The Normal

Distribution
Ch. 9, Part b

f(x)

Continuous Probability
Distributions

A continuous random variable can assume

any real number value within some interval
on the real line or in a collection of
intervals.
It is not possible to talk about the
probability of the random variable
assuming a particular value.
Instead, we talk about the probability of
the random variable assuming a value
within a given interval.
The probability of the random variable
assuming a value within some given
interval from x1 to x2 is defined to be the
ECO 3401 B. Potter

Normal Probability Distribution

Graph of the Normal Probability Density

Function
f(x)

P x1 x x2

x1

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x2
3

Normal Probability Distribution

Characteristics of the Normal Probability
Distribution

The shape of the normal curve is often

illustrated as a bell-shaped curve.
Two parameters
(mean) determines the location of the

distribution. It can be any numerical

value: negative, zero, or positive.
(standard deviation) determines the
width of the curve: larger values result in
wider, flatter curves.

The highest point on the normal curve is

at the mean, which is also the median
and mode.ECO 3401 B. Potter
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Normal Probability Distribution

Characteristics of the Normal Probability
Distribution

The normal curve is symmetric.

The total area under the curve is 1 (.5 to
the left of the mean and .5 to the right).
Probabilities for the normal random
variable are given by areas under the
curve.

ECO 3401 B. Potter

Empirical Rule (68 95 99.7 Rule)

% of Values in Some Commonly Used

Intervals
68.26% of values of a normal random
variable are within +/- 1 standard
deviation of its mean.
95.44% of values of a normal random
variable are within +/- 2 standard
deviations of its mean.
99.72% of values of a normal random
variable are within +/- 3 standard
deviations of its mean.
ECO 3401 B. Potter

Empirical Rule (68 95 99.7 Rule)

f(x)

P x2 x x1 .6826

x6
3

x4

x2

x1
1

x3

x5

68.26%
ECO 3401 B. Potter

Empirical Rule (68 95 99.7 Rule)

f(x)

P x4 x x3 .9544

x6
3

x4

x2

x1
1

x3

x5

95.44%
ECO 3401 B. Potter

Empirical Rule (68 95 99.7 Rule)

f(x)

P x6 x x5 .9972

x6
3

x4

x2

x1
1

x3

x5

99.72%
ECO 3401 B. Potter

Standard Normal Probability

Distribution

A normal probability distribution with a mean of

zero and a standard deviation of one.
The letter z is commonly used to designate the
standard normal random variable.
Converting to the Standard Normal Distribution

x
z

We can think of z as a measure of the

number of
.
standard deviations x is from .

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Standard Normal Probability

Distribution
=0
P(z)

=1

P = 1.0
z

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Standard Normal Probability

Distribution
=0
P(z)

=1

P(z < 0) = .5 P(z > 0) = .5

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Standard Normal Probability

Distribution
=0
P(z)

=1

P z 1.00

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Standard Normal Probability Table

z - Table

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Standard Normal Probability Table

z - Table

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Standard Normal Probability

Distribution
=0
f(z)

=1

P z 1.00 .8413

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Standard Normal Probability

Distribution
=0
f(z)

=1

P z 1.00

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Standard Normal Probability

Distribution
=0
f(z)

=1

P z 1.00 1 P ( z 1)

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Standard Normal Probability

Distribution
=0
f(z)

=1

1 .8413 .1587

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Using the Standard Normal

Probability Table
P z .83

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P z .83
Using the Standard Normal Probability Table
.00 1)
.01
.02
.03
.04
.05
.06
.07
.08
.09
z (Table

.0 .5000 .5040 .5080 .5120 .5160 .5199

.1 .5398 .5438 .5478 .5517 .5557 .5596
.2 .5793 .5832 .5871 .5910 .5948 .5987
.3 .6179 .6217 .6255 .6293 .6331 .6368

.5239 .5279 .5319 .5359

.4 .6554 .6591 .6628 .6664 .6700 .6736

.5 .6915 .6950 .6985 .7019 .7054 .7088
.6 .7257 .7291 .7324 .7357 .7389 .7422
.7 .7580 .7612 .7642 .7673 .7704 .7734

.6772 .6808 .6844 .6879

.5636 .5675 .5714 .5733

.6026 .6064 .6103 .6141
.6406 .6443 .6480 .6517
.7123 .7157 .7190 .7224
.7454 .7486 .7518 .7549
.7764 .7794 .7823 .7852

.8 .7881 .7910 .7939 .7967 .7995 .8023 .8051 .8078 .8106 .8133
.9 .8159 .8186 .2120 .8238 .8264 .8289 .8315 .8340 .8365 .8389
1.0 .8413 .8438 .8461 .8485 .8508 .8531 .8554 .8577 .8599 .8621
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Using the Standard Normal

Probability Table

P z .83 .7967
P z .38
P z 2.86
P 0 z 1
P 1 z 1

P z 1.8

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Example
Annual salaries for sales associates from a
particular store have a mean of $32,500 and a
standard deviation of $2,500.
a. Suppose that the distribution of annual salaries
follows a normal distribution. Calculate and
interpret the z-score for a sales associate who makes
$36,000.
b. Calculate the probability that a randomly selected
sales associate earns $30,000 or less.
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Example
Annual salaries for sales associates from a
particular store have a mean of $32,500 and a
standard deviation of $2,500.
c. Calculate the percentage of sales associates with
salaries between $35,625 and $38,750.

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Example: Pep Zone

Standard Normal Probability Distribution

Pep Zone sells auto parts and supplies
including a popular multi-grade motor oil.
When the stock of this oil drops to 20
gallons, a replenishment order is placed.
The store manager is concerned that sales
are being lost due to stock-outs while
waiting for an order. It has been
determined that lead-time demand (x) is
normally distributed with a mean of 15
gallons and a standard deviation of 6
gallons. The manager would like to know
the probability of a stock-out, P(x 20).
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Example: Pep Zone

f(x)

= 15
=6

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Example: Pep Zone

f(x)

= 15
=6

P(x 20)

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z
27

Example: Pep Zone

f(x)

= 15
=6

x
z

20 15
z
.83
6
x

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z
28

Example: Pep Zone

Standard Normal Probability Distribution

The Standard Normal table shows an area of .
7967 for the region below z = .83. The shaded
tail area is
1.00 - .7967 = .2033. The
probability of a stock-out is .2033.
Area = .7967

Area = 1.00 - .7967

= .2033
z

0 .83
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Example: Pep Zone

Standard Normal Probability Distribution

If the manager of Pep Zone wants the
probability of a stock-out to be no
more
than .05, what should the reorder
point be?

Area = .05
Area = .95
0

z.05

Let z.05 represent the z value cutting the .05 tail area.
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Example: Pep Zone

Using the Standard Normal Probability Table

We now look-up the .9500 area in the
Standard Normal Probability table to find the
corresponding z.05 value.

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Example: Pep Zone

Using the Standard Normal Probability Table

We now look-up the .9500 area in the
Standard Normal Probability table to find the
corresponding z.05 value.

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Example: Pep Zone

Using the Standard Normal Probability Table

We now look-up the .9500 area in the
Standard Normal Probability table to find the
corresponding z.05 value.

z.05 = 1.645 is a reasonable estimate.

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Example: Pep Zone

Standard Normal Probability Distribution

If the manager of Pep Zone wants the
probability of a stock-out to be no
more
than .05, what should the reorder
point be?

Area = .05
Area = .95
0

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1.645

34

Example: Pep Zone

Standard Normal Probability Distribution

The corresponding value of x is given by

x 15
1.645
6
x 24.87

A reorder point of 24.87 gallons will place

the probability of a stock-out during leadtime at .05. Perhaps Pep Zone should set
the reorder point at 25 gallons to keep the
probability under .05.
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Now You Try

Annual salaries for sales associates from a particular store

have a mean of $32,500 and a standard deviation of $2,500.
How much does a sales associate make if no more than 5% of
the sales associates make more than he or she?

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Now You Try

A certain type of light bulb has an average life
of 500 hours with a standard deviation of 100
hours. The length of life of the bulb can be
closely approximated by a normal curve. An
amusement park buys and installs 10,000
such bulbs. Find the total number that can be
expected to last
a) between 650 and 780 hours.
b) more than 300 hours.

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End of Chapter 9, Part b

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