Exponential. f ( x ). Uniform. f ( x ). Normal. f ( x ). x. x. x. Chapter 6 Continuous Probability Distributions. Uniform Probability Distribution Normal Probability Distribution Exponential Probability Distribution. Continuous Probability Distributions. - PowerPoint PPT Presentation
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Chapter 6Chapter 6 Continuous Probability Distributions Continuous Probability Distributions
Uniform Probability DistributionUniform Probability Distribution Normal Probability DistributionNormal Probability Distribution Exponential Probability DistributionExponential Probability Distribution
Continuous Probability DistributionsContinuous Probability Distributions
A A continuous random variablecontinuous random variable can assume any can assume any value in an interval on the real line or in a value in an interval on the real line or in a collection of intervals.collection of intervals.
It is not possible to talk about the probability of It is not possible to talk about the probability of the random variable assuming a particular value.the random variable assuming a particular value.
Instead, we talk about the probability of the random Instead, we talk about the probability of the random variable assuming a value within a given interval.variable assuming a value within a given interval.
Continuous Probability DistributionsContinuous Probability Distributions
The probability of the random variable The probability of the random variable assuming a value within some given interval assuming a value within some given interval from from xx11 to to xx22 is defined to be the is defined to be the area under area under the graphthe graph of the of the probability density functionprobability density function betweenbetween x x11 andand x x22..
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.
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 . .
Normal Probability DistributionNormal Probability Distribution
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..
Normal Probability DistributionNormal Probability Distribution
Normal Probability DistributionNormal Probability Distribution
CharacteristicsCharacteristics
= 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.
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).
Normal Probability DistributionNormal Probability Distribution
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..
Converting to the Standard Normal Converting to the Standard Normal Distribution Distribution
Standard Normal Probability DistributionStandard Normal Probability Distribution
z x
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 ..
Standard Normal Probability DistributionStandard Normal Probability Distribution
Example: Pep ZoneExample: Pep ZonePep Zone sells auto parts and supplies Pep Zone sells auto parts and supplies
includingincludinga popular multi-grade motor oil. When thea popular multi-grade motor oil. When thestock of this oil drops to 20 gallons, astock of this oil drops to 20 gallons, areplenishment order is placed.replenishment order is placed. Pep
The store manager is concerned that sales The store manager is concerned that sales are beingare beinglost 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 duringreplenishment lead-time is normallyreplenishment lead-time is normallydistributed with a mean of 15 gallons anddistributed with a mean of 15 gallons anda standard deviation of 6 gallons. a standard deviation of 6 gallons.
The manager would like to know theThe manager would like to know theprobability of a stockout, probability of a stockout, PP((xx > 20). (Demand > 20). (Demand exceeding 20 gallons)exceeding 20 gallons)
Standard Normal Probability DistributionStandard Normal Probability Distribution
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.
PepZone5w-20
Motor Oil
Step 2: Find the area under the standard normalStep 2: Find the area under the standard normal curve to the left of curve to the left of zz = .83. = .83.
see next slidesee next slide
Standard Normal Probability DistributionStandard Normal Probability Distribution
Solving for the Stockout ProbabilitySolving for the Stockout Probability
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)
Standard Normal Probability DistributionStandard Normal Probability Distribution
Standard Normal Probability DistributionStandard Normal Probability DistributionIf 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
Standard Normal Probability DistributionStandard Normal Probability Distribution
Solving for the Reorder PointSolving for the Reorder PointPepZone5w-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.
Solving for the Reorder PointSolving for the Reorder PointPepZone5w-20
Motor Oil
Step 2: Convert Step 2: Convert zz.05.05 to the corresponding value of to the corresponding value of xx..
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.
Standard Normal Probability DistributionStandard Normal Probability Distribution
Solving for the Reorder PointSolving for the Reorder PointPepZone5w-20
Motor Oil
By raising the reorder point from 20 gallons to By raising the reorder point from 20 gallons to 25 gallons on hand, the probability of a stockout25 gallons on hand, the probability of a stockoutdecreases from about .20 to .05.decreases from about .20 to .05. This is a significant decrease in the chance that PepThis is a significant decrease in the chance that PepZone will be out of stock and unable to meet aZone will be out of stock and unable to meet acustomer’s desire to make a purchase.customer’s desire to make a purchase.
Standard Normal Probability DistributionStandard Normal Probability Distribution