Statistics for Managers Using Microsoft® Excel 5th Edition - CA Sri Lanka
Statistics for Managers Using Microsoft? Excel
5th Edition
Chapter 4 Basic Probability
Statistics for Managers Using Microsoft Excel, 5e ? 2008 Pearson Prentice-Hall, Inc.
Chap 4-1
Learning Objectives
In this chapter, you will learn:
Basic probability concepts Conditional probability
Statistics for Managers Using Microsoft Excel, 5e ? 2008 Pearson Prentice-Hall, Inc.
Chap 4-2
1
Definitions
Probability: the chance that an uncertain event will occur (always between 0 and 1)
Event: Each possible type of occurrence or outcome
Simple Event: an event that can be described by a single characteristic
Sample Space: the collection of all possible events
Statistics for Managers Using Microsoft Excel, 5e ? 2008 Pearson Prentice-Hall, Inc.
Chap 4-3
Types of Probability
There are three approaches to assessing the probability of an uncertain event:
1. a priori classical probability: the probability of an event is based on prior knowledge of the process involved.
2. empirical classical probability: the probability of an event is based on observed data.
3. subjective probability: the probability of an event is determined by an individual, based on that person's past experience, personal opinion, and/or analysis of a particular situation.
Statistics for Managers Using Microsoft Excel, 5e ? 2008 Pearson Prentice-Hall, Inc.
Chap 4-4
2
Calculating Probability
1. a priori classical probability
Probability of Occurrence X number of ways the event can occur T total number of possible outcomes
2. empirical classical probability
Probability of Occurrence number of favorable outcomes observed total number of outcomes observed
These equations assume all outcomes are equally likely.
Statistics for Managers Using Microsoft Excel, 5e ? 2008 Pearson Prentice-Hall, Inc.
Chap 4-5
Example of a priori
classical probability
Find the probability of selecting a face card (Jack, Queen, or King) from a standard deck of 52 cards.
Probability of Face Card X number of face cards T total number of cards X 12 face cards 3 T 52 total cards 13
Statistics for Managers Using Microsoft Excel, 5e ? 2008 Pearson Prentice-Hall, Inc.
Chap 4-6
3
Example of empirical
classical probability
Find the probability of selecting a male taking statistics from the population described in the following table:
Male Female Total
Taking Stats
84 76 160
Not Taking Stats 145 134 279
Total
229 210 439
Probability of Male Taking Stats number of males taking stats 84 0.191 total number of people 439
Statistics for Managers Using Microsoft Excel, 5e ? 2008 Pearson Prentice-Hall, Inc.
Chap 4-7
Class Exercise
Statistics for Managers Using Microsoft Excel, 5e ? 2008 Pearson Prentice-Hall, Inc.
Chap 4-8
4
Examples of Sample Space
The Sample Space is the collection of all possible events ex. All 6 faces of a die:
ex. All 52 cards in a deck of cards
ex. All possible outcomes when having a child: Boy or Girl
Statistics for Managers Using Microsoft Excel, 5e ? 2008 Pearson Prentice-Hall, Inc.
Chap 4-9
Events in Sample Space
Simple event
An outcome from a sample space with one characteristic
ex. A red card from a deck of cards
Complement of an event A (denoted A/)
All outcomes that are not part of event A ex. All cards that are not diamonds
Joint event
Involves two or more characteristics simultaneously ex. An ace that is also red from a deck of cards
Statistics for Managers Using Microsoft Excel, 5e ? 2008 Pearson Prentice-Hall, Inc.
Chap 4-10
5
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