Paper.

15- Quantitative Techniques for Management Decisions

Module:13 Discrete Probability Distribution : Poisson Distribution

Prof. S P Bansal
Principal Investigator Vice Chancellor
Maharaja Agrasen University, Baddi

Prof YoginderVerma
Co-Principal Investigator Prof.
Pro–Vice S P Bansal
Chancellor
Principal Investigator Vice Chancellor
Central University of Himachal Pradesh. Kangra. H.P.
Maharaja Agrasen University, Baddi
Dr. Pankaj Madan
Paper
- Coordinator Prof. YoginderVerma
– School
Professor, of Management,
Co Principal Investigator Pro Vice Chancellor
Central
Maharaha University
Agrasen ofBaddi,
University, Himachal
HP Pradesh. Kangra. H.P.
Dr. Nidhi Handa
Content Writer
Department of Mathematics & Statistics.
Paper Coordinator Prof. Pankaj Madan
Dean FMS, Gurukul Kangri viswavidhalaya, Haridwar

Dr. Nidhi Handa Assistt. Prof.

Content Writer Department of Mathematics & Statistics,
Gurukul Kangri Viswavidhalaya, Haridwar
Items Description of Module

Subject Name Management

Paper Name QUANTITATIVE TECHNIQUES FOR MANAGEMENT DECISIONS

Module Title . Discrete Probability Distribution : Poisson Distribution.

Module Id Module No.-13

Pre- Requisites Basic knowledge of what Probability and its mean, variance are.

Objectives To study the probability distribution when occurrences are random and
independent

Keywords Mean , Variance , Standard Variance ,Moments , Kurtosis ,Skewness.

QUADRANT:-1

Module-13 Discrete Probability Distribution : Poisson Distribution

1. Introduction
2. Poisson Probability Distribution
3. Conditions to apply Poisson Probability Distribution
4. Approaches To Formula of Poisson Probability
5. Problems related to Poisson Distribution
6. Summary

THE POISSON PROBABILITY DISTRIBUTION

The Poisson probability distribution, named after the French mathematician Simeon D.
Poisson, is another important probability distribution of a discrete random variable that has a
large number of applications. Suppose a washing machine in a Laundromat breaks down an
average of three times a month. We may want to find the probability of exactly two break
downs during the next month. This is an example of Poisson probability distribution problem.
Each breakdown is called an occurrence in Poisson probability distribution terminology.
The Poisoon probability distribution is applied to experiments with random and independent
occurrences. The occurances are random in the sense that they do not follow any pattern and,
hence, they are unpredictable. Independence of occurrences means that one occurrence(or
non occurrence) of an event does not influence the successive occurrences or non occurrences
of that event. The occurrences are always considered with respect to an interval. In the
example of the washing machine, the interval represents one month. The interval may be a
time interval, a space interval, or a volume interval. The actual number or occurrences with
in an interval is random and independent. If the average number of occurrences for a given
interval is known, then by using the Poisson probability distribution we can compute the
probability of a certain number of occurrences x in that interval. Note that the number of
actual occurrences in an interval is denoted by x.
CONDITIONS TO APPLY POISSON PROBABILITY DISTRIBUTION :
The following three conditions must be satisfied to apply the Poisson probability distribution.
1. X is a discrete random variable.
2. The occurrences are random.
3. The occurrences are independent.
The following are a few examples of discrete random variables for which the occurrences are
random and independent. Hence, these are examples to which the Poisson probability
distribution can be applied.
1 Consider the number of patients arriving at the emergency ward of a hospital
during a one-hour interval. In this example, an occurrences is the arrival of a
patient at the emergency ward, the intervals is one hour (an interval of time), and
the occurrences are random. The total number of patients who may arrive at this
emergency ward during a one-hour interval may be 0,1,2,3,4,……. The
independence of occurrences in this example means that patient arrive
individually and the arrival of any two ( or more) patients is not related.
2 Consider the number of defective items in the next 100 items manufactured on a
machine. In this case, the interval is a volume interval (100times). The
occurrences (number of defective items) are random because there may be
0,1,2,3,……, 100 defective items in 100 items. We can assume the occurrence of
defective items to be independent of one another.
3 Consider the number of defects in a 5-foot long iron rod. The interval, in this
example, is a space interval(5feet). The occurrences (defects) are random because
there may be any number of defects in a 5-foot iron rod. We can assume that
these defects are independent of one another.
The following examples also qualify for the application of the Poisson probability
distribution.
1) The number of accidents that occur on a given highway during a one-week period.
2)The number of customers coming to a grocery store during a one-hour interval.
3)The number of television sets sold at a department store during a given week.
On the other hand, consider the arrival of patients at a physician’s office. These arrivals will
be non random if the patients have to make appointments to see the doctor. The arrival of
commercial airplanes at an airport is non random because all planes are scheduled to arrive at
certain times, and airport authorities know the exact number of arrivals for any period
(although this number may change slightly because of late or early arrivals and
cancellations). The Poisson probability distribution cannot be applied to these examples.
In the Poisson probability distribution terminology, the average number of occurrences in an
interval is denoted by  (Greek letter lambda). The actual number of occurrences in the
interval is denoted by x. The, using the Poisson probability distribution, we find the
probability of x occurrences during an interval given the mean occurrences are  during that
interval.

