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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