MBA ZC417

Introduction to Probability

Dr Shekhar Rajagopalan

Chap 1-1
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More Terminology
Conditional Probability
P(A | B) Read as Probability of A given B
P(A | B) = P(A and B) / P(B) = P(A B) / P(B)

Independent Events
P(A | B) = P(A) or P(A B) = P(A) * P(B)

Multiplicative Law
P(A and B) = P(B) * P(A | B) or P(A B) = P(B)P(A|B)

Joint Probability
Probability of two events both occurring

Marginal Probability
Related to the Joint Probability Table
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P 180 Ex 11

NOPUS was conducted by sending observers to randomly selected sites to collect

data on the usage of DOT-compliant helmets by motorcyclists. Following table
presents the data.
Type of Helmet
Region DOT-Complaint Non-Compliant
Northeast 96 62
Midwest 86 43
South 92 49
West 76 16
Total 350 170

Estimate the probability that a motor-cyclist wears a DOT-Compliant helmet

Compute the probability of DOT-compliance by region
What is the probability a motor-cyclist is DOT-Complaint given he is from NE
What is the probability that a motorcyclist is from NE given he is DOT-Complaint

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P 197 Ex 33

Students taking GMAT were asked about their UG degree and Intent to pursue their
MBA as a full-time or Part-Time student. A summary of their response follows:

UG Degree
Type Business Engineering Other Total
FT 352 197 251 800
PT 150 161 194 505
Total 502 358 194 505

Develop a joint probability table for these data

Use the marginal probabilities of UG degrees to comment on which UG degree
produces the most potential student
If the student intends to enroll FT, what is the probability that he is an engineer
If he is a Business UG, what is the probability that he intends to be a FT MBA student
Let A denote the event that he intends to be a FT MBA student and let B denote the
event that he is Business UG. Are A and B independent?
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P 197 Ex 30 & Ex 31

30. Suppose P(A) = 0.5 and P(B) = 0.6 and P(A and B) = 0.4.
1. Draw the Venn Diagram.
2. Compute P(A | B).
3. Compute P(B | A).
4. Are A and B independent?

31. Suppose A and B are mutually exclusive. And P(A) = 0.3 and P(B) = 0.4.
1. Compute P(A and B).
2. Compute P(A | B).
3. Explain why Mutually Exclusive and Independence are not the same
concepts.
4. What would you conclude about these two concepts.

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Mutual Exclusiveness and Independence

Do not confuse the notion of mutually exclusive events with that of

independent events.

Two events with nonzero probabilities cannot be both mutually exclusive

and independent.

Mutually exclusive event is known to occur, the other cannot occur.; thus,
the probability of the other event occurring is reduced to zero (and they
are therefore dependent).

Two events that are not mutually exclusive, might or might not be
independent.
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