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Chapter-3
ManavazhaganR@Bsnl.in 1
What is the chance that
the sales will decrease if,
the price is increased ?
ManavazhaganR@Bsnl.in 2
What is the chance that
Indians will not live after
the age of 65 years ?
ManavazhaganR@Bsnl.in 3
What is the likelihood that
the driving will be safe on
Indian roads ?
ManavazhaganR@Bsnl.in 4
Probability
• What are the chances that sales
decrease if we increase the
price ?
• Likelihoo • What is the likelihood the new
method will result in high
d •
productivity ?
What are the odds in favour of a new
• Chance •
investment being profitable ?
What is the likelihood the driving will
be safe on Indian roads ?
• Possibilit • What are the chances that Indian
y will not live after 65 years of
age ?
• What are the chances that TV serials
telecasted between 8 & 9 P.mwill
be seen by the family ?
• ManavazhaganR@Bsnl.in 5
Probability
• What are the chances that sales
decrease if we increase the
price ?
describing the• What
chance that
is the likelihood the newthe
method eve
high
will result in
productivity ?
• What are the odds in favour of a new
investment being profitable ?
• driving
What is the likelihood the
will be safe on
Indian roads ?
• What are the chances that
ManavazhaganR@Bsnl.in 7
Probability
0 0. 1
5
Probability
Uncertain Certain
50 : 50
Chance
Equally Likely
ManavazhaganR@Bsnl.in 8
0
Probability-Quiz 1
Unlikely Likel
Uncertain 50 : 50 y Certain
Chance
Equally Likely
• Match the following with the above Chances
1. Today is Monday . Tomorrow is Tuesday
2. It will rain today
3. Tomorrow We can travel by Metro Train in Bangalore
4. Every Monday morning there will be heavy traffic on
the Bangalore Roads
5. Everybody will die at the age of 85
6.
ManavazhaganR@Bsnl.in 9
Probability- Terminology
ManavazhaganR@Bsnl.in 11
Measuring Probability
P(Event) = Number of ways the event could occur
Total number of outcomes
e once 1 Experiment:
) what is the probability of 5 showing
Step-1: Find the? Total
or number of
2 ) what is the chance possible
that theoutcome
number 5 will be shown ? o
of the
Roll3a die which
) How much percentageexperiment
of an experiment will result in n
has six sides with
each side showing
le outcomes of an
six sides with experiment
each side • is called
showing one number
bability
fromof 1all to 6the andoutcomes
with of an experiment =
• P(Number 1)1 . = 1/6
ll ) = 0 .for
space 167 + 0this
. 167 + 0rolling
. 167 + 0 . 167 die
+ 0 . 167 + 0 . 167
experiment is : S = [ 1 , 2 , 3 ,
each side showing a =0.167
different number.
• P(Number 2) = 1/6
Event:
=0.167
e having
1. whatequal
is the probability or chanc
• P(Number 3) = 1/6
outcomes are
probability of called
number 1 Equally Like
=0.167
showing?
2. what is the • P(Number 4) = 1/6
probability of number 2 =0.167
showing?
• P(Number 6) = 1/6
3. what is the
=0.167
probability of number 3
showing? •
4. what is the ManavazhaganR@Bsnl.in 13
Quiz
• http://www.bbc.co.uk/skillswise/numbers
•
ManavazhaganR@Bsnl.in 14
Measuring Probability- Quiz
P(Event) = Number of ways the event could occur
Experiment:
• Total number of outcomes
Roll a die which
has six sides with •
each side showing • P(Odd Number) = 3/6
one number from 1
to 6 and with each =0.5
side showing a • P(Even Number)= 3/6
different number. =0.5
Event: •
1. what is the
probability of
showing odd
number ?
2. what is the
probability of ManavazhaganR@Bsnl.in 15
showing even number
Measuring Probability- Quiz
P(Event) = Number of ways the event could occur
Experiment:
• Total number of outcomes
Roll a die which has
six sides with each side•
showing one number • P(Greater than 3) = 3/6
from 1 to 6 and with
=0.5
each side showing a
different number. •
Event: • P(Less than 5) = 4/6
1. what is the =0.33
probability of showing
numbers greater than 3 ?
