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Chapter 8: Continuous Probability Distributions: 8-3 (Optional) Exponential Distribution

Book Title: Statistics for Management and Economics
Printed By: JOB POLVORIZA (job.polvoriza.music@ust.edu.ph)
© 2018 Cengage Learning, Cengage Learning

8-3 (Optional) Exponential Distribution

Another important continuous distribution is the exponential distribution (
).

Exponential Probability Density Function

A random variable X is exponentially distributed if its probability density function is

given by

where and λ is the parameter of the distribution.

Statisticians have shown that the mean and standard deviation of an exponential random
variable are equal to each other:

Recall that the normal distribution is a two-parameter distribution. The distribution is

completely specified once the values of the two parameters μ and σ are known. In contrast,
the exponential distribution is a one-parameter distribution. The distribution is completely
specified once the value of the parameter λ is known. Figure 8.21 depicts three exponential
distributions, corresponding to three different values of the parameter λ. Notice that for any
exponential density function f(x), and f(x) approaches 0 as x approaches infinity.

Figure 8.21
Exponential Distributions

The exponential density function is easier to work with than the normal. As a result, we can
develop formulas for the calculation of the probability of any range of values. Using integral
calculus, we can determine the following probability statements.
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Probability Associated with an Exponential Random Variable

If X is an exponential random variable,

The value of can be obtained with the aid of a calculator.

Example 8.7

Lifetimes of Alkaline Batteries

The lifetime of an alkaline battery (measured in hours) is exponentially distributed

with .

a. What is the mean and standard deviation of the battery’s lifetime?

b. Find the probability that a battery will last between 10 and 15 hours.

c. What is the probability that a battery will last for more than 20 hours?

Solution:

a. The mean and standard deviation are equal to 1/λ. Thus,

b. Let X denote the lifetime of a battery. The required probability is

c.

Figure 8.22 depicts these probabilities.

Figure 8.22
Probabilities for Example 8.7

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EXCEL Function

Instructions

Type (in any cell)

= EXPONDIST ([X], [λ], True)

To produce the answer for Example 8.7c, we would find P(X < 20) and
subtract it from 1.

To find P(X < 20), type

= EXPONDIST(20, .05, True)

which outputs .6321 and hence , which is

exactly the number we produced manually.

Applications in Operations Management

Waiting Lines

Paul prescott/ Shutterstock.com

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In Section 7-5, we described waiting-line models and how the Poisson distribution is
used to calculate the probabilities of the number of arrivals per time period. To
calculate the operating characteristics of waiting lines, management scientists often
assume that the times to complete a service are exponentially distributed. In this
application, the parameter λ is the service rate, which is defined as the mean
number of service completions per time period. For example, if service times are
exponentially distributed with , this tells us that the service rate is 5 units
per hour or 5 per 60 minutes. Recall that the mean of an exponential distribution is
. In this case, the service facility can complete a service in an average of 12
minutes. This was calculated as

We can use this distribution to make a variety of probability statements.

Example 8.8

Supermarket Checkout Counter

A checkout counter at a supermarket completes the process according to an

exponential distribution with a service rate of 6 per hour. A customer arrives at the
checkout counter. Find the probability of the following events.

a. The service is completed in fewer than 5 minutes.

b. The customer leaves the checkout counter more than 10 minutes after
arriving.

c. The service is completed in a time between 5 and 8 minutes.

Solution:

One way to solve this problem is to convert the service rate so that the time period
is 1 minute. (Alternatively, we can solve by converting the probability statements so
that the time periods are measured in fractions of an hour.) Let the
.

a.

b.

c.

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Exercises

8.79. The random variable X is exponentially distributed with . Sketch the

graph of the distribution of X by plotting and connecting the points
representing f(x) for .

8.80. X is an exponential random variable with . Sketch the graph of the

distribution of X by plotting and connecting the points representing f(x) for
.

8.81. Let X be an exponential random variable with . Find the following

probabilities.

a. P(X > 1)

b. P(X > .4)

c. P(X < .5)

d. P(X < 2)

8.82. X is an exponential random variable with . Find the following

probabilities.

a. P(X > 2)

b. P(X < 4)

c. P(1 < X < 2)

d.

8.83. The production of a complex chemical needed for anticancer drugs is

exponentially distributed with kilograms per hour. What is the probability
that the production process requires more than 15 minutes to produce the
next kilogram of drugs?

8.84. The time between breakdowns of aging machines is known to be

exponentially distributed with a mean of 25 hours. The machine has just been
repaired. Determine the probability that the next breakdown occurs more than
50 hours from now.

8.85. Canada and the United States are each other’s largest trading partner. The
two-way trade between these two countries is the largest in the world. This
makes the Ambassador bridge linking Windsor Ontario and Detroit Michigan
extremely busy. The Free Trade Agreement between Canada and the United
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States and the North American Free Trade Agreement (NAFTA) further
increased trade. Trucks heading into Detroit and Windsor have on occasion
been backed up for miles. When trucks arrive at the Ambassador Bridge
connecting Windsor and Detroit, each truck must be checked by customs
agents. Suppose that the times are exponentially distributed with a service
rate of 10 per hour. What is the probability that a truck requires more than 15
minutes to be checked?

8.86. A bank wishing to increase its customer base advertises that it has the
fastest service and that virtually all of its customers are served in less than 10
minutes. A management scientist has studied the service times and
concluded that service times are exponentially distributed with a mean of 5
minutes. Determine what the bank means when it claims “virtually all” its
customers are served in less than 10 minutes.

8.87. Toll booths on the New York State Thruway are often congested because of
the large number of cars waiting to pay. A consultant working for the state
concluded that if service times are measured from the time a car stops in line
until it leaves, service times are exponentially distributed with a mean of 2.7
minutes. What proportion of cars can get through the toll booth in less than 3
minutes?

8.88. The manager of a gas station has observed that the times required by
drivers to fill their car’s tank and pay are quite variable. In fact, the times are
exponentially distributed with a mean of 7.5 minutes. What is the probability
that a car can complete the transaction in less than 5 minutes?

8.89. Because automatic banking machine (ABM) customers can perform a

number of transactions, the times to complete them can be quite variable. A
banking consultant has noted that the times are exponentially distributed with
a mean of 125 seconds. What proportion of the ABM customers take more
than 3 minutes to do their banking?

8.90. The manager of a supermarket tracked the amount of time needed for
customers to be served by the cashier. After checking with his statistics
professor, he concluded that the checkout times are exponentially distributed
with a mean of 6 minutes. What proportion of customers require more than 10
minutes to check out?

Applications in Operations Management

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Determining the Service Rate

In some circumstances, the value of λ can be controlled by management. For

example, in a supermarket, a manager can improve the service rate at a checkout
counter by employing a worker to fill the shopper’s bags. We can calculate the value
of λ by specifying a value for x and its probability. To illustrate, suppose that the
current service rate is 8 per hour. That is, and the mean of the exponential
distribution is or 7.5 minutes. The manager would like the
probability that a checkout takes longer than 15 minutes (.25 of an hour) to be less
than 5%. With the probability that checkout will take longer than .25 of an hour
is

which the manager considers too large.

To solve for λ given x and the probability that X is greater than x, we solve the
equation for λ

Thus,

or

where ln is the natural logarithm (logarithm using the base e)

With and the , we find

The manager can reduce the probability that a checkout will take longer than 15
minutes to .05 by increasing the service rate to 12 per hour.

8.91. Refer to Exercise 8.85. In order to improve the time spent by trucks
waiting, both countries should improve the service rate by customs
agents. Suppose that the governments decided that the probability that a
truck spends more than 30 minutes being checked should be less than
1%. Find the service rate to accomplish this goal.

8.92. A Jiffy Lube franchise manager is concerned about the amount of time
it takes for his technicians to change the oil and filters of cars. The current
mean time for the complete operation is 18 minutes. He hasn’t kept track

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of the number of times his employees took more than 30 minutes to

complete a car but he knows that the probability is too high. There are
several ways to reduce the mean time. Determine the mean time
necessary to reduce the probability that a job takes longer than 30
minutes to 10%.

Chapter 8: Continuous Probability Distributions: 8-3 (Optional) Exponential Distribution

Book Title: Statistics for Management and Economics
Printed By: JOB POLVORIZA (job.polvoriza.music@ust.edu.ph)
© 2018 Cengage Learning, Cengage Learning

© 2020 Cengage Learning Inc. All rights reserved. No part of this work may by reproduced or used in any form or by any means -
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