallons anddistributed with a mean of 15 gallons and

a standard deviation of 6 gallons. a standard deviation of 6 gallons.

The manager would like to know theThe manager would like to know the

probability of a stockout, probability of a stockout, PP((xx > 20). > 20).


PepZone5w-20Motor Oil

Example: Pep ZoneExample: Pep Zone

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zz = ( = (xx - - )/)/ = (20 - 15)/6= (20 - 15)/6 = .83= .83

zz = ( = (xx - - )/)/ = (20 - 15)/6= (20 - 15)/6 = .83= .83

Solving for the Stockout ProbabilitySolving for the Stockout Probability

Step 1: Convert Step 1: Convert xx to the standard normal distribution. to the standard normal distribution.Step 1: Convert Step 1: Convert xx to the standard normal distribution. to the standard normal distribution.

PepZone5w-20

Motor Oil

Step 2: Find the area under the standard normalStep 2: Find the area under the standard normal curve to the right of curve to the right of zz = .83. = .83.Step 2: Find the area under the standard normalStep 2: Find the area under the standard normal curve to the right of curve to the right of zz = .83. = .83.

see next slidesee next slide see next slidesee next slide


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Cumulative Probability Table for Cumulative Probability Table for the Standard Normal Distributionthe Standard Normal Distribution

z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09

. . . . . . . . . . .

.5 .3085 .3050 .3015 .2981 .2946 .2912 .2877 .2843 .2810 .2776

.6 .2743 .2709 .2676 .2643 .2611 .2578 .2546 .2514 .2483 .2451

.7 .2420 .2389 .2358 .2327 .2296 .2266 .2236 .2206 .2177 .2148

.8 .2119 .2090 .2061 .2033 .2005 .1977 .1949 .1922 .1894 .1867

.9 .1841 .1814 .1788 .1762 .1736 .1711 .1685 .1660 .1635 .1611

. . . . . . . . . . .

z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09

. . . . . . . . . . .

.5 .3085 .3050 .3015 .2981 .2946 .2912 .2877 .2843 .2810 .2776

.6 .2743 .2709 .2676 .2643 .2611 .2578 .2546 .2514 .2483 .2451

.7 .2420 .2389 .2358 .2327 .2296 .2266 .2236 .2206 .2177 .2148

.8 .2119 .2090 .2061 .2033 .2005 .1977 .1949 .1922 .1894 .1867

.9 .1841 .1814 .1788 .1762 .1736 .1711 .1685 .1660 .1635 .1611

. . . . . . . . . . .

PepZone5w-20

Motor Oil

PP((zz >> .83) .83)


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PP((z z > .83) =.2033 > .83) =.2033 PP((z z > .83) =.2033 > .83) =.2033


Step 3: Compute the area under the standard normalStep 3: Compute the area under the standard normal curve to the right of curve to the right of zz = .83. = .83.Step 3: Compute the area under the standard normalStep 3: Compute the area under the standard normal curve to the right of curve to the right of zz = .83. = .83.

PepZone5w-20

Motor Oil

ProbabilityProbability of a of a

stockoutstockoutPP((xx > > 20)20)


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00 .83.83

Area = .7967Area = .7967Area = .2033Area = .2033

zz

PepZone5w-20

Motor Oil


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If the manager of Pep Zone wants the If the manager of Pep Zone wants the probability of a stockout to be no more probability of a stockout to be no more than .05, what should the reorder point be?than .05, what should the reorder point be?

PepZone5w-20

Motor Oil


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Solving for the Reorder PointSolving for the Reorder Point

PepZone5w-20

Motor Oil

00

Area = .9500Area = .9500

Area = .0500Area = .0500

zzzz.05.05


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PepZone5w-20

Motor Oil

Step 1: Find the Step 1: Find the zz-value that cuts off an area of .05-value that cuts off an area of .05 in the right tail of the standard normalin the right tail of the standard normal distribution.distribution.

Step 1: Find the Step 1: Find the zz-value that cuts off an area of .05-value that cuts off an area of .05 in the right tail of the standard normalin the right tail of the standard normal distribution.distribution.

z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09

. . . . . . . . . . .

1.5 .0668 .0655 .0643 .0630 .0618 .0606 .0594 .0582 .0571 .0559

1.6 .0548 .0537 .0526 .0516 .0505 .0495 .0485 .0475 .0465 .0455

1.7 .0446 .0436 .0427 .0418 .0409 .0401 .0392 .0384 .0375 .0367

1.8 .0359 .0351 .0344 .0336 .0329 .0322 .0314 .0307 .0301 .0294

1.9 .0287 .0281 .0274 .0268 .0262 .0267 .0250 .0244 .0239 .0233

. . . . . . . . . . .

z .00 .01 .02 .03 .04 .05 .06 .07 .08 .09

. . . . . . . . . . .

1.5 .0668 .0655 .0643 .0630 .0618 .0606 .0594 .0582 .0571 .0559

1.6 .0548 .0537 .0526 .0516 .0505 .0495 .0485 .0475 .0465 .0455

1.7 .0446 .0436 .0427 .0418 .0409 .0401 .0392 .0384 .0375 .0367

1.8 .0359 .0351 .0344 .0336 .0329 .0322 .0314 .0307 .0301 .0294

1.9 .0287 .0281 .0274 .0268 .0262 .0267 .0250 .0244 .0239 .0233

. . . . . . . . . . .We look up the tail We look up the tail

area .05 area .05


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PepZone5w-20

Motor Oil

Step 2: Convert Step 2: Convert zz.05.05 to the corresponding value of to the corresponding value of xx..Step 2: Convert Step 2: Convert zz.05.05 to the corresponding value of to the corresponding value of xx..

xx - - / /zz.05.05

xx = = + +zz.05.05

= 15 + 1.645(6)= 15 + 1.645(6)

= 24.87 or 25= 24.87 or 25

xx - - / /zz.05.05

xx = = + +zz.05.05

= 15 + 1.645(6)= 15 + 1.645(6)

= 24.87 or 25= 24.87 or 25

A reorder point of 25 gallons will place the probabilityA reorder point of 25 gallons will place the probability of a stockout during leadtime at (slightly less than) .05.of a stockout during leadtime at (slightly less than) .05.


Documents

1 1 Slide MA4704Gerry Golding Normal Probability Distribution n The normal probability distribution is the most important distribution for describing a