FUNDAMENTALS OF PROBABILITY

By. Prof. Prasad Kulkarni

Random experiment

1.

2.

3.

A process of obtaining information through observations or measurement of phenomena whose outcome is subject to chance Properties of random experiment All possible outcomes can be specified inadvance. It can be repeated. The same outcome may not occur on various repetitions so that the actual outcome is not known in advance.

Sample space

The set of all possible distinct outcomes ( events) for a random experiment is called the sample space ( or event space) provided Example: Tossing of coin head or tail.

Event types

Mutually exclusive events: If two or more events cannot occur simultaneously in a single trial of an experiment, then such events are called mutually exclusive events or disjoint events. For example; The number 2 and 3 cannot occur simultaneously on the roll of a dice. Collectively exhaustive events: a list of events is said to be collectively exhaustive when all possible events that can occur an experiment includes every possible outcome.

Independent events; Two events are said to be independent if information about one tells nothing about the occurrence of other. For example; the outcome of succeeding tosses of coin are independent of the preceding toss. Dependent events; Two or more events are said to be dependent if information about one tells something about others for example; drawing car from a pack of playing cards without replacement reduces the chances of drawing queen in the subsequent draws.

Compound events; When two or more events occur in connection with each other than their simultaneous occurrence is called a compound event.

Definition of probability

Probability is a numerical measure ( between 0 and 1 inclusively) of the likelihood or chance of occurrence of an uncertain event. Classical Approach.

Relative frequency approach The probability of an event A is the ratio of the number of times that A has occurred in n trials of an experiment

Relative Frequency Approach

6.9

Bits & Bytes Computer Shop tracks the number of desktop computer systems it sells over a month (30 days):
Desktops Sold # of Days

For example, 10 days out of 30 2 desktops were sold.

0 1 2 3

1 2 10 12

From this we can construct 4 5 the estimated probabilities of an event (i.e. the # of desktop sold on a given day)

Properties of probability

Each probability should fall between 0 and 1 Sum of probabilities of all sample units constituting the sample space is equal to 1 P(s) = PA)+ P(B)+......+P(N) =1 is called as the probability of certain event Probability of an event that doesnot occur is equal to 1- probability of the event that does occur

fundamentals

Permutations; This rule helps us to compute the number of ways in which n disjoint objects can be arranged, taking r of them at a time

n! = n ( n-1) (n-2)3,2,1. 5! = 5 (5-1) (5-2) (5-3) (5-4)

= 5 (4)(3) (2)(1)

Combinations: the arrangement of objects is not important but only the objects that are chosen

Rules of addition

Rule 1 : Mutually exclusive events: if two events A and B are mutually exclusive, exhaustive and equiprobable then the probability of either event A or B or both occurring is equal to the sum of their individual probabilities P(A or B) = P(A U B)= P(A)+ P(B)

Problem

Consider the pattern of arrival of students of first semester MBA@ GIT to the class on time during the first hour with its probability
No of persons Probabilit y 0 1 2 3 4 or more 0.4

0.1

0.2

0.3

0.3

What is the probability that either 2 or 3 students will arrive on time during the first hour?

solution

P(A or B) = P(A U B)= P(A)+ P(B) P(2 or 3) = P (2U3) = P(2) +( p( 3)

= 0.3 + 0.3 = 0.6

Rule 2: Partially overlapping ( Joint events): If two events A and B are not mutually exclusive then the probability of either A or b or both occurring is equal to the sum of their individual probabilities minus the probability of A and B occurring together. P( A or B) = P( A) +P(B) P(A B) This is also written as P( A U B) = P(A)+ P(B) - P(A B) P( A U B) = P(A)+ P(B) - P(A and B)

Problem

Suppose 60% of GIT MBA students studying in first semester are from commerce background and 40% of students from rural background and 20% of students have both rural and commerce back ground What is the probability that students are from Commerce background or rural background or both

Solution

P( commerce or rural )= P( commerce) + P( Rural) P ( commerce and rural) = 0.6 + 0.4 0.2
= 0.8

Rules of Multiplication

Statistically independent events: when the occurrence of an event does not affect and is not affected by the probability of occurrence of any other event. The event is said to be statistically independent For example : A house wife purchasing NIRMA detergent will not affect the purchase of WHEEL and it will not be affected by the purchase of WHEEL by others.

There are three types of probabilities under statistical independence 1. Marginal probability 2. Joint probability 3. Conditional probability

Marginal probability: A marginal or unconditional probability is the simple probability of the occurrence of an event. For example: In Australia and India cricket test series the runs scored by Viral Kohli is independent of outcome of Rohit sharma

Joint probability: The probability of two or more independent events occurring together or in succession is called the Joint probability P(AB) = P(A B) = P(A) * P(B) For example: On shop floor of TATA MARCOPOLO In shop 1 two employees are working on two different machines A And B. the output of two machines are independent of each other

Conditional probability: The probability of an event occurring given that another event has occurred P(A/B) = P(A) P(B/A)= P(B) For example: In TATA MARCOPOLO plant after top body put on the chassis , the welding process will start.

Statistically dependent events: The condition when the probability of occurrence of an event is dependent upon or affected by the occurrence of some other event There are three types of statistical dependent events. They are 1. Joint probability 2. Conditional probability 3. Marginal probability

Joint probability; the joint probabilities of events A and B occurring together or in succession under statistical dependence is given by P(A B) = P(A) * P(B/A) P(A B) = P(B) * P(A/B) For example ; the passing of electricity ( event A) and working of machines ( event B) occurs together.

Conditional probability: Under statistical dependence the conditional probability of an event B given that event A has already occurred is given by P(B/A)= P(A B) /P(A) P(A/B) = P(A B) /P(B)

Problem

The internal marks of first sem students of MBA @ GIT in four subjects according to their class obtained given below
Statistics Marketin g MIS MBP

FCD
First Class Second class

45
10 5

50
5 5

30
20 10

20
30 10

What is the probability that student who got FCD given that he got it in statistics?

solution

145 65 30 240

60

60

60

60

P( FCD/statistics) = P(FCD statistics) /p(statistics)

= (45/240 )/45/60) = 0.1875 / 0.75 = 0.25.

Bayes theorem

A method to compute conditional probabilities under statistical dependence. P(A/B) = P(A B) /P(B)