935270549 (1).ppt - Basic Probability Sanjay Rastogi IIFT 1...

Info icon This preview shows pages 1–9. Sign up to view the full content.

Sanjay Rastogi, IIFT, New Delhi 1 Basic Probability
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Sanjay Rastogi, IIFT, New Delhi 2 Important Terms Probability – the chance that an uncertain event will occur (always between 0 and 1) Event – Each possible outcome of a variable Sample Space – the collection of all possible events
Image of page 2
Sanjay Rastogi, IIFT, New Delhi 3 Classical Probability Number of outcomes leading to the event divided by the total number of outcomes possible Each outcome is equally likely Determined a priori -- before performing the experiment Applicable to games of chance Objective -- everyone correctly using the method assigns an identical probability P E N Where N e n ( ) : total number of outcomes number of outcomes in E e n
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Sanjay Rastogi, IIFT, New Delhi 4 Relative Frequency Probability Based on historical data Computed after performing the experiment Number of times an event occurred divided by the number of trials Objective -- everyone correctly using the method assigns an identical probability P E N Where N e n ( ) : total number of trials  number of outcomes producing E e n
Image of page 4
Sanjay Rastogi, IIFT, New Delhi 5 Subjective Probability Comes from a person’s intuition or reasoning Subjective -- different individuals may (correctly) assign different numeric probabilities to the same event Degree of belief Useful for unique (single-trial) experiments New product introduction Initial public offering of common stock Site selection decisions Sporting events
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Sanjay Rastogi, IIFT, New Delhi 6 Sample Space The Sample Space is the collection of all possible events e.g. All 6 faces of a die: e.g. All 52 cards of a bridge deck:
Image of page 6
Sanjay Rastogi, IIFT, New Delhi 7 Events Simple event An outcome from a sample space with one characteristic e.g., A red card from a deck of cards Complement of an event A (denoted A’) All outcomes that are not part of event A e.g., All cards that are not diamonds Joint event Involves two or more characteristics simultaneously e.g., An ace that is also red from a deck of cards
Image of page 7

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Sanjay Rastogi, IIFT, New Delhi 8 Visualizing Events Contingency Tables Tree Diagrams Red 2 24 26 Black 2 24 26 Total 4 48 52 Ace Not Ace Total Full Deck of 52 Cards Red Card Black Card Not an Ace Ace Ace Not an Ace Sample Space Sample Space 2 24 2 24
Image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern