mba 522 Continuity Correction Factor

mba 522 Continuity Correction Factor - 25. So, you would...

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Continuity Correction Factor: Examples A asked about how to determine whether to add or subtract the 0.5 when approximating binomial with normal distribution. I replied the following. I hope you find it helpful also. Dr. J. _______________________________ You should always make sure the X value is included in the range that you use with the normal distribution calculation. Example: Let's say the Mean =30, and you also know the standard deviation and can use normal approximation to binomial. How would you answer the following? A) P(X =25). We are solving for an exact value for binomial. But, using normal distribution, exact values have zero probability (b/c normal distribution is a continuous distribution). So, we must create a range of values to use normal distribution, and we must ensure the range contains
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Unformatted text preview: 25. So, you would compute P(24.5 <= X <= 25.5). B) P(X<25). That does not include 25, but you should include values of X that are 24 or less. Since we want 24 included in the calculation. So, you must use a range that includes 24. So, you would compute: P(X<24.5). C) P(X<=25). Here, 25 is included in the analysis. So, you should compute P(x<=25.5). D) P(X >= 25). Since 25 must be included, you would use: P(X>=24.5). E) P(25<= X <= 33). Make sure 25 and 33 are included. So compute P(24.5 <=X <=33.5). F) P(25 <X< 33). Greater than 25 means 26 or more for binomial. Less than 33 means 32 or less for binomial. Therefore, 26 and 32 must be included in the range. So answer the question with normal using P(25.5 < X < 32.5). I hope the above examples help. Dr. J....
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This note was uploaded on 11/13/2011 for the course MBA 522 taught by Professor Nabavi during the Spring '08 term at Bellevue.

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