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binomial distribution

Contributor(s): Matthew Haughn

Binomial distribution, in mathematics and statistics, is the probability of a particular outcome in a series when the outcome has two distinct possibilities, success or failure. The prefix bi means two. Binomial distributions have many uses in business. For example, they may be used to predict the number of defective products in a product run (pass/fail inspection) or the ability a data center has to carry out its functions effectively (estimating uptime/downtime). Once the likely outcome for a series has been determined, that information can be used to create an action plan. For example, if a binomial distribution is used to predict the likelihood that a borrower will default on a loan or pay it back, that information can be used to determine if the load should be granted.

Binomial distributions are discrete and can be used to model the total number of successes in repeated trials as long as each trial is independent and the probability of getting either outcome remains constant. Determining the probability of a single, particular outcome is only valid if the experiment is repeated.

Perhaps the most common model for learning about binomial distribution is a coin toss. In this tutorial from the Khan Academy, the instructor demonstrates how to calculate the binomial distribution of a fair coin toss, when the coin is tossed five times.

This was last updated in October 2018

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