AN

ASSIGNMENT

THE CONCEPT OF PROBABILITY

(EXAMPLE NO. 4.34 TO 4.50)

TITLE OF BOOK: BUSINESS STATISTICS

AUTHOR: KEN BLACK

EDITION: 5th

PUBLISHER: JOHN WILEY SONS INC. U.S.A.

FOR THE SUBJECT OF

QUANTITATIVE TECHNIQUES

IN MANAGEMENT

IS
SUBMITED TO: Dr HIREN J. PATEL

ASSISTANT AND PROFESSIOR

OF VMPIM

SUBMITED BY:

Sr. NO. NAME ROLL NO.

1) PRAJAPATI ALAY V. 117
2) PATEL NEHA 88
3) PATEL KIRAN 82
4) PATEL RAJ 100
5) PATEL DHAVAL 67

MBA-1 DIVISION: B

DATE OF SUBMISSION: 28/11/2010

4.34

Use the values in the contingency table to solve the equation given.

Variable2 D E
A 10 20
B 15 5
C 30 15
55 40 95

a) P(E) = 40/95 = .42105

b) P(B  D) = P(B) + P(D) - P(B  D)

= 20/95 + 55/95 - 15/95 = 60/95 = .63158

c) P(A  E) = 20/95 = .21053

d) P(BE) = 5/40 = .1250

e) P(A  B) = P(A) + P(B) = 30/95 + 20/95 =

50/95 = .52632

f) P(B  C) = .0000 (mutually exclusive)

g) P(DC) = 30/45 = .66667

h) P(AB)= P(A  B) = .0000 = .0000 mutually exclusive

P(B) 20/95

i) P(A) = P(AD)??

30/95 = 10/95 ??
.31579  .18182
No, Variables 1 and 2 are not independent.
4.35

Use the value in contingency table to solve the equations given.

D E F G
A 3 9 7 12 31
B 8 4 6 4 22
C 10 5 3 7 25
21 18 16 23 78

a) P(F  A) = 7/78 = .08974

b) P(AB) = P(A  B) = .0000 = .0000

P(B) 22/78

c) P(B) = 22/78 = .28205

d) P(E  F) = .0000 Mutually Exclusive

e) P(DB) = 8/22 = .36364

f) P(BD) = 8/21 = .38095

g) P(D  C) = 21/78 + 25/78 – 10/78 = 36/78 = .4615

h) P(F) = 16/78 = .20513

4.36

The following probability matrix contains a breakdown on the age and gender of U.S. physicians
in a recent year as reported by the American medical association.

Age(years)
 <35 35-44 45-54 55-64 >65
Gender Male .11 .20 .19 .12 .16 .78
Female .07 .08 .04 .02 .01 .22
.18 .28 .23 .14 .17 1.00

a) what is the probability that one randomly selected physician is 35-44 years
old?
P(35-44) = .28
b) what is the probability that one randomly selected physician is both a woman
and 45-54 years old?

P(Woman  45-54) = .04

c) what is the probability that one randomly selected physician is a man or is 35-
44 years old?

P(Man  35-44) = P(Man) + P(35-44) - P(Man  35-44) = .78 + .28 - .20 = .

86
d) what is the probability that one randomly selected physician is less than 35
years old or 55-64 years old?

P(<35  55-64) = P(<35) + P(55-64) = .18 + .14 = .32

e) what is the probability that one randomly selected physician is a woman if she
is 45-54 years old?

P(Woman45-54) = P(Woman  45-54)/P(45-54) = .04/.23= .1739

f) what is the probability that one randomly selected physician is neither a
woman nor 55-64 years ol?

P(NW  N 55-64) = .11 + .20 + .19 + .16 = .66

4.37

Purchasing survey asked purchasing professionals what sales traits impressed them most in a
sales representative. 78% selected “thoroughness”. 40% responded “knowledge of your own
product”. The purchasing professionals were allowed to list more than one trait. Suppose 27% of
the purchasing professionals listed both “thoroughness” and “knowledge of your own product”
as sales traits that impressed them most. A purchasing professional is randomly sampled.

a) What is the probability that the professional selected “thoroughness” or “knowledge of

your own product”?
 b) What is the probability that the professional selected neither “thoroughness “nor
knowledge of your own product”?
c) If it is known that the professional selected “thoroughness”, what is the probability that
the professional selected “knowledge of your own product”?
d) What is the probability that the professional did not select “thoroughness” and did select
“knowledge of your own product”?

