A Survey of Probability Concepts

Chapter 5

McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
 GOALS

1. Define probability.
2. Describe the classical, empirical, and subjective
approaches to probability.
3. Explain the terms experiment, event, outcome,
permutations, and combinations.
4. Define the terms conditional probability and joint
probability.
5. Calculate probabilities using the rules of addition
and rules of multiplication.
6. Apply a tree diagram to organize and compute
probabilities.
7. Calculate a probability using Bayes’ theorem.

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 Probability, Experiment, Outcome, Event:
Defined

PROBABILITY A value between zero and

one, inclusive, describing the relative
possibility (chance or likelihood) an event
will occur.

 An experiment is a process
that leads to the occurrence
of one and only one of several
possible observations.
 An outcome is the particular
result of an experiment.
 An event is the collection of
one or more outcomes of an
experiment.

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 Mutually Exclusive Events and
Collectively Exhaustive Events

 Events are mutually exclusive if the occurrence of any one event means that none of the others can occur at the same time.
 Events are collectively exhaustive if at least one of the events must occur when an experiment is conducted.
 The sum of all collectively exhaustive and mutually exclusive events is 1.0 (or 100%)

 Events are independent if the occurrence of one event does not affect the occurrence of another.

collectively
exhaustive and
mutually exclusive
events

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 Classical and Empirical Probability

Consider an experiment of rolling a six-sided

die. What is the probability of the event The empirical approach to probability is based on what is
“an even number of spots appear face called the law of large numbers. The key to
up”? establishing probabilities empirically is that more
observations will provide a more accurate estimate of
The possible outcomes are: the probability.

EXAMPLE:
On February 1, 2003, the Space Shuttle Columbia
exploded. This was the second disaster in 113
space missions for NASA. On the basis of this
information, what is the probability that a future
mission is successfully completed?

There are three “favorable” outcomes (a two,

a four, and a six) in the collection of six Number of successful flights
Probability of a successful flight 
equally likely possible outcomes. Total number of flights
111
 0.98
113

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 Subjective Probability - Example

 If there is little or no past experience or information on which to base a

probability, it may be arrived at subjectively.

 Illustrations of subjective probability are:

1. Estimating the likelihood the New England Patriots will play in the Super Bowl next
year.
2. Estimating the likelihood you will be married before the age of 30.
3. Estimating the likelihood the U.S. budget deficit will be reduced by half in the next 10
years.

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 Summary of Types of Probability

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 Rules of Addition
Rules of Addition EXAMPLE:
 Special Rule of Addition - If two
events A and B are mutually An automatic Shaw machine fills plastic bags with a mixture
exclusive, the probability of one or the of beans, broccoli, and other vegetables. Most of the bags
other event’s occurring equals the contain the correct weight, but because of the variation in
sum of their probabilities.
the size of the beans and other vegetables, a package might
P(A or B) = P(A) + P(B) be underweight or overweight. A check of 4,000 packages
filled in the past month revealed:
 The General Rule of Addition - If A
and B are two events that are not
mutually exclusive, then P(A or B) is
given by the following formula:
P(A or B) = P(A) + P(B) - P(A and B)

What is the probability that a particular package will be

either underweight or overweight?

P(A or C) = P(A) + P(C) = .025 + .075 = .10

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 The Complement Rule
The complement rule is used to determine EXAMPLE
the probability of an event occurring An automatic Shaw machine fills plastic bags with a
by subtracting the probability of the mixture of beans, broccoli, and other vegetables. Most of
event not occurring from 1. the bags contain the correct weight, but because of the
P(A) + P(~A) = 1 variation in the size of the beans and other vegetables, a
or P(A) = 1 - P(~A). package might be underweight or overweight. Use the
complement rule to show the probability of a satisfactory
bag is .900

P(B) = 1 - P(~B)
= 1 – P(A or C)
= 1 – [P(A) + P(C)]
= 1 – [.025 + .075]
= 1 - .10
= .90

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 The General Rule of Addition and Joint Probability

The Venn Diagram shows the result of a

survey of 200 tourists who visited Florida JOINT PROBABILITY A probability that measures
during the year. The survey revealed that 120 the likelihood two or more events will happen
went to Disney World, 100 went to Busch concurrently.
Gardens and 60 visited both.

