Guide to Using Excel 2007 For Basic Statistical Applications To Accompany Business Statistics: A Decision Making Approach, 8th Ed. Chapter 5: Introduction to Discrete Probability Distributions By Groebner, Shannon, Fry, & Smith Prentice-Hall Publishing Company Copyright, 2011

Chapter 5 Excel Examples Binomial Mean - Catalog Sales Poisson Distribution – Heritage Tile More Examples

Binomial Mean- Catalog Sales Issue: People who order items from catalogs can return the items for a refund. Historical return rate for one catalog has been 11 percent. Is this rate still valid? Objective: Use Excel 2007 to compute binomial probabilities based on a sample of 300 purchases.

Binomial Mean – Catalog Sales Situation: Sample Size is n=300 p = .11 Mean = np = 300(.11) = 33 44 returns were observed P(X > 44) = 1 – P(X < 43) Find P(X < 43) = ?

Binomial Mean – Catalog Sales Select Formulas tab Select More Functions Select Statistical Select BINOMDIST

Binomial Mean – Catalog Sales Enter values: Note: True = cumulative probability. False = exact probability Binomial Probability Result

Poisson Distribution Heritage Title Issue: The distribution for the number of defects per tile made by Heritage Tile is Poisson distributed with a mean of 3 defects per tile. The manager is worried about the high variability Objective: Use Excel 2007 to generate the Poisson distribution and histogram to visually see spread in the distribution of possible defects.

Poisson Distribution – Heritage Tile Enter values zero through 10

Poisson Distribution – Heritage Tile Select Formulas, More Functions, Statistical and POISSON

Poisson Distribution – Heritage Tile Enter: a1, 3, false

Poisson Distribution – Heritage Tile Notice that I had pre-selected Cell B1. When I pressed enter the Poisson Probability was loaded into that cell. Simply copy and paste Cell B1 into cells B2 : B11

Poisson Distribution – Heritage Tile Select the Insert tab Select Column Select the chart type that you want

Poisson Distribution – Heritage Tile Format the chart as per Chapter 2

Creating A Binomial Table Issue: The binomial tables in this text contain specific probabilities for certain values of n and p. You may need to have more extensive tables. Objective: Use Excel 2007 to generate the Binomial table for n = 25 and p value of .01 to .50 in increments of .01

Creating A Binomial Table Sample size in Cell B1 p-values in Row 2 x-values in Column B

Creating A Binomial Table P(x =0) = .777821 for n = 25, p = .01 Notice the use of absolute cell referencing – this allows you to copy the function across and down to complete this section of the binomial table

Creating A Binomial Table Copy the contents (formula) of Cell C3 over the entire table

Creating A Binomial Table Clear all Cells with a value of Zero

Creating A Binomial Table Repeat for the next set of values for p: 0.11, 0.12 … 0.20 Simply change the contents of Row 2. Continue this for all possible values of p. For different sample sizes (n) change Cell B1 and Row B

Creating A Poisson Table Issue: The Poisson tables in this text contain specific probabilities for certain values of λt . You may need to have more extensive tables. Objective: Use Excel 2007 to generate the Poisson Table table for λt = 6.0 to 7.0 in increments of .10

Creating A Poisson Table λt values in row 2 Values of x in column A

Creating A Poisson Table P(x = 0) for λt = 6.0 equals .00248 Notice the use of absolute cell referencing this allows you to copy the function across and down to complete this section of the binomial table

Creating A Poisson Table Continue this process for other λt values as desired. As λt increases, the possible values for x will have to increase.