POISSON PROBABILITY DISTRIBUTION FORMULA

According to the Poisson probability distribution, the probability of x occurrences in an
interval is -

e
x

P(x) =
x!
Where  (pronounced lambda ) is the mean number of occurrences in that interval and the
value of e is approximately 2.71828.
The mean number of occurrences in an interval, denoted by  , is called the parameter of
the Poisson probability distribution or the Poisson parameter. As is obvious from the Poisson
probability distribution formula, we need to know only the value of  to compute the
probability of any given value of x. We can read the value of e for a given  from table.
EXAMPLE 1: A washing machine in a Laundromat breaks down an average of three times
per month. Using the Poisson probability distribution formula, find the probability that
during the next month this machine will have
(a) Exactly two breakdowns (b) at most one breakdown
Solution let  be the mean number of breakdowns per month and x be the actual number
of breakdowns observed during he next month for this machine. Then,
 = 3
(a) The probability that exactly two breakdowns will be observed during the next month
is

e
x
 (32 )𝑒 −3 (9)(.049787)
P(x=2) = = = = .2240
x! 2! 2
(b) The Probability that at most one breakdown will be observed during the next month
is given by the sum of the probabilities of zero and one breakdown. Thus,

P(at most 1 breakdown) = P( 0 or 1 breakdown) = P(x = 0) + P(x=1)

(30 )𝑒 −3 (31 )𝑒 −3
= +
0! 1!
(1)(.049787) (3)(.049787)
= +
1 1

= 0.0498 + 0.1494
 = 0.1992
One important point to remember about the Poisson probability distribution is that the
intervals for  and x must be equal.
POISSON DISTRIBUTION :
We come across several situations in which the probability 𝜑 of an event is very small
but the number of trials n is no large that the event occurs several times as can be seen from
the following cases :
 The number of typographical errors by an expert typist in typing the
manuscript of a book is fairly high.
 Individually being born blind is a rare event and hence its probability is very
small, but the no. of persons born blind in a big city in a year is quite high.
 The probability of a person suffering form a disease such as blood cancer is
very small, but in a big city in a year the no. of persons suffering from the
disease is sufficiently high.
Thus, clearly Poisson Distribution is a limiting case of Binomial Distribution when p
(or q) is very small and n is large so that average no. of successes np (or nq) is a finite
constant 𝛾 (say).
In the Binomial Distribution, the prob. Of r successes is given by
B(r, n, p) = nCr pr, p+q=1,
lim 𝑛𝑝 =m
𝑛→∞

MEAN AND VARIANCE :

If X is Poisson variate
i.e. X ~ P(  ) then
𝜇 = mean = E (X)
Variance = 𝜎 2 = E(X – 𝜇)2
= E(X2) – 𝜇2
= m2 + m – m2
=m
Note : The mean number of occurrences in an interval, denoted by  , is called the
parameter of Poisson Distribution or the Poisson parameter.
ANOTHER APPROACH TO POISSON DISTRIBUTION :
Let the random variable X denote the number of telephone calls during time t at a
telephone switch boards. We assume that (1) the calls are independent and (2)  denotes
mean arrival rate of telephone cells per second.
Further examples of Poisson varicates :
1. Number of buses reaching bus depot in time t.
2. Number of suicides in a city in a year.
3. Number of Persons joining a queue at a counter in time t.
So Here  is mean (m).
Example 2: Experience shows that a box of 450 components of a company has 1 percent
defective components. Find the probability that such a box has (1) no defective (2) one
component defective and (3) at most 3 components defective. Given e-4 =0.0183.

