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Lesson 2: Distributions
Standard Normal (z) Distribution
A normal distribution whose mean is zero and standard deviation is 1 is called the standard normal distribution.
Any normal distribution can be converted to a standard normal distribution with simple algebra. This makes calculations much easier.
Calculating in Standard Units
Figure 2.14. Converting a Variable (X) to the Standard Normal (Z)
Calculating Score From Standard Units
Conversely, if you know your score in standard units, you can always work backward to calculate your actual score.
Figure 2.15. Converting the Z-score to a Variable Value (X)
Remember: Use the + sign when calculating scores that are above average.
Use the – sign for scores below average.
What is the point of using the z-score, you ask? Well, because the z is distributed with mean 0 and a standard deviation of 1, it makes calculations easier. Let’s see how we could have solved the inventory management problem discussed earlier using the z-distribution.