Underlying distribution is a concept that describes the density for the value of the measurement. It is a theoretical concept.
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If the underlying distribution of the product is normally distributed then (and only then) the normal distribution can be used to identify specimens that are outside the acceptable range.
The standard error of the underlying distribution, the method of selecting the sample from which the mean is derived, the size of the sample.
The answer depends on the underlying distribution. For example, if you have a random variable X, with a symmetric distribution with mean = 20 and sd = 1, then prob(X > 1) = 1, to at least 10 decimal places.
The Normal or Gaussian distribution is a probability distribution which depends on two parameters: the mean and the variance (or standard deviation). In may real life situations measurements are found to be approximately normal. Furthermore, even if the underlying distribution of a variable is not normal, the mean of a number of repeated observations of the variable will approximate the normal distribution.The term "approximate" is important because, although the heights of adult males (for example) appear to be normally distributed, the true normal distribution must allow negative heights whereas that is not physically possible!
A large sample reduces the variability of the estimate. The extent to which variability is reduced depends on the quality of the sample, what variable is being estimated and the underlying distribution for that variable.