Quantitative Methods of Management - I

PGDM
Academic Year 2025-26

Dr. Hasanuzzaman
Assistant Professor

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 Session Outline – Discrete Probability Distribution

• Random Variables
• Discrete Probability Distribution
• Probability Mass Function
• Uniform distribution
• Bernoulli distribution
• Binomial distribution
• Poisson Distribution

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 Random Variables

• A random variable is obtained by assigning a numerical value to each outcome of

a particular experiment.

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 Random Variables

• The machine breakdown in a

workshop may be associated with a
repair cost. For example, suppose
that electrical failures generally cost
an average of $200 to repair,
mechanical failures have an average
repair cost of $350, and operator
misuse failures have an average
repair cost of only $50.
• Define the sample space and random
variable

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 Random Variables

• A company has one position available for which eight applicants have made the
short list. The company’s strategy is to interview the applicants sequentially and to
make an offer immediately to anyone they feel is outstanding (without interviewing
the additional applicants). If none of the first seven applicants interviewed is
judged to be outstanding, the eighth applicant is interviewed and then the best of
the eight applicants is offered the job. Define the random variable ?

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 Discrete Random Variables

• A random variable that may assume either a finite number of values or an

infinite sequence of values such as 0, 1, 2, . . . is referred to as a discrete
random variable

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 Probability Distribution

• A listing of all the possible outcomes of a random variable with each outcome’s associated
probability of occurrence is called probability distribution.

• The machine breakdown in a workshop may

be associated with a repair cost. For
example, suppose that electrical failures
generally cost an average of $200 to
repair, mechanical failures have an average
repair cost of $350, and operator misuse
failures have an average repair cost of only
$50.
• What will be the probability distribution?

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 Probability Distribution

• The probability distribution of a random variable 𝑋 is a set of probability values

𝑝𝑖 assigned to each of the values 𝑥𝑖 taken by the random variable.
• Provided 𝑥𝑖 is a discrete random variable
• These probability values must satisfy 0 ≤ 𝑝𝑖 ≤ 1 and

σ 𝑝𝑖 = 1,
• The probability that the random variable takes the value 𝑥𝑖 is said to be 𝑝𝑖 , and
this is written

𝑃(𝑋 = 𝑥𝑖 ) = 𝑝𝑖
• This is known as probability mass function.

• Cumulative Probability distribution = 𝐹 𝑥 = 𝑃(𝑋 ≤ 𝑥𝑖 )

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 Probability Distribution
• Consider machine breakdown example

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 Probability Distribution

• Consider the probability

values given in Figure below,

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 Probability Distribution - Practice

• The probability mass function for the

positive difference between the
scores obtained from two dice

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 Probability Distribution

Discrete Probability Distribution Continuous Probability Distribution

Uniform Distribution Rectangular Distribution

Bernoulli Distribution Triangular Distribution

Binomial Distribution Exponential Distribution

Poisson Distribution Cauchy Distribution

Geometric Distribution Gamma Distribution

Negative Binomial Distribution Beta Distribution

Hyper Geometric Distribution Normal Distribution

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 Distribution - Parameters

• Mean or Expectation
• Variance
• Skewness
• Kurtosis

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 Discrete Probability – Expectation

• A discrete random variable X taking the values xi with probability values pi has
an expected value of

𝐸 𝑋 = ෍ 𝑝𝑖 𝑥𝑖
𝑖

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 Discrete Probability – Example

• If a fair die is rolled, what will be the expected value of the outcomes?

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 Discrete Probability – Example
If a fair die is rolled. Generate the probability mass function of the positive
difference between the scores obtained from two dice. What will be the expected
value of the positive difference between the scores obtained from two dice?

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 Discrete Probability – Variance

• A discrete random variable X taking the values xi with probability values pi has
an expected value of

𝐸 𝑋 = 𝜇 = ෍ 𝑝𝑖 𝑥𝑖
𝑖
2 2
𝑉𝑎𝑟 𝑋 = 𝐸 𝑋 − 𝐸 𝑋 =𝐸 𝑋2 − 𝐸 𝑋

𝑆𝐷 𝑋 = √(𝑉𝑎𝑟 𝑋

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 Variance – Practice

• Consider two games.