Let T = thoroughness
Let K = knowledge

P(T) = .78 P(K) = .40 P(T  K) = .27

a) P(T  K) = P(T) + P(K) - P(T  K) =

.78 + .40 - .27 = .91

b) P(NT  NK) = 1 - P(T  K) = 1 - .91 = .09

c) P(KT) = P(K  T)/P(T) = .27/.78 = .3462

d) P(NT  K) = P(NT) - P(NT  NK)

but P(NT) = 1 - P(T) = .22

P(NT  K) = .22 - .09 = .13

4.38

The U.S. bureau of labor statistics publishes data on the benefits offered by small companies to
their employees. Only 42% offer retirement plans while 61% offer life insurance. Suppose 33%
offer both retirement plans and life insurance as benefits. If a small company is randomly
selected, determine the following probabilities:

a) The company offers a retirement plan given that they offer life insurance.
b) The company offers a life insurance given that they offer retirement plan.
c) The company offers a life insurance or a retirement plan.
d) The company offers a retirement plan and does not offer life insurance.
e) The company does not offer life insurance if it is known that they offer a retirement plan.

Let R = retirement
Let L = life insurance

P(R) = .42 P(L) = .61 P(R  L) = .33

 a) P(RL) = P(R  L)/P(L) = .33/.61 = .5410

b) P(LR) = P(R  L)/P(R) = .33/.42 = .7857

c) P(L  R) = P(L) + P(R) - P(L  R) =

.61 + .42 - .33 = .70

d) P(R  NL) = P(R) - P(R  L) = .42 - .33 = .09

e) P(NLR) = P(NL  R)/P(R) = .09/.42 = .2143

4.39

According to link resources, 16% of the U.S population is technology-driven. However, these
figures vary by region. For example, in the west the figure is 20% and in the northeast the figure
is 17%. 21% of the U.S. population in general is in the west and 20% of the U.S. population is in
the northeast. Suppose an American is chosen randomly.

a) What is the probability that the person lives in the west and is a technology-driven
person?
b) What is the probability that the person lives in the northeast and is a technology-driven
person?
c) Suppose the chosen person is known to be technology driven. What is the probability that
the person lives in the west?
d) Suppose the chosen person is known not to be technology driven. What is the probability
that the person lives in the northeast?
e) Suppose the chosen person is known to be technology driven. What is the probability that
the person lives in neither the west nor the northeast?

P(T) = .16 P(TW) = .20 P(TNE) = .17

P(W) = .21 P(NE) = .20

a) P(W  T) = P(W)P(TW) = (.21)(.20) = .042

 b) P(NE  T) = P(NE)P(TNE) = (.20)(.17) = .034

c) P(WT) = P(W  T)/P(T) = (.042)/(.16) = .2625

d) P(NENT) = P(NE  NT)/P(NT) = {P(NE)P(NTNE)}/P(NT)

but P(NTNE) = 1 - P(TNE) = 1 - .17 = .83 and

P(NT) = 1 - P(T) = 1 - .16 = .84

Therefore, P(NENT) = {P(NE)P(NTNE)}/P(NT) =

{(.20)(.83)}/(.84) = .1976

e) P(not W  not NET) = P(not W  not NE  T)/ P(T)

but P(not W  not NE  T) =

.16 - P(W  T) - P(NE  T) = .16 - .042 - .034 = .084

P(not W  not NE  T)/ P(T) = (.084)/(.16) = .525

4.40

In a certain city, 30% of the families have a master card, 20% have an American express card,
and 25% have a visa card. 8% of the families have both a master card and American express
card. 12% have both a visa card and master card. 6% have a both an American express card and
a visa card.

a) What is the probability of selecting a family that has either a visa card or an American
express card?
b) If a family has a master card, what is the probability that it has a visa card?
c) If a family has a visa card, what is the probability that it has a master card?
d) Is possession of a visa card independent of possession of a master card? Why or why not?
e) Is possession of an American express card mutually exclusive of possession of a visa
card?

