935270549 (1).ppt

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

• 32

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

Sanjay Rastogi, IIFT, New Delhi 1 Basic Probability

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
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

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
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

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:
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

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
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• 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.

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

• 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.

Dana University of Pennsylvania ‘17, Course Hero Intern

• 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.

Jill Tulane University ‘16, Course Hero Intern