GROUP 2

CONCEPT OF A RANDOM VARIABLE

RANDOM VARIABLE - is a function whose value is a real number
determined by each element in the sample
space.

Two Types of Random Variables

•Discrete Random Variable is a random variable

where the sample space contains a finite number of
possibilities or an unending sequence with as many
elements as there are whole numbers.

•Continuous Random Variable is a random variable

where the sample space contains an infinite number
of possibilities equal to the number of points on a
line segment.
DISCRETE AND CONTINOUS RANDOM VARIABLE:

A variable is a quantity whose value changes.

A discrete variable is a variable whose value is obtained by

counting.
Examples: number of students present
number of red marbles in a jar
number of heads when flipping three coins
students’ grade level
A continuous variable is a variable whose value is obtained by
measuring.
Examples: height of students in class
weight of students in class
time it takes to get to school
distance travelled between classes
 A discrete probability distribution is made
up of discrete variables. Specifically, if
a random variable is discrete, then it will
have a discrete probability distribution.
 Discrete Probability Distributions
A table or formula listing all possible values that a
discrete random variable can take on along with
associated probabilities
 The function f(x) is a probability function or a
probability distribution of the discrete random
variable X if, for each possible outcome x,

1. f ( x)  0.
2.  f ( x)  1.
x

3. P( X  x)  f ( x).
For example, let’s say you had the choice of playing
a game of chance at a fair.

 Game : Roll a die. If you roll a six, you win a prize.

 For the game, you could roll a 1,2,3,4,5, or 6. All of

the die rolls have an equal chance of being rolled
(one out of six, or 1/6). This gives you a discrete
probability distribution of:

Roll 1 2 3 4 5 6

Odds 1/6 1/6 1/6 1/6 1/6 1/6

 The cumulative distribution function (CDF) of
a real-valued random variable X, or
just distribution function of X, evaluated at x,
is the probability that X will take a value less
than or equal to x.

F(x)=P(X≤x)
 Expected value is just the average or mean
(µ) of random variable x.
Discrete case:

Continuous case:
Basic Expected Value Formula
 The basic expected value formula is the probability of an
event multiplied by the amount of times the event happens:

(P(x) * n)

Expected Value for a Discrete Random Variable

 You can think of an expected value as a mean, or average, for
a probability distribution. A discrete random variable is
a random variable that can only take on a certain number of
values.
 Basically, all the formula is telling you to do
is find the mean by adding the
probabilities. The mean and the expected
value are so closely related they are
basically the same thing. You’ll need to do
this slightly differently depending on if you
have a set of values, a set of probabilities,
or a formula.
 Sample problem:
The weights (X) of patients at a clinic (in pounds),
are: 108, 110, 123, 134, 135, 145, 167, 187, 199.

Assume one of the patients is chosen at random.

What is the Expected Value?

Step 1: Find the mean.

The mean is:

108 + 110 + 123 + 134 + 135 + 145 + 167 + 187

+ 199 = 145.333
 Sample problem :
You toss a fair coin three times. X is the number of heads
which appear. What is the EV?

Step 1: Figure out the possible values for X. For a three coin
toss, you could get anywhere from 0 to 3 heads. So your
values for X are 0,1,2 and 3.

Step 2: Figure out your probability of getting each value of X.

You may need to use a sample space. The probabilities are:
1/8 for 0 heads, 3/8 for 1 head, 3/8 for two heads, and 1/8
for 3 heads.
HHH,TTT,TTH,THT,HTT,HHT,HTH,THH

Step 3: Multiply your X values in Step 1 by the probabilities

from step 2.
E(X) = 0(1/8) + 1(3/8) + 2(3/8) + 3(1/8) = 3/2.

The Expected Value is 3/2

 BINOMIAL DISTRIBUTION
If a binomial trial can result in a success with a probability p

and a failure with probability q=1–p, then the probability

distribution of the binomial random variable X, the number of

successes in n independent trials is

 n  r nr
br; n, p     p q
where:
n = number of trials
 r
X = number of successes of which probability we
are computing
p = probability of success in one trial
q = probability of failure in one trial

Note: p + q = 1
Binomial Formula. Suppose a binomial experiment
consists of n trials and results in x successes. If the
probability of success on an individual trial is P, then
the binomial probability is:
b(x; n, P) = nCx * Px * (1 - P)n – x

or

b(x; n, P) = { n! / [ x! (n - x)! ] } * Px * (1 - P)n - x

Cumulative Binomial – it refers to the probability that

the binomial random variable falls within a specified
range.
A binomial experiment is one that possesses the
following properties:
- the experiment consists of n repeated trials
- each trial results in an outcome that may be
classified as a success or a failure
- the probability of a success remains constant
from trial to trial
- the repeated trials are independent

Binomial Experiment also known as Bernoulli trial.

