Poisson distribution is a discrete probability distribution which is described by a single parameter λ, the mean of the distribution. Poisson distribution is the limiting form of Binomial distribution as n -> $\infty$. It serves as an approximation to Binomial distribution when the number of trials n is very large.
Poisson distribution is used to find probabilities when
Poisson distribution is also used as an approximation to binomial distribution when np < 5 and for situations when only the mean of the distribution is known.
A Poisson variable is used to represent
- The number of natural calamities like earth quakes happening during the course of an year.
- The number of deaths of the insurance policy holders before the maturity period.
- Number of incoming calls during a period of time.