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BASICS OF PROBABILITY

Presented By: Arnika Vishwakarma

Amruta Dadkar
Amarnath Gupta Anitha Meenakshi Abhishek Khare

Aditya Singh

Will we win the new contract ? Will the companys new product be popular with the customers? Will we gain the export order we have bid for? Will the tender get passed?

Will the company make profits this year?

WHAT IS PROBABILITY?

Probability is the measure of how likely an event is. In other words it is quantifying uncertainties

APPLICATIONS OF PROBABILITY

Investment companies: Evaluation of prospects of stocks of different companies

Traders: Assessment of prices of commodities for trading

Bankers: Assessment of the credit worthiness of an individual or company

Doctors: Detection of abnormality of a part or system of a human body

BASIC TERMINOLOGIES

EXPERIMENT: Any activity that produces an event Examples: Tossing of a coin, Throwing a dice

SAMPLE SPACE (S ): Set of all the possible outcomes of an experiment Examples: Tossing of a coin: S={H,T} Tossing of three coins: S ={HHH,TTT,HHT,TTH,THH,HTT,HTH,HTT}

SAMPLE POINT: elements of the sample space Examples: HHH,TTT.HHT.so on

BASIC TERMINOLOGIES (CONTINUED)


EVENT (E) : Of all the possible outcomes in the sample space of an experiment some outcomes satisfy a specified description, which we call an event. Example: If a dice is thrown, S = {1,2,3,4, 5,6} E 1:event of getting an odd number ={1,3,5} E 2: event of getting an even number ={2,4.6} MUTUALLY EXCLUSIVE EVENT: Two or more events are said to be mutually exclusive if the occurrence of any one of them excludes the occurrence of another event Example: When we toss a coin the events head and tail are mutually exclusive because if head occurs we cannot get a tail and vice versa.

COLLECTIVELY EXHAUSTIVE: Event that encompasses all the possible outcomes of an experiment. Example: Rolling of a dice the outcomes 1,2,3,4,5 and 6 are collectively exhaustive

MUTUALLY EXCLUSIVE VS COLLECTIVELY EXHAUSTIVE If a dice is thrown, S = {1,2,3,4, 5,6} E 1:event of getting an odd number ={1,3,5} E 2: event of getting an even number ={2,4.6} E 1 and E 2 are both mutually exclusive and collectively exhaustive

If a dice is thrown, S = {1,2,3,4, 5,6} E 1:event of getting an even number ={2, 4, 6 } E 2: event of getting a prime number={1, 2, 3, 5 } E 1 and E 2 are not mutually exclusive but not collectively exhaustive

AXIOMS

0<P(A) < 1 The probability of occurrence of one of the other of all possible event is equal to 1.That is P(S)= 1 For a mutually exclusive P(A or B)= P(A) + P(B)=1

DEFINITIONS OF PROBABILITY
THE VARIOUS DEFINITIONS ARE: 1) CLASSICAL 2) STATISTICAL, EMPERICAL OR FREQUENCY 3) MODERN 4) ODDS 5) SUBJECTIVE

CLASSICAL DEFINITION
If an event E can happen in m ways out of a total of n possible equally likely ways, the probability of its happening is defined as m P ( E ) = ------n Eg: A box contains 2 white and 3 black balls. If a ball is drawn at random from the box, the probability of the ball being white is 2/5. because out of 5 balls or probabilities, 2 are favorable to the event of drawing a white ball. Eg: If a dice is thrown, the probability of the no: 6 to show up on the throw is 1/6.

STATISTICAL OR EMPERICAL PROBABILITY


It is defined as the relative frequency of occurrence of the event when the number of observations is very large. The calculation is expressed as a ratio between the number of times an event occurs to the number of possible times it could occur. Eg: If out of 500 babies, born in a hospital in a year , there are 260 boys and 240 girls, one could say that the probability of a girl being born is 240/500=0.48 or 48% Eg: If in a class of 100 students , there are 60 boys and 40 girls, the probability that a student selected at random from the class will be a girl is 40/100=2/5

MODERN THEORY OF PROBABILITY


In the sample space corresponding to a conceptual or physical experiment, an event of interest could be defined as either an individual point or as collection of points (referred to as subset) in the whole set of points known as Sample Space. The probability of an event E is defined as n(E) P(E) = ----------N where n(E) is the number of points corresponding to the happening of the event, and N is the total number of points in the sample space. Eg when 2 coins are tossed ,the sample space comprises of 4 pts. probability of the event head on at least 1 coin is .