• In game I, a fair die is rolled and a player wins the dollar amount of the score obtained. What will
be the expected winnings amount?
• In game II, the same die is rolled, but the player wins $3 if a score of 1, 2, or 3 is obtained and
wins $4 if a score of 4, 5, or 6 is obtained. In game II, what will be the expected winnings amount?
• Which game has higher confidence of winning and why?

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 Variance – Practice

• Sabari Engineering is a leading manufacturer of kitchen equipment. Their factory is located in the
industrial estate of Sriperumbudur. They have four sales offices spread across India. Their sales
offices in Mumbai does the highest amount of business. Their display cabinets, which are used by
bakeries and retail outlets, are very popular. A careful study of the sales data of the display
cabinets for the past 200 days indicates that Mumbai offices sold five display cabinets during 85
days, four during 35 days, three during 20 days, two during 14 days, one during 6 days, and there
were no sales of display cabinets during 40 days. What are the variance and standard deviation of
the number of display cabinets sold per day?

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 Uniform Distribution

• Giving equal chance to all the outcomes.

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 Bernoulli Distribution

• Bernoulli random variable: The most simple discrete random variable is one that can take just two
values.
• Such a random variable can be used to model the outcome of
• A coin toss,
• Whether a valve is open or shut,
• Whether an item is defective or not, or
• Any other process that has only two possible outcomes
• A Bernoulli random variable with parameter 𝑝, 0 ≤ 𝑝 ≤ 1, takes the values 0 and 1With
𝑃 𝑋 = 0 = 1 − 𝑝 𝑎𝑛𝑑 𝑃 𝑋 = 1 = 𝑝, 𝑎𝑛𝑑

𝑃𝑟𝑜𝑏𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝑚𝑎𝑠𝑠 𝑓𝑢𝑛𝑐𝑡𝑖𝑜𝑛 𝑃(𝑥) = 𝑝 𝑥 1 − 𝑝 1−𝑥 , 𝑥 = 0, 1

𝐸(𝑋) = (0 × 𝑃(𝑋 = 0)) + (1 × 𝑃(𝑋 = 1)) = (0 × (1 − 𝑝)) + (1 × 𝑝) = 𝑝

𝑉𝑎𝑟(𝑋) = 𝐸(𝑋2 ) − (𝐸(𝑋))2 = 𝑝 − 𝑝2 = 𝑝(1 − 𝑝)

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 Bernoulli Distribution – Example

• Four coin tossed simultaneously, what will be the expectation and variance of the
outcomes.

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 Bernoulli Distribution – Example

• The probability that exactly three of the Bernoulli trial take

the value 1.
• The probability that exactly two of the Bernoulli random
variables take the value 1

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 Binomial Distribution

• If n independent Bernoulli trials 𝑋1 , … , 𝑋𝑛 are performed, each with a probability p of

recording a 1, then the random variable
𝑋 = 𝑋1 + 𝑋2 + 𝑋3 + … … … … … … … + 𝑋𝑛
is said to have binomial distribution parameter n and p,
• which can be written as 𝑵~𝑩 𝒏, 𝒑 And the probability mass function will
𝑓 𝑥 = 𝑛𝐶𝑥 𝑝 𝑥 1 − 𝑝 1−𝑥 , for x = 0, 1, 2, … … … … . , n
𝐸(𝑋 ) = 𝑛 𝑝
2
𝑉𝑎𝑟(𝑋) = 𝐸(𝑋 2 ) − 𝐸 𝑋 = 𝑛( 𝑝 − 𝑝2 ) = 𝑛𝑝(1 − 𝑝)

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 Binomial Distribution

• 8 coins are thrown simultaneously. Find the probability of getting at least 7 heads.

A B(n, 0.5) distribution is a

symmetric probability
distribution for any value of
the parameter n. The
distribution is symmetric
about the expected value
n/2.