Binomial Probability - the probability that an n-trial binomial

experiment results in exactly r successes, when the probability
of success on an individual trial P.
 Suppose we flip a coin two times and count the number of
heads (successes). The binomial random variable is the
number of heads, which can take on values of 0, 1, or 2. The
binomial distribution is presented below.
 Suppose a die is tossed 5 times. What is the
probability of getting exactly 2 fours?

 Solution: This is a binomial experiment in which

the number of trials is equal to 5, the number of
successes is equal to 2, and the probability of
success on a single trial is 1/6 or about 0.167.
Therefore, the binomial probability is:

b(2; 5, 0.167) = 5C2 * (0.167)2 * (0.833)3

b(2; 5, 0.167) = 0.161
 POISSON DISTRIBUTION
 Poisson probabilities are useful when there
are large number of independent trials with
a small probability of success on a single
trial and the variables occur over a period
time
e-μ μx
P ( x;μ) = --------------- x = 0, 1, 2…
x!
Where μ is the average number of outcomes occurring in the given
time interval or specified region. e = 2.71828
The Poisson Approximation of the Binomial
Distribution

 In a binomial experiment, when n is large (n 

30), and p or q is close to zero such that
 np  5 or nq  5, the resulting binomial
probability distribution may be approximated
using the Poisson distribution.
 with  np
The average number of homes sold by the Acme Realty
company is 2 homes per day. What is the probability that
exactly 3 homes will be sold tomorrow?
Solution: This is a Poisson experiment in which we know the
following:

 μ = 2; since 2 homes are sold per day, on average.

 x = 3; since we want to find the likelihood that 3 homes will be
sold tomorrow.
 e = 2.71828; since e is a constant equal to approximately
2.71828.
We plug these values into the Poisson formula as follows:
 P(x; μ) = (e-μ) (μx) / x!
 P(3; 2) = (2.71828-2) (23) / 3!

 P(3; 2) = (0.13534) (8) / 6

 P(3; 2) = 0.180

 Thus, the probability of selling 3 homes tomorrow is 0.180.

 A cumulative Poisson probability refers to the
probability that the Poisson random variable
is greater than some specified lower limit and
less than some specified upper limit.
EXAMPLE:
Suppose the average number of lions seen on a 1-day
safari is 5. What is the probability that tourists will see fewer
than four lions on the next 1-day safari?

Solution: This is a Poisson experiment in which we know the

following:
 μ = 5; since 5 lions are seen per safari, on average.

 x = 0, 1, 2, or 3; since we want to find the likelihood that

tourists will see fewer than 4 lions; that is, we want the
probability that they will see 0, 1, 2, or 3 lions.

 e = 2.71828; since e is a constant equal to approximately

2.71828.

To solve this problem, we need to find the probability that

tourists will see 0, 1, 2, or 3 lions.
Thus, we need to calculate the sum of four probabilities: P(0; 5)
+ P(1; 5) + P(2; 5) + P(3; 5). To compute this sum, we use the
Poisson formula:

P(x < 3, 5) = P(0; 5) + P(1; 5) + P(2; 5) + P(3; 5)

P(x < 3, 5) = [ (e-5)(50) / 0! ] + [ (e-5)(51) / 1! ] + [ (e-5)(52) / 2! ]

+ [ (e-5)(53) / 3! ]

P(x < 3, 5) = [ (0.006738)(1) / 1 ] + [ (0.006738)(5) / 1 ] + [

(0.006738)(25) / 2 ] + [ (0.006738)(125) / 6 ]

P(x < 3, 5) = [ 0.0067 ] + [ 0.03369 ] + [ 0.084224 ] + [

0.140375 ]

P(x < 3, 5) = 0.2650

Thus, the probability of seeing at
no more than 3 lions is 0.2650