Let M = Mastercard A = American Express V = Visa

 P(M) = .30 P(A) = .20 P(V) = .25

P(M  A) = .08 P(V  M) = .12 P(A  V) = .06

a) P(V  A) = P(V) + P(A) - P(V  A)

= .25 + .20 - .06 = .39

b) P(VM) = P(V  M)/P(M) = .12/.30 = .40

c) P(MV) = P(V  M)/P(V) = .12/.25 = .48

d) P(V) = P(VM)??

.25  .40

Possession of Visa is not independent of

possession of Mastercard

e) American Express is not mutually exclusive of Visa

because P(A  V)  .0000

4.41

A few years ago, a survey commissioned by the world almanac and maturity news service
reported that 51% of the respondents did not believe the social security system will be secure in
20 years. Of the respondents who were age 45 or older, 70% believed the system will be secure
in 20 years. Of the people surveyed, 57% were under age 45. One respondent is selected
randomly.

a) What is the probability that the person is age 45 or older?

b) What is the probability that the person is younger than age 45 and believes that the social
security system will be secure in 20 years?
c) Is the person selected believes the social security system will be secure in 20 years, what
is the probability that the person is 45 years old or older?
d) What is the probability that the person is younger than age 45 or believes the social
security system will not be secure in 20 years?

Let S = believe SS secure

N = don't believe SS will be secure
<45 = under 45 years old
 >45 = 45 or more years old

P(N) = .51
Therefore, P(S) = 1 - .51 = .49

P(S>45) = .70
Therefore, P(N>45) = 1 - P(S>45) = 1 - .70 = .30

P(<45) = .57

a) P(>45) = 1 - P(<45) = 1 - .57 = .43

b) P(>45  S) = P(>45)P(S>45) = (.57)(.70) = .301

P(<45  S) = P(S) - P(>45  S) = .49 - .301 = .189

c) P(>45S) = P(>45  S)/P(S) = P(>45)P(S>45)/P(S) =

(.43)(.70)/.49 = .6143

d) (<45  N) = P(<45) + P(N) - P(<45  N) =

but P(<45  N) = P(<45) - P(<45  S) =

.57 - .189 = .381

so P(<45  N) = .57 + .51 - .381 = .699

Probability Matrix Solution for Problem 4.41:

S N
<45 .189 .381 .57
>45 .301 .129 .43
.490 .510 1.00

4.42

A telephone survey conducted by the Maritz marketing research company found that 43% of the
Americans expert to save more money next year than they saved last year. 45% of those
surveyed plan to reduce debt next year. Of those who expect to save more money next year, 81%
plan to reduce debt next year. And American is selected randomly.

a) What is the probability that this person expect to save more money next year and plans to
reduce debt next year?
 b) What is the probability that this person expect to save more money next year or plans to
reduce debt next year?
c) What is the probability that this person neither expect to save more money next year nor
plans to reduce debt next year?
d) What is the probability that this person expect to save more money next year and does not
plans to reduce debt next year?

Let M = expect to save more

R = expect to reduce debt
NM = don't expect to save more
NR = don't expect to reduce debt

P(M) = .43 P(R) = .45 P(RM) = .81

P(NRM) = 1-P(RM) = 1 - .81 = .19
P(NM) = 1 - P(M) = 1 - .43 = .57
P(NR) = 1 - P(R) = 1 - .45 = .55

a) P(M  R) = P(M)P(RM) = (.43)(.81) = .3483

b) P(M  R) = P(M) + P(R) - P(M  R)

= .43 + .45 - .3483 = .5317

c) P(neither save nor reduce debt) =

1 - P(M  R) = 1 - .5317 = .4683

d) P(M  NR) = P(M)P(NRM) = