Chapter 6 EXCEL Procedure (Normal Probability Calculation)

From William E. Becker, Statistics for Business and Economics Using Microsoft Excel 97, S.R.B. Publishing, 1997, p. 218. Reproduced with permission of S.R.B. Publishing. QUERY 6.1 (P.218): If the time required to complete an examination by those with a certain learning disability is believed to be distributed normally, with mean of 65 minutes and a standard deviation of 15 minutes, then when can the exam be terminated so that 99 percent of those with the disability can finish? ANSWER: Because the average and standard deviation are known, what needs to be established is the amount of time, above the mean time, such that 99 percent of the distribution is lower. This is a distance that is measured in standard deviations as given by the z value corresponding to the 0.99 probability found in the body of Appendix Table A.3,as shown in the textbook OR THE COMMANDS ENTER INTO ANY CELL OF EXCEL TO FIND THIS Z VALUE IS =NORMINV(0.99,0,1) FOR 2.326342. Notice in the text book use of Appendix Table A.3 The closest cumulative probability that can be found is 0.9901, in the row labeled 2.3 and column headed by .03, z = 2.33, which is only an approximation for the more exact 2.326342 found in EXCEL. Using this more exact value the calculation with Formula 6.1 would be
x- z= ___ ___ sga im x-6 5 ___ ___ 1 5

2364= .23

Tu,x=6 +1(.23)=9. mnts hs 5 52364 99 iue.

ALTERNATIVELY, INSTEAD OF STANDARDIZING WITH THE Z DISTRIBUTION USING EXCEL WE CAN SIMPLY WORKED DIRECTLY WITH THE NORMAL DISTRIBUTION WITH A MEAN OF 65 AND STANDARD DEVIATION OF 15 AND ENTERED "=NORMINV(0.99,65,15)" TO OBTAIN THE 99.895 TIME LIMIT. IN GENERAL TO OBTAIN THE x VALUE FOR WHICH alpha PERCENT OF A NORMAL RANDOM VARIABLE'S VALUES ARE LOWER, THE FOLLOWING "NORMINV" COMMAND MAY BE USED, WHERE THE FIRST ENTRY IS alpha, THE SECOND IS mu, AND THE THIRD IS sigma. From William E. Becker Statistics for Business and Economics Using Microsoft Excel 97, S.R.B. Publishing, 1997, p. 220. QUERY 6.2 (P. 220): In the early 1980s, the Toro Company of Minneapolis, Minnesota, advertised that it would refund the purchase price of a snowblower if the following winter's snowfall was less than 21 percent of the local average. If the average snowfall is 45.25 inches, with a standard deviation of 12.2 inches, what is the likelihood that Toro will have to make refunds?

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Chapter 6 EXCEL Procedure (Normal Probability Calculation)

likelihood that Toro will have to make refunds? ANSWER: Within limits, snowfall is a continuous random variable that can be expected to vary symmetrically around its mean, with values closer to the mean occurring most often. Thus, it seems reasonable to assume that snowfall (x) is approximately normally distributed with a mean of 45.25 inches and standard deviation of 12.2 inches. Nine and a half inches is 21 percent of the mean snowfall of 45.25 inches and, with a standard deviation of 12.2 inches, the number of standard deviations between 45.25 inches and 9.5 inches is z:
x- 95 -4.5 .0 52 z= ___ = ______ =-.3 ___ ______ 29 sga im 1. 22

Using Appendix Table A.3, the textbook demonstrates the determination of P(x < 9.50) = P(z < -2.93) = 0.17, the probability of snowfall less than 9.5 inches. USING EXCEL, THE NORMAL PROBABILITY IN QUERY 6.2, P236, IS OBTAINED WITH THE "NORMDIST" COMMAND, WHERE THE FIRST ENTRY IS x, THE SECOND IS mu, THE THIRD IS sigma, AND THE FOURTH IS CUMULATIVE (1). ENTERING =NORMDIST(-2.93,0,1,1) GIVES P(z < -2.93) = 0.001695 AND ENTERING =NORMDIST(9.5,45.25,12.2,1) GIVES P( x < 9.50) = 0.001693. Go to: Examples of EXCEL Use Statistics for Business and Economics WWW Page

www.indiana.edu/~iustats/query /chap6.htm

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