2. what is the
probability of showing
numbers less than 5 ?
3. What is the ManavazhaganR@Bsnl.in 16
Complement ofis an
n t E is ca lle d C o m p le m e n t of that event . Complement
denoted
Event
Event-1. probability of
Event:
Event-2. probability of
showing numbers less
1. what is the than 3
probability of showing Complement of this event is
Ø Addition
Rule
1 . M u tu a lly E x clu siv e E v e n ts
2 . N o t M u tu a lly E x clu siv e E v e n ts
ØMultiplication Rule
1 . Independent Events
2 . Dependent Events
ManavazhaganR@Bsnl.in 18
Mutually Exclusive Events
M u tu a lly e x clu siv e
e v•e n t A h a p p e n s B ca n n o t h a p p e n O r V ice - v e
•
•
A B C D
Mutually exclusive
o not have common outcome the events are mutu
ManavazhaganR@Bsnl.in 19
Mutually Exclusive Events
M u tu a lly e x clu siv e Not Mutually Exclusive
n o•§If
t h atwo
p p eevents
n . have common outcome the events are
p p•§eCn occurs or mD e occurs
a t th e sa tim e or both c & D occurs simulta
B •w ill n o t o ccu r( w ill n o t h a v e c o m m o n o u tco m e )
C D
Mutually Exclusive
Events
A B Not Mutually Exclusive
Events
C. Sun arises in the
A .Sun arises in the morning .
morning . D . Young couple goes
B .Sun sets in the for a walk
ManavazhaganR@Bsnl.in 20
evening
Hat is the
ManavazhaganR@Bsnl.in 21
Joint Probability - Quiz
• The Outcome of Find the result of joining
+ P(B) – P(A B)
P(A or B ) = P(A) + P(B) –
P(A or B) = P(A and B)
P(A) + P(B)
P ro b a b ility o f g e ttin g e ith e r2. P(A or B or C ) = P(A) +R eP(B)
m ove
R e2.
d OP(A orck
r B la B Cor C) ?= P(A)
a rd +P(C) – P(A and B) - nP(A
o .2
+P(B)+P(C ) and C) – P(C and B) – re d
2 ca rd s
B la ck P(A and
R ed B and C)
R ed
2
2 2
C a r C a rd
C a r 2
2
d • d
•
A ll re a d a n d A ll B la ck A ll R e d ca rd s w ith o u t
C a rd s N u m b e r 2 re d C a rd s a n d
ManavazhaganR@Bsnl.in 23
Addition Rule-1 -Quiz
Card is selected from 52 car
is M u tu a lly E x clu siv e e v e n t a n d m a tch th e fo rm
2
2
C ar 2
C ar C a rd
2
2
d • d
ManavazhaganR@Bsnl.in 27
Independent & Conditional Events
Independent Event
Conditional Event
at Maths
is good at Maths
ManavazhaganR@Bsnl.in 31
• 4. Today it rains. Today is Tuesday
Calculating Independent & Conditional
Probabilities
• Independent • Conditional
Probability Probability
• If two events A & B are •( AIf|Btwo events are
independent then the P ) = P ( A a nd B ) / P ( B
probability that they P ( A |Bdependent
) = P( A B ) / P ( B )
P ( A both
a n doccur
B ) =is:P ( A ) * P ( B )
P ( A a n d B ) = P ( A ) * P ( A |B
P ( A ,•B a n d C ) = P ( A ) * P ( B ) * P ( C )
ManavazhaganR@Bsnl.in 32
Theoretical Distributions
Suppose we wish to know the
chances of a person having an
accident while travelling by a car
on the NICE road, what should we
do ?
Ø Should we ask a person to travel on the
NICE road by a car till he met with an
accident and get killed ?
Ø Should we repeat experiments in the
Lab ?
ManavazhaganR@Bsnl.in 33
Theoretical Distributions
Use theoretical
Probability Distributions
to find out the chances
of an accident .
Ø
Ø How do the outcomes are expected to vary ?
Ø Many situations reflect the behavior of these
Probability distributions.
Ø ManavazhaganR@Bsnl.in 34
Theoretical Distributions
1.Normal Distribution
2.Binomial Distribution
3.Poisson Distribution
ManavazhaganR@Bsnl.in 35
eoretical Distributions - Definitio
Random Variable:
A random variable is a function that associates
real numbers 0,1,2,….with each element in the
sample space.
Notations :
ManavazhaganR@Bsnl.in 37
T h e o re tica l D istrib u tio n s
NOTATIONS of Theoretical
Distributions:
Mean – μ
Standard Deviation - σ
ManavazhaganR@Bsnl.in 38
Binomial Experiments
Case-1
• A sales man may or may not sell a
product
Case-2
ManavazhaganR@Bsnl.in 40
Theoretical Distributions
B in o m ia l D istrib u tio n s
Many situations involve ‘Yes’ or ‘No’ type of
answers.
Ø A sales man may or may not sell his products
Ø A student may or may not pass in a subject
Ø A product may or may not be defective
Ø
Ø These type of situations involve only two answers
Ø Experiments involving these type of situations are
called Binomial Experiments
Ø The results of these experiments follow Binomial
Distribution
ManavazhaganR@Bsnl.in 41
Theoretical Distributions
B in o m ia l D istrib u tio n s
Properties of Binomial Distribution :
( Bernoulli Process )
1.The experiment consists of a sequence of n
identical trials
2.Each trial has only two possible outcomes –
Success / Failure
3.The probability of the outcomes of any trial is
same
4.The outcome of one trial does not affect the
ManavazhaganR@Bsnl.in 42
Theoretical Distributions
ManavazhaganR@Bsnl.in 43
Theoretical Distributions
B in o m ia l D istrib u tio n s
P ro b a b ility d istrib u tio n
fo rm u la is :
P - P ro b a b ility o f
Sq -u cce
P ro ssb a b ility o f
nfa- ilu
N urem = b e1r- op f tria ls
in o mur-nia l D istrib u tio n w e a re in te re ste d in n u m b
Nd ue mrtab ke er no f su cce sse s
d e sire d
ManavazhaganR@Bsnl.in 44
Theoretical Distributions
B in o m ia l D istrib u tio n s
Properties of S te p - 1 : F in d th e D istrib u tio n ty p e :
Binomial 1 . N o . o f o u tco m e : H e a d o r ta il
Distribution2 . N o . o f tria ls : 5 co in s a re to sse d
1. Only two 3 . P ro b . O f o u tco m e : 5 0 % ch a n ce fo r e a ch t
possible 4 . In d e p e n d e n t o u tco m e : Y e s
outcomes. S o it is B in o m ia l D istrib u tio n
S te p - 2 : A p p ly F o rm u la :
2. Experiment has n
r= 3 ; n = 5 , p = 0 . 5 , q = 0 . 5
trials
3. Prob. Of outcome
P ( h e a d =3 ) = 1 0 / 3 2
to be equal for
all trials.
e 4.
to sse d 6 4 tim e s . In h o w m a n y to sse s w o u ld y o u e x p
Independent
outcome. ManavazhaganR@Bsnl.in 45
Theoretical Distributions
P ( x ) – Probability of occurrences in an
interval
μ - ( Mu )- Average number of outcomes
per unit time , distance , area or
volume .
t - Specific time
e = 2 . 71828ManavazhaganR@Bsnl.in 47
Theoretical Distributions
μ = mean
occurrences must be =4 , x = 6
constant for all the time
P ( 6of) same
interval = 0 .length
104
3. The probability of an occurrence
http://www.portfoliomonkey.com/flash/galtonboard/galtonboard.html
o f th e g ra p h
N o rm a l
ManavazhaganR@Bsnl.in 51
Normal Distributions -
Properties
Properties of Normal Distribution:
1. B e ll – S h a p e d G ra p h
2. S ym m e trica l a b o u t ce n tre
lin e
3. Ta il o f th e cu rve exte n d s
fro m + ∞ to - ∞
4. M e a n is lo ca te d in th e
ce n tre
5. T h e h ig h e st p o in t is a t
m ean
6. S ta n d a rd D e via tio n
d e te rm in e s th e w id th o f
th e cu rve
7. M e a n = M e d ia n = M o d e
8. T h e a re a b e tw e e nManavazhaganR@Bsnl.in
th eN o rm a l 52
M ean
9.68 - 95 - 99 . 7 Rule M ean=
15
L o w e r Ta il U p p e r Ta il
10. The Normal Probability
function is :
Normal
ManavazhaganR@Bsnl.in 54
Curve
Standard Normal Distribution
ØA ra n d o m v a ria b le th a t Standard Normal
Distribution
h a s n o rm a l d istrib u tio n % of Data Val
w ith
m e a n = 0 a n d S . D = 1 is
ca lle d S ta n d a rd N o rm a l
D istrib u tio n .
ØT h is ra n d o m v a ria b le is
n o te d a s Z
ØT h e p ro b a b ility th a t th e Z
Probability of Z value betwe
v a lu e lie b e tw e e n tw o Mean
in te rv a ls is ca lcu la te d b y
co m p u tin g th e a re a
u n d e r th e n o rm a l
cu rv e o v e r th a t in te rv a l
ØT h e S ta n d a rd N o rm a l
D istrib u tio n Ta b ManavazhaganR@Bsnl.in
le is 55
Z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09
0.0 0.0000 0.0040 0.0080 0.0120 0.0160 0.0199 0.0239 0.0279 0.0319 0.0359
0.1
0.2
0.0398
0.0793
0.0438
0.0832
0.0478
0.0871 S ta n d a rd N o rm a l D istrib u ti
0.0517
0.0910
0.0557
0.0948
0.0596
0.0987
0.0636
0.1026
0.0675
0.1064
0.0714
0.1103
0.0753
0.1141
t is th e p ro b a b ility th a t th e Z v a lu e is a t m o st - 2 . 1 3 ?
0.3
0.4
0.1179
0.1554
0.1217
0.1591
0.1255
0.1628
0.1293
0.1664
0.1331
0.1700
0.1368
0.1736
0.1406
0.1772
0.1443
0.1808
0.1480
0.1844
0.1517
0.1879
0.5 0.1915 0.1950 0.1985 0.2019 0.2054 0.2088 0.2123 0.2157 0.2190 0.2224
0.6 0.2257 0.2291 0.2324 0.2357 0.2389 0.2422 0.2454 0.2486 0.2517 0.2549
0.7 0.2580 0.2611 0.2642 0.2673 0.2704 0.2734 0.2764 0.2794 0.2823 0.2852
0.8 0.2881 0.2910 0.2939 0.2967 0.2995 0.3023 0.3051 0.3078 0.3106 0.3133
t is th e p ro
0.9
1.0
W bhaabtility
0.3159
0.3413
is thth
0.3186
0.3438
e ap trothb ea bZility
0.3212
0.3461
0.3238
0.3485
v a luthe ais
0.3264
0.3508
t th
0.3289
0.3531
a teleZa vst
0.3315
0.3554
a lu
2 .e1 3is ?b e
0.3340
0.3577
0.3365
0.3599
0.3389
0.3621
1.1 0.3643 0.3665 0.3686 0.3708 0.3729 0.3749 0.3770 0.3790 0.3810 0.3830
1.2 0.3849 0.3869 0.3888 0.3907 0.3925 0.3944 0.3962 0.3980 0.3997 0.4015
1.3 0.4032 0.4049 0.4066 0.4082 0.4099 0.4115 0.4131 0.4147 0.4162 0.4177
1.4 0.4192 0.4207 0.4222 0.4236 0.4251 0.4265 0.4279 0.4292 0.4306 0.4319
is th e p ro Wb ahbaility
1.5
1.6
0.4332
0.4452
t is th
0.4345
0.4463
th ea tp th
0.4357
0.4474
ro eb aZb vility
0.4370
0.4484
a lu ethisa tleth
0.4382
0.4495
0.4394
0.4505
sse th
Z av na lu
0.4406
0.4515
- 2e . is
0.4418
0.4525
1 3 b?e
0.4429
0.4535
0.4441
0.4545
1.7 0.4554 0.4564 0.4573 0.4582 0.4591 0.4599 0.4608 0.4616 0.4625 0.4633
1.8 0.4641 0.4649 0.4656 0.4664 0.4671 0.4678 0.4686 0.4693 0.4699 0.4706
1.9 0.4713 0.4719 0.4726 0.4732 0.4738 0.4744 0.4750 0.4756 0.4761 0.4767
2.0 0.4772 0.4778 0.4783 0.4788 0.4793 0.4798 0.4803 0.4808 0.4812 0.4817
is th e p ro bWa bhility
2.1
2.2
0.4821
0.4861 a t isththaet th
0.4826
0.4864
0.4830
0.4868p ro
e bZa vb aility
0.4834
0.4871 lu e th
0.4838
0.4875 is abte th
0.4842
0.4878 tw ee Ze nv a- 1lu&
0.4846
0.4881
0.4850
0.4884 e 1is ?b
0.4854
0.4887
0.4857
0.4890
2.3 0.4893 0.4896 0.4898 0.4901 0.4904 0.4906 0.4909 0.4911 0.4913 0.4916
2.4 0.4918 0.4920 0.4922 0.4925 0.4927 0.4929 0.4931 0.4932 0.4934 0.4936
2.5 0.4938 0.4940 0.4941 0.4943 0.4945 0.4946 0.4948 0.4949 0.4951 0.4952
2.6 0.4953 0.4955 0.4956 0.4957 0.4959 0.4960 0.4961 0.4962 0.4963 0.4964
2.7 0.4965 0.4966 0.4967 0.4968 0.4969 0.4970 0.4971 0.4972 0.4973 0.4974
2.8 0.4974 0.4975 0.4976 0.4977 0.4977 0.4978 0.4979 0.4979 0.4980 0.4981
2.9 0.4981 0.4982 0.4982 0.4983 0.4984 0.4984 0.4985 0.4985 0.4986 0.4986
3.0 0.4987 0.4987 0.4987 0.4988 0.4988 0.4989
ManavazhaganR@Bsnl.in 0.4989 0.4989 0.4990 0.4990
56
Normal Distributions – Computing
Probabilities
Computing Probabilities for any Normal Probability
Distributions
al distributions are computed using the Standard Normal Distribution .
Other Normal
Distributions a ) 15 – is the Mean ,
5 , 10 , 15 , 20 , 25 are x –
values , S . D = 2 . 5
Z b ) The shaded region 15 to
20 represents the % of
data whose values are
Miles
How do we know the % of between
data lies 15 between
and 20 0. & Z or 15
ManavazhaganR@Bsnl.in 59
Standard Normal Distribution & Other
Normal Dirstributions
= 1 .5
S .D
S ta n d a rd N o rm a l D istrib u tio n Ta b le va lu e fo r 1 . 5 =
0 .4 3 3 2
ie
. 4 3 % o f a ll va lu e lie s b e tw e e n 1 5 & 2 0
ie
. th e p ro b a b ility th a t th e ra n d o m va ria b le x lie s
b e tw e e n 1 5 & 2 0 is 0 . 4 3 3 2
ManavazhaganR@Bsnl.in 61
ManavazhaganR@Bsnl.in 62
Exercises On theoretical
Distributions
1.Business Statistics – Williams p
( 571to 621 )
2.Business Statistics – JK. Sharma
p(246 – 248 )
3.Business Statistics – JK. Sharma
p(252 – 254 )
4.Business Statistics – JK. Sharma
p(263 – 267 )
5.
6. ManavazhaganR@Bsnl.in 63
Counting Rule
……………..(nK).
ManavazhaganR@Bsnl.in 64
Combination Rule
• If an experiment can
be described as a
sequence of k steps
with
n1 possible outcomes
on the first step,
n2 possible outcomes
on the second step and ……
nk possible outcomes
in the kth step, then
Total number of outcomes =
(n1)(n2)(n3)……………..(nK).
ManavazhaganR@Bsnl.in 65
Combination Rule
• To count the number of outcomes
when the experiment involves
selecting r objects from a set of N
objects.
S e le ct 2 b a lls . H o w
m •a n y co m b in a tio n o f 2
b a lls ca n b e se le cte d ?
ManavazhaganR@Bsnl.in 66
Combination Rule