What is the probability a selected person

visited either Disney World or Busch
Gardens?

P(Disney or Busch) = P(Disney) + P(Busch) - P(both Disney and Busch)

= 120/200 + 100/200 – 60/200
= .60 + .50 – .80

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 Special and General Rules of Multiplication

 The special rule of multiplication requires that two events A and B are independent.
 Two events A and B are independent if the occurrence of one has no effect on the probability of the The general rule of multiplication is used to find the joint

occurrence of the other.
This rule is written: P(A and B) = P(A)P(B) probability that two independent events will occur.
EXAMPLE
A survey by the American Automobile association (AAA) revealed 60 percent of its members made
airline reservations last year. Two members are selected at random. Since the number of AAA
members is very large, we can assume that R1 and R2 are independent. What is the probability both
made airline reservations last year?

Solution:
The probability the first member made an airline reservation last year is .60, written as P(R1) = .60
The probability that the second member selected made a reservation is also .60, so P(R2) = .60. EXAMPLE
Since the number of AAA members is very large, you may assume that R1 and R2 are independent.
A golfer has 12 golf shirts in his closet. Suppose 9 of these
P(R1 and R2) = P(R1)P(R2) = (.60)(.60) = .36
shirts are white and the others blue. He gets dressed in
the dark, so he just grabs a shirt and puts it on. He
plays golf two days in a row and does not do laundry.
What is the likelihood both shirts selected are white?

The event that the first shirt selected is white is W1. The
probability is P(W1) = 9/12
The event that the second shirt (W2 )selected is also white. The
conditional probability that the second shirt selected is
white, given that the first shirt selected is also white, is
P(W2 | W1) = 8/11.
To determine the probability of 2 white shirts being selected we
use formula: P(AB) = P(A) P(B|A)
P(W1 and W2) = P(W1)P(W2 |W1) = (9/12)(8/11) = 0.55
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 Contingency Tables
A CONTINGENCY TABLE is a table used to classify sample observations according to two or more
identifiable characteristic

EXAMPLE:
A sample of executives were surveyed
about their loyalty to their company. Event A1 happens if a randomly selected executive
One of the questions was, “If you were will remain with the company despite an equal or
given an offer by another company slightly better offer from another company. Since
equal to or slightly better than your there are 120 executives out of the 200 in the
present position, would you remain survey who would remain with the company
with the company or take the other P(A1) = 120/200, or .60.
position?” The responses of the 200
executives in the survey were cross- Event B4 happens if a randomly selected executive
classified with their length of service has more than 10 years of service with the
with the company. What is the company. Thus, P(B4| A1) is the conditional
probability of randomly selecting an probability that an executive with more than 10
executive who is loyal to the company years of service would remain with the company.
(would remain) and who has more than Of the 120 executives who would remain 75
10 years of service? have more than 10 years of service, so
P(B4| A1) = 75/120.

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 Tree Diagrams

A tree diagram is useful for portraying

conditional and joint probabilities. It is
particularly useful for analyzing business
decisions involving several stages.
A tree diagram is a graph that is helpful in
organizing calculations that involve
several stages. Each segment in the tree
is one stage of the problem. The
branches of a tree diagram are weighted
by probabilities.

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 Permutation and Combination

A permutation is any arrangement of r A combination is the number of ways to

objects selected from n possible choose r objects from a group of n objects
objects. The order of arrangement is without regard to order.
important in permutations.

EXAMPLE EXAMPLE
Suppose that in addition to selecting the There are 12 players on the Carolina Forest
group, he must also rank each of the High School basketball team. Coach
players in that starting lineup Thompson must pick five players among
according to their ability. the twelve on the team to comprise the
starting lineup. How many different groups
are possible?
12! 12!
12 P 5  95,040 12 C5  792
(12  5)! 5!(12  5)!

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