Solution : Let selection of a component from the box be regarded as a trial and getting a
1
defective component as the success. If p denotes the probability of success, then 𝑝 = =
100
0.01 which is small, as the number of trials n= 400 is large and so the problem can be solved
by poisson distribution.

The parameter m= np=400 ×0.01=4

𝑒 −𝑚
Required Poisson distribution 𝑝(𝑥 = 𝑟) = 𝑚𝑟 𝑟 = 0,1,2 … …
𝑟!

𝑒 −4 𝑟
= 4 𝑟 = 0,1,2 … …
𝑟!
(1) P(0 defective)= p(x=0)= 𝑒 −𝑚 = 𝑒 −4 =0.0183
(2) P(1 defective)= p(x=1)= 𝑒 −𝑚 = 4𝑒 −4 =4×0.0183 =0.0732
(3) P(at most 3 defective)=p(x≤ 3)
𝑒 −4
=∑30 4𝑟
𝑟!
42 43
= 𝑒 −4 (1 + 4 + + )
2! 3!
32
=0.0183(1+4+8+ )
3
71
=0.0183× = 0.0183× 23.6667
3
=0.4331

Example 3: If the probability of a bad reaction from certain vaccine is 0.001. Determine the
probability that one of 2000 individuals (1) none (2) 1 (3) more than 1; (4) more than 2; (5)
exactly 3 will get a bad reaction given 𝑒 −2 = 0.1353
Solution : let getting a bad reaction be regarded as success, then p=0.001 and the selection of
an individual being regarded as a trial, then the number of trials n =2000. Hence , parameter
of poisson distribution m= 2000 × 0.001 = 2

𝑒 −2 𝑟
𝑝(𝑟 = 𝑠𝑢𝑐𝑐𝑒𝑠𝑠) = 2 𝑟 = 0,1,2 … …
𝑟!
(1) p(0 success)= 𝑒 −2 = 0.1353
(2) p(1 success)= 2𝑒 −2 = 2 × 0.1353 = 0.2706
(3) p(more than 1 success)= 𝑝(2 success)+ 𝑝(3 success)+… … ….
= 1 − 𝑝(0 success) - 𝑝(1 success) +… … ….
= 1 − 𝑒 −2 -2𝑒 −2
=1-3𝑒 −2 =1-3×0.1353
=0.5941
(4) p(more than 2 success)= 𝑝(3success)+ 𝑝(4 success)+… … ….
= 1 − 𝑝(0 success) - 𝑝(1 success) –p(2 successes) … … ….
22
=1 − 𝑒 −2 −2𝑒 −2 − 𝑒2
2
=1- 5𝑒 −2 = 1- 5 × 0.1353 = 0.3235
23
(5) p(3 successes)= 𝑒 −2 = 0.1804
3!

Example 4: If the probability of a bad reaction from certain vaccine is 0.001. Determine the
probability that one of 2000 individuals (1) none (2) 1 (3) more than 1; (4) more than 2; (5)
exactly 3 will get a bad reaction given 𝑒 −2 = 0.1353

Solution : let getting a bad reaction be regarded as success, then p=0.001 and the selection of
an individual being regarded as a trial, then the number of trials n =2000. Hence , parameter
of poisson distribution m= 2000 × 0.001 = 2