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 Bernoulli Distribution – Example

• There is a probability of 0.261 that a

milk container is underweight. Suppose
that the milk containers are shipped to
retail outlets in boxes of 20 containers.
What is the distribution of the number
of underweight containers in a box?
• The probability that a box contains
exactly seven underweight containers
• The probability that a box contains no
more than three underweight containers

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 Binomial Distribution

• These days many fuel station have the facility to fill nitrogen gas for the tyres of
automobiles. If the probability of a customer filling nitrogen gas for his vehicle is
30%, then out of a total of 10 customer
• what is the probability that all ten would fill nitrogen gas?
• what is the probability that no customer would fill nitrogen gas?
• What is the probability only one customer would fill nitrogen gas?
• What is the probability that more than eight customer would fill nitrogen gas?
• What is the probability that less than three customer would fill nitrogen gas?
• What is the probability that at least customer would fill nitrogen gas?

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 Binomial Distribution

• For its Music 360 survey, Nielsen Co. asked teenagers and adults how each group has
listened to music in the past 12 months. Nearly two-thirds of U.S. teenagers under the
age of 18 say they use Google Inc.’s video-sharing site to listen to music and 35% of
the teenagers said they use Pandora Media Inc.’s custom online radio service (The
Wall Street Journal). Suppose 10 teenagers are selected randomly to be interviewed
about how they listen to music.
• What is the probability that none of the 10 teenagers uses Pandora Media Inc.’s
online radio service?
• What is the probability that at least 2 of the 10 teenagers use Pandora Media Inc.’s
online radio service?

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 Poisson Distribution

• The Poisson process measures the number of occurrences of a particular outcome of a

discrete random variable in a predetermined time interval, space, or volume, for which
an average number of occurrences of the outcome are known or can be determined.
• The Poisson probability distribution provides a simple, easy-to-compute and accurate
approximation to a binomial distribution
• when the probability of success, p, is very small and n is large, so that 𝜆 = 𝑛𝑝 is small,
preferably np > 7.
• It is often called the law of improbable events meaning that the probability, p, of a
particular event’s happening is very small

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 Poisson Distribution

• A random variable X distributed as a Poisson random variable with parameter λ,

which can be written as,
𝑋 ∼ 𝑃(𝜆)
• has a probability mass function

𝑒 −𝜆 𝜆𝑥
𝑃 𝑋 = 𝑥 =
𝑥!
for x = 0, 1, 2, 3,... .
𝐸 𝑋 = 𝑉𝑎𝑟 𝑋 = 𝜆

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 Poisson Distribution – Example

• A quality inspector at a glass manufacturing company inspects sheets of glass to

check for any slight imperfections. Suppose that the number of these flaws in a glass
sheet has a Poisson distribution with parameter λ = 0.5. what will be the probability
that there are no flaws in a sheet?

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 Poisson Distribution – Example

• A hospital emergency room accepts an average of about 47 bone fracture patients

per week. How might the number of bone fracture patients arriving in a certain day
be modeled?
• The hospital manager has decided to allocate emergency room resources that are
sufficient to comfortably cope with up to ten bone fracture patients per day. Predict
the probability that on any given day these resources will be inadequate.

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 Poisson Distribution – Example

• In a one-year period, New York City had a total of 11,232 motor vehicle accidents
that occurred on Monday through Friday between the hours of 3 p.m. and 6 p.m.
(New York State Department of Motor Vehicles website). This corresponds to mean of
14.4 accidents per hour.
• Compute the probability of no accidents in a 15-minute period.
• Compute the probability of at least one accident in a 15-minute period.
• Compute the probability of four or more accidents in a 15-minute period.

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 Poisson Distribution – Example

• According to a 2017 survey conducted by the technology market research firm The
Radicati Group, U.S. office workers receive an average of 121 emails per day
(Entrepreneur magazine website). Assume the number of emails received per hour
follows a Poisson distribution and that the average number of emails received per
hour is five.
• What is the probability of receiving no emails during an hour?
• What is the probability of receiving at least three emails during an hour?
• What is the expected number of emails received during 15 minutes?
• What is the probability that no emails are received during 15 minutes?

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 Thank You

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