BUSS1020 Lecture Notes - Lecture 6: Standard Deviation, Electric Light, Normal Distribution
5 Jun 2018
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The properties of the normal distribution
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To compute probabilities from the normal distribution
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How to use the normal distribution to solve business problems
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To compute probabilities from the uniform distribution
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To compute probabilities from the exponential distribution
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LO:
Probability X is more than…. = have to 1-P(X)
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Probability X is less than ….. = P(X)
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Can only apply CLT if sample size is over 30 (very important to know)
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If sample size is below 30 = normal distribution
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If sample size is not 30, then the distribution cannot be normal but uniform, exponential
(apply CLT)
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Note:
Continuous Probability Distribution
1.
thickness of an item
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time required to complete a task
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temperature
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financial return
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A continuous random variable can assume any value on a continuum (can assume an
uncountable number of values), e.g.:
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They can potentially take on any value depending on the ability to precisely and accurately
measure
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6. Continuous Distribution
Thursday, 19 April 2018
5:45 PM
Textbooks Page 1
The Normal Distribution
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Numerous continuous variables common in business have distributions that closely
resemble the normal distribution
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The normal distribution can be used to approximate various discrete probability
distributions
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The normal distribution provides the basis for classical statistics inference
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Important for stats because:
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General formula = NORM.DIST (x,mean,sd,true)
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Alternatively for standard normal distribution = NORM.S.DIST (z,true)
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Can use general formula for everything
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in excel
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General formula = NORM.INV (probability, mean,sd)
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No need to put true or false because it is already cumulative distribution
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Inverse normal in excel
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Textbooks Page 2
Textbooks Page 3
Document Summary
How to use the normal distribution to solve business problems. Probability x is less tha(cid:374) = p(cid:894)x(cid:895) Can only apply clt if sample size is over 30 (very important to know) If sample size is below 30 = normal distribution. If sample size is not 30, then the distribution cannot be normal but uniform, exponential (apply clt) A continuous random variable can assume any value on a continuum (can assume an uncountable number of values), e. g. thickness of an item time required to complete a task temperature financial return. They can potentially take on any value depending on the ability to precisely and accurately measure. Numerous continuous variables common in business have distributions that closely resemble the normal distribution. The normal distribution can be used to approximate various discrete probability distributions. The normal distribution provides the basis for classical statistics inference in excel. Alternatively for standard normal distribution = norm. s. dist (z,true)