𝑒 −2 𝑟
𝑝(𝑟 = 𝑠𝑢𝑐𝑐𝑒𝑠𝑠) = 2 𝑟 = 0,1,2 … …
𝑟!
(1) p(0 success)= 𝑒 −2 = 0.1353
(2) p(1 success)= 2𝑒 −2 = 2 × 0.1353 = 0.2706
(3) p(more than 1 success)= 𝑝(2 success)+ 𝑝(3 success)+… … ….
= 1 − 𝑝(0 success) - 𝑝(1 success) +… … ….
= 1 − 𝑒 −2 -2𝑒 −2
=1-3𝑒 −2 =1-3×0.1353
=0.5941
(4) p(more than 2 success)= 𝑝(3success)+ 𝑝(4 success)+… … ….
= 1 − 𝑝(0 success) - 𝑝(1 success) –p(2 successes) … … ….
22
=1 − 𝑒 −2 −2𝑒 −2 − 𝑒2
2
=1- 5𝑒 −2 = 1- 5 × 0.1353 = 0.3235
23
(5) p(3 successes)= 𝑒 −2 = 0.1804
3!
Example 5: The probability of getting no misprint is e-2. Find the probability that a page
contains more than 2 errors. (Given e-2=0.135)

Solution : The required poisson distribution is

𝑒 −2 𝑟
𝑝(𝑟 𝑒𝑟𝑟𝑜𝑟𝑠) = 2 𝑟 = 0,1,2 … …
𝑟!
Since p (0 error) = e-2= e-m ⇒ 𝑚 = 2, the parameter of poisson distribution.

Hence p (2 and more than 2 success)= 𝑝(2 errors)+ 𝑝(3 errors)+… … ….

= 1 − 𝑝(0 error) - 𝑝(1error)
=1 − 𝑒 −2 − 2𝑒 −2
=1 − 3𝑒 −2
=1-3× 0.1353
= 1- 0.4059= 0.5941.

Example 6: A manufacturer of cotter pins knows that 5 per cent of this product is defective
if he sells cotter poins in boxes of 100 and guarantees that not more than 10 pins will be
defective.What is the probability that a box will fail to meet the guaranteed quality.

Solution: The number of trials n=100

The probability that a cotter pin is defective,i.e., the probability of success p=5/100
5
∴ Parameter for Poisson distribution m=np=100* =5
100

𝑒 −5 5𝑟
∴ Probability of r success = r=0,1,2,..........
𝑟!

𝑒 −5 5𝑟
P(more than 10 defective) = 1 - ∑10
𝑟=0 𝑟!

Example 7: Suppose the number of telephone calls an operator received from 8:30 a.m. to
8:40 a.m. follow Poisson distribution with mean 2.Find the probability that the operator will
receive (1) no call; (2) 1 call in that time interval tomorrow, given 𝑒 −2 =0.1353.

Solution: Poisson distribution has mean m=2.

Hence, the required Poisson distribution is

𝑒 −𝑚 𝑚𝑟 𝑒 −2 2𝑟
P(r calls in the given time) = = , r=0,1,2,........
𝑟! 𝑟!

(1) P(no call) = p(r=0) = 𝑒 −2 =0.1353

(2) P(1 call) = p(r=1) = 2 𝑒 −2 =2*0.1353=0.2706

Example 8: An auto salesperson sells an average of .9 cars per day. Let x be the number of
cars sold by this salesperson on any given day. Using the poisson probability distribution
table, write the probability distribution of x.
Solution : Let  be the mean number of cars sold per day by this salesperson. Hence,  = .9.
Using the portion of corresponding to  = .9 we write the probability distribution of x in table
I.

Table I Probability Distribution of x for  =.9

X P(x)
0 .4066
1 .3659
2 .1647
3 .0494
4 .0111
5 .0020
6 .0003

Note that 6 is the largest value of x for  = .9 listed in table I for which the proability is
greater than zero. However, this does not mean that this salesperson cannot sell more than six
cars on a given day. What this means is that the probability of selling 7 or more cars is very
small. Actually, the probability of x = 7 for  = .9 calculated by using the Poisson formula is
.000039. When rounded to four decimal places, this probability is .0000, as listed in table I.

Summary
If the average number of occurrences for a given interval is known ,then by
using the Poisson probability distribution we can compute the probability of a
certain number of occurrences r (or x) in that interval. Note that the number
of actual occurrences in an interval is denoted by r (or x ).The average
occurrences during an interval for a Poisson probability distribution is its
parameter. In this distribution the number of occurrences is large and
probability is small. Mean and Variance are also discussed. Related problems
are also solved.
Table II Table of Poisson Probabilities