Lect1_2700_s09 - ENGRD 2700 Engineering Probability and...

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The Greatest Scope More Details EDA Describing sample data Title Page Page 1 of 25 Go Back Full Screen Close Quit ENGRD 2700 Engineering Probability and Statistics Lecture 1: Introduction David S. Matteson School of Operations Research and Information Engineering Rhodes Hall, Cornell University Ithaca NY 14853 USA [email protected] January 20, 2009
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The Greatest Scope More Details EDA Describing sample data Title Page Page 2 of 25 Go Back Full Screen Close Quit 1. Why you can’t live without prob & stat Basis for the scientific method, management science, inteligent empiricism. Tidbits: Fact based decision making. Scientific decision making. In God we trust; everyone else bring data. Conclusion: Hunches can be wrong, intuition can be fooled, instincts may be im- mature or just wrong. Positive societal contribution; ubiquity: Drug testing: Drug companies are not allowed to market a drug until it it proven safe and e ff ective via clinical trials. (Living link with history: SIR1 was part of the largest public health clinical trial ever–the Salk polio vaccine clinical trial.) The drug company employs statisticians to supervise the clinical trial; the FDA employs statisticians to review the drug company results. Digital network tra ffi c: Fundamentally di ff erent from POTS=plain old telephone tra ffi c. Prize winning Bellcore study (1993) statistically analyzed data network traces and concluded they exhibit characteristics not compatible with telephone models. Probability models were then constructed to explain the anomolies.
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The Greatest Scope More Details EDA Describing sample data Title Page Page 3 of 25 Go Back Full Screen Close Quit Risk managment: Governmental bodies set standards which control risk. Hydrology: 10,000 year flood. Build the dam so high that water will exceed the height once per 10,000 years. (Small quantile estimation to the cognoscenti.) Finance: Value at risk–the banks risk reserve needs to be high enough to cover a loss so big that it occurs with probability 1/10,000. Environment: City is ruled out of compliance with EPA regulations if pollutant concentration exceeds a specified level more than 5% of the days in a year; that is, the standard is set so the prob of exceeding the standard is 5%. Weather prediction: Chance of rain tomorrow is 53%. What does this mean? But image problems persist: Pick your favorite quote: ”There are lies, damn lies and statistics.” –Sir Winston Churchill ”There are three kinds of lies: Lies, Damn Lies, and Statistics.” –Benjamin Disraeli ”You can use statistics to prove anything.” –Homer Simpson ”He uses statistics as a drunken man uses a lamppost - for support rather than illumination.” –Andrew Lang
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The Greatest Scope More Details EDA Describing sample data Title Page Page 4 of 25 Go Back Full Screen Close Quit ”Statistics are like bikinis. What they reveal is suggestive, but what they conceal is vital.
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