PROBABILITY DEFINED AS ODDS The odds of occurrence of an event is the ratio of the probability of its happening to the probability of its not happening. odds in favour of happening as p:q when p is the probability of its happening and q is the probability of its not happening.ie q=1-p. While the odds against its happening are q:p. Eg: When the dice is thrown the probability of getting 6 is 1/6 and of not getting 6 is 5/6.Thus odds in favour of no: 6 are 1/6:5/6 ie. 1:5 and odds against 6 is 5:1.

SUBJECTIVE PROBABILITY

A probability derived from an individual's personal judgment about whether a specific outcome is likely to occur. Eg: whether it is going to rain, winning of a match.

VENN DIAGRAM Venn diagrams are diagrams that show all possible logical relations between a finite collection of sets Sample Space rectangular region Events circular regions within the rectangle.

EVENT

TWO MUTUALLY EXCLUSIVE EVENTS

TWO NON MUTUALLY EXCLUSIVE EVENTS

PROBLEM In a survey of children who saw three different shows at Walt Disney World, the following information was gathered: 39 children liked The Little Mermaid 43 children liked 101 Dalmatians 56 children liked Mickey Mouse 7 children liked The Little Mermaid and 101 Dalmatians 10 children liked The Little Mermaid and Mickey Mouse 16 children liked 101 Dalmatians and Mickey Mouse 4 children liked The Little Mermaid, 101 Dalmatians, and Mickey Mouse 6 children did not like any of the shows

Answer the following questions: How many students were surveyed? How many liked The Little Mermaid only? How many liked 101 Dalmatians only? How many liked Mickey Mouse only?

How many students were surveyed? Ans) The total no. of students surveyed were 26+3+24+6+4+12+34+6 = 115 How many liked The Little Mermaid only? Ans) 26 children's How many liked 101 Dalmatians only? A) 24 children's How many liked Mickey Mouse only? Ans) 34 children's

JOINT ,MARGINAL AND CONDITIONAL


PROBABILITIES

Joint Probability P(AB) is defined joint probability of both the events A and B happening jointly Marginal probability Probability of happening event A when there are 2 events A and B i.e P(A) Conditional Probability Probability of happening of B given that A is already happened i.e P(B/A)

*
A

* * * *

*
B

EXAMPLE:*

AB

Sample Space
p(A)= nA/n = 6/10 P(B)= nB/n =4/10 P(AB)= nAB/n = 2/10 c Marginal probability: P(AB) + P(AB )= 2/10 +4/10

Conditional probability : P(B/A) = nAB/nA = 2/6

n : number of points in the sample space nA : number of points corresponding to the happening of event A nB: number of points corresponding to the happening of event B nAB: number of points corresponding to the happening of both events A and B i.e event AB

THEOREMS OF PROBABILITY
P(A U B) = P(A) + P(B) P(AB) Problem: The probability that a contractor will get a contract is 2/3
and the probability that he will get on other contract is 5/9 . If the probability of getting at least one contract is 4/5, what is the probability that he will get both the contracts ?

Sol: Here P(A) = 2/3, P(B) = 5/9 P(AU B) = 4/5, P(AB) = ? By addition theorem of Probability: P(A U B) = P(A) + P(B) - P(AB) 4/5 = 2/3 + 5/9 - P(AB) 4/5 = 11/9 P(AB) P(AB) = 11/9 4/5 = (55-36) / 45 P(AB) = 19/45

BAYES THEOREM

It states that if A and B are two mutually exclusive and collectively exhaustive events and C is another event defined in the context of the same experiment, then given the values of P(A), P(B) , P(C/A) and P(C/B), the conditional probability: P(A/C) = (P(C/A) x P(A)) / ( P(C/A)P(A) + P(C/B)P(B) P(B/C) = (P(C/B) x P(B)) / ( P(C/B)P(B) + P(C/A)P(A)

PROBLEM

Suppose we have two machines , I and II , which are used in the manufacture of shoes. Let E1 be the event of shoes produced by machine I and E2 be the event that they are produced by machine II. Machine I produces 60 % of the shoes and machine II 40 %. It is also reported that 10 % of the shoes produced by machine I are defective as against the 20% by machine II. What is the probability that a non-defective shoe was manufactured by machine I?

P(E1/A) = P(AE1)P(E1)/ S P(A/Ei)P(Ei)

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