Explanation
The Poisson distribution models how many times an event occurs in a fixed interval of time, space or any other unit when the events are independent of each other and occur at a stable mean rate \( \lambda \). It is a discrete distribution with support on the non-negative integers \( \{0, 1, 2, \ldots\} \). Its most distinctive property is that the mean and the variance are equal: both equal \( \lambda \). If in your data the variance clearly exceeds the mean (overdispersion), the negative binomial may be a more suitable model.
Use it when the events can occur any number of times in the interval, there is no fixed upper limit on occurrences (unlike the binomial, which has \( n \) trials), the events are rare relative to the potential opportunities, and the rate is stable across the interval. Typical examples: phone calls at a call center, customers in a store, errors on a printed page, radioactive emissions, or server failures in production. The Poisson distribution is also the limit of the binomial when \( n \) is large, \( p \) is small and \( \lambda = np \) is moderate.
Formula
\( P(X=k)=\frac{\lambda^k e^{-\lambda}}{k!} \)
Parameters
- λ (lambda): expected number of events in the interval.
- k: observed event count.
Worked example
Situation: A telephone switchboard receives on average \(\lambda = 3\) calls per minute. The number of calls in any given minute follows a Poisson distribution with \(\lambda = 3\).
Question 1: What is the probability that no call arrives in a given minute, \(P(X = 0)\)?
Solution: We apply the Poisson mass function with \(k = 0\): \[ P(X = 0) = \frac{e^{-3} \cdot 3^0}{0!} = e^{-3} \approx 0.0498 \] There is approximately a 4.98% probability that a minute passes without any call.
Question 2: What is the probability of receiving at most 2 calls in a minute, \(P(X \leq 2)\)?
Solution: We add \(P(X = 0) + P(X = 1) + P(X = 2)\): \[ P(X=1) = e^{-3}\cdot 3 \approx 0.1494, \quad P(X=2) = e^{-3}\cdot\frac{9}{2} \approx 0.2240 \] \[ P(X \leq 2) = 0.0498 + 0.1494 + 0.2240 \approx 0.4232 \] There is approximately a 42.32% probability of receiving 2 or fewer calls in a minute.
Interpretation: With a mean of 3 calls per minute, there is more than a 57% probability of receiving 3 or more calls. For a Poisson with integer \(\lambda\), the values \(\lambda-1 = 2\) and \(\lambda = 3\) are both modes (bimodal): \(P(X=2) = P(X=3) \approx 0.224\). These calculations allow you to size the service capacity needed for different service levels.