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, & SmithPrentice-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.

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

Binomial Mean – Catalog Sales

•Select Formulas tab

•Select More Functions

•Select Statistical

•Select BINOMDIST

Enter values:

Note:

•True = cumulative probability.

•False = exact probability

Binomial Probability Result

Binomial Mean – Catalog Sales

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 λtvalues as desired. As λt increases, the possible values for x will have to increase.