Random Variables

Discrete and Continuous Random Variables

Discrete and Continuous Random Variables
 If the random variable X assumes only a finite or countably infinite set of values it is known
as discrete random variable. They represent the counted data.
For eg.: the number of students in a college, the number of defective mangoes in a basket of
mangoes, number of accidents taking place on a busy road, etc., are all discrete random variables.
 If the random variable X assumes infinite and uncountable set of values, it is said to be a
continuous random variable. The value of a continuous random variable is in a particular
interval and not at a point. They represent the measured data.
For eg.: the age, height or weight of students in a class are all continuous random variables.
Random variable: The variable involved in a
probability distribution

Discrete Continuous

Assume only discrete Assumes any value in

values a given range
 Probability Distribution of a Discrete
Random Variable
Let X be a discrete r.v. which can take the possible values x1, x2, x3,…, xn. With each value of the
variable X, we associate a number,
pi = P(X = Xi ) ; i = 1, 2,…, n
which is known as the probability of Xi and satisfies the following conditions : (i) pi = P(X = Xi ) ≥ 0,
(i = 1, 2,…, n) i.e., pi ’s are all non-negative and
(ii) ∑ pi = p1 + p2 + … + pn = 1 i.e., the total probability is one.
More specifically, let X be a discrete random variable and define :
p (x) = P(X = x) such that p(x) ≥ 0 and ∑ p(x) = 1,
The function pi = P(X = Xi ) or p(x) is called the probability function or more precisely probability
mass function (p.m.f) of the random variable X and the set of all possible ordered pairs {x, p(x)}, is
called the probability distribution of the random variable X.
 Distribution Function or Cumulative
Probability Function
If X is a discrete r.v. with probability function p(x) then, the distribution function, usually denoted
by F(x) is defined as :
F(x) = P(X ≤ x)
If X takes integral values, viz., 1, 2, 3, …then
F(x) = P(X = 1) + P(X = 2) + … + P(X = x) ⇒
F(x) = p(1) + p(2) + p(3) + … + p(x)
In the above case, F(x – 1) = p(1) + p(2) + … + p(x – 1)
∴ F(x) – F(x – 1) = p (x) ⇒ p(x) = F(x) – F(x – 1)
Hence, if X is a random variable which can take only positive integral values, then probability
function can be obtained from distribution function.
F(X=x) : ¼ ¾ 1
 Mathematical Expectation
If X is a random variable which can assume any one of the values
x1, x 2…, xn with respective probabilities p1, p2,…, pn then the mathematical
expectation of X, usually called the expected value of X and denoted by E(X),
is defined as :
E(X) = p1x1 + p2 x2 + … + pn xn = ∑ p × x
where ∑ pi = p1 + p2 + … + pn = 1
More precisely, if X is a random variable with probability distribution
{x, p(x)}, then E(X) = ∑ x × p (x), summation being taken over different values
of X.
In other words,
Hence, mathematical expectation of a random variable is nothing but its
arithmetic mean.
Problems on Expectation and Variance
1. A die is thrown at random. What is the expectation and variance of the
number on it ? (Ans: 3.5)
2. What is the expected number of heads appearing when a fair coin is
tossed three times? (Ans: 1.5)
3. A random variable X is defined as the sum of faces when a pair of dice is
thrown. Find the expected value of X. (Ans: 7)
4. A survey conducted over the last 25 years indicated that in 10 years the
winter was mild, in 8 years it was cold and in the remaining 7 years it was
very cold. A company sells 1000 woolen coats in a mild year, 1300 in a cold
year and 2000 in a very cold year. You are required to find the yearly
expected profit of the company if a woolen coat costs Rs. 1730 and it is
sold to stores for Rs. 2480. (Ans: Rs. 1032000)
5. A player tosses two fair coins. He wins Rs. 5 if 2 heads occur, Rs. 2 if 1
head occurs and Re. 1 if no head occurs. Find his expected gain.
(Ans: Rs.2.50)
 A probability Discrete
distribution involving a probability
discrete random variable
distribution

A probability
distribution involving a Continuous
continuous random probability
variable distribution
Binomial Distribution

 The most widely known of all discrete distributions

is the Binomial distribution.
 Assumptions of the Binomial distributions
➢ The experiment involves n identical trials
➢ Each trial has only two possible outcomes denoted
as success or failure.
➢ Each trail is independent of the previous trials.
➢ The terms p and q remain constant throughout the
experiment, where the term p is the probability of
getting a success on any one trial and the term
q=(1-p) is the probability of getting a failure on any
one trial.
Application of Binomial Distribution
The binomial distribution is often used in business scenarios where there are only
two possible outcomes (success or failure) in a series of independent and identical
trials. Here are some examples of business applications where the binomial
distribution is relevant:
Quality Control:
Inspecting a batch of products for defects, where each product is either defective
or non-defective.
Market Research:
Analyzing customer responses to a new product launch, where customers can
either make a purchase (success) or not make a purchase (failure).
Credit Approval:
Evaluating credit applications, where each application is approved (success) or
rejected (failure).
Application of Binomial Distribution
Call Center Performance:
Monitoring the success rate of sales calls, where each call results in a sale or not.
Inventory Management:
Predicting the likelihood of items being sold within a given time frame, where each item
can be sold (success) or not sold (failure).
Employee Performance:
Assessing the success or failure of employees achieving sales targets or meeting
performance metrics.
Website Conversion Rates:
Analyzing the conversion of website visitors into customers, where each visitor
either makes a purchase (success) or does not.
Marketing Campaigns:
Measuring the success of a marketing campaign, where individuals exposed to
the campaign either respond positively (success) or do not respond (failure).
Solving Binomial Problems: Binomial Formula
P(x) = nCx Px qn-x
𝑛
𝑃 𝑥 = . 𝑝 𝑥 . (𝑞)𝑛−𝑥
𝑥
𝑛!
= . 𝑝 𝑥 . (𝑞)𝑛−𝑥
𝑥! 𝑛 − 𝑥 !
where
n= number of trials
x= number of success desired
p= probability of getting a success in one trial
q= (1-p)=probability of getting a failure in one trial
 The probability of x successes P (x ) is given as:
P(x) = nCx Px qn-x
 It has two parameters: n and p
 It is symmetrical if p = 0.5
 If p < 0.5, the distribution positively skewed
 For p > 0.5, the distribution is skewed negatively
 Mean = np
 Variance = npq
The variance is always smaller than mean
The manager of the electronics department of a
large departmental store informs that the probability that a
customer who is just browsing will eventually buy some items
is 0.4. During the pre-lunch session on a day, 7 customers are
seen to browse in the department.
Using this information, what is the probability of no
customers buying?
 Here p = 0.4, q = 1 – 0.4 = 0.6 and n = 7
 For a binomial distribution,

 Thus, probability of no customers buying: P

(x =0)

P(0) = 7C0 (0.4)0 (0.6)7-0 = 0.028

 Example
 Saxon Home Improvement Company submit online orders, the
company’s accounting information system reviews the order
forms for possible mistake. Any questionable invoices are tagged
and included in a daily exceptions report. The likelihood of
tagged invoices is 0.10. What would be the likelihood that none
of the order forms are tagged in a sample of four forms? What
would be the likelihood of the order forms being tagged in a
sample of four forms? (Ans: 0.6561, 0.3439)
Soln: Here n = 4
p = probability of getting tagged = 0.10
1-p = probability of not getting tagged = 1 – 0.10 =0.90
1. Ten unbiased coins are tossed simultaneously. Find the probability of
obtaining, (i) Exactly 6 heads (ii) At least 8 heads (iii) No head (iv) At
least one head (v) Not more than three heads. (Ans: 0.20508, 0.0547,
0.00098, 0.17188)
2. An oil exploration firm finds that 5% of the test wells it drills, yield a
deposit of natural gas. If the firm drills 6 wells, what is the probability
that (i) exactly 2 wells, (ii) at least one well ; yield gas? (Ans: 0.03044,
0.2649)
3. If the probability of a defective bolt is 0·2, find : (i) the mean; and (ii)
the standard deviation, of defective bolts in a total of 900 bolts.
(Ans: 180, 12)
Poisson Distribution
1. The number of telephone calls arriving at a telephone switch board in unit
time (say, per minute).
2. The number of customers arriving at the super market ; say per hour.
3. The number of defects per unit of manufactured product [This is done for the
construction of control chart for number of defects (c) in Industrial Quality
Control].
4. The number of defective material say, pins, blades etc. in a packing
manufactured by a good concern.
5. The number of suicides reported in a particular day or the number of
causalities (persons dying) due to a rare disease such as heart attack or cancer
or snake bite in a year.
6. The number of accidents taking place per day on a busy road. (ix) The number
of typographical errors per page in a typed material or the number of printing
mistakes per page in a book
 Poisson Distribution
The Poisson distribution is used to model the number of
events occurring within a given time interval.
The formula for the Poisson probability mass function
is

λ is the shape parameter which indicates the average

number of events in the given time interval and
e = 2.718282
Characteristics of Poisson Distribution
Expectation and Variance
 It is positively skewed. However, the degree of
skewness decreases with an increase in the value
of λ.
 It has a single parameter, defined by the average
number of random events in a trial, λ (with λ > 0)
 The expected value (mean) and variance of a
Poisson distribution are both numerically equal
to λ
Example 1: Poisson Distribution
The mean number of customers who arrive
per minute at the bank during the noon to 1
pm hour is equal to 3.0. What is the
probability that a given minute, exactly two
customers will arrive? And what is the
probability that more than two customers will
arrive in a given minute? (Ans: 0.2240, 0.5768)
Example 2: Poisson Distribution

 The number of work-related injuries per

month in a manufacturing plant is known to
follow a Poisson Distribution with a mean of
2.5 work-related injuries a month. What is
the probability that in a given month no
work-related injuries occur? What is the
probability that at least one work-related
injury occurs? (Ans: 0.0821, 0.9179)
Example
A manufacturer, who produces medicine bottles,
finds that an average of 0·5 of the bottles are
defective. A drug manufacturer buys 100 boxes from
the producer of bottles. Using Poisson distribution,
find how many boxes will contain:
 (i) no defective (Ans: 61)
 (ii) at least 2 defectives. [e – 0·5 = 0·6065] (Ans:9)
1. Comment on the following : For a Poisson distribution, Mean = 8 and
Variance = 7 (Ans: False).
2. Between the hours 2 P.M. and 4 P.M. the average number of phone calls
per minute coming into the switch board of a company is 2·35. Find the
probability that during one particular minute, there will be at most 2
phone calls. [Given e–2·35 = 0·095374] (Ans: 0.5828543).
3. It is known from past experience that in a certain plant there are on the
average 4 industrial accidents per month. Find the probability that in a
given month there will be less than 4 accidents. Assume Poisson
distribution. (e–4 = 0·0183) (Ans: 0.4332).
4. A car hire firm has two cars which it hires out day by day. The number of
demands for a car on each day is distributed as a Poisson variate with
mean 1.5·Calculate the proportion of days on which (i) Neither car is
used (ii) Some demand is refused. (Ans: e-1.5 = 0.2231)
(Ans: 0.2231, 0.19126).
Thank You