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Statistics for Decision- Making in Business - Maricopa Community ...

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( ) ( )<br />

We rewrite our <strong>for</strong>mula with the above def<strong>in</strong>ed components:<br />

. / ( )<br />

This is known as the b<strong>in</strong>omial probability density function, or b<strong>in</strong>omial pdf.<br />

To make this more clear, we first def<strong>in</strong>e a random variable, . In the case of a b<strong>in</strong>omial<br />

experiment (one <strong>in</strong> which there are two possible outcomes <strong>for</strong> each trial), the set list<strong>in</strong>g all<br />

possible values that can be achieved (between 0 and the number of trials).<br />

For example, if<br />

<strong>in</strong> co<strong>in</strong> tosses, then * +. That is, between 0 and 10 heads can possibly<br />

be achieved <strong>in</strong> 10 tosses of the co<strong>in</strong> (though not all have the same probability). To <strong>in</strong>dicate a<br />

b<strong>in</strong>omial pdf calculation, we often write:<br />

The probability that takes on successes is . / ( ) , or,<br />

( ) . / ( )<br />

We summarize a b<strong>in</strong>omial pdf below, along with the necessary assumptions to use this.<br />

B<strong>in</strong>omial Probability Density Function (pdf)<br />

If the follow<strong>in</strong>g assumptions are met:<br />

1) An experiment is carried out with trials,<br />

2) Each trial can result <strong>in</strong> only one of two possible values: a success or a failure,<br />

3) The probability of a success <strong>in</strong> each trial is (it is always the same), and<br />

4) Each trial is <strong>in</strong>dependent of all other trials (the outcome of one trial <strong>in</strong> no way affects the<br />

outcome of any other trial),<br />

then the experiment is a b<strong>in</strong>omial experiment and the probability of<br />

calculated by<br />

successes can be<br />

( ) . / ( )<br />

<strong>Statistics</strong> <strong>for</strong> <strong>Decision</strong>-<strong>Mak<strong>in</strong>g</strong> <strong>in</strong> Bus<strong>in</strong>ess © Milos Podmanik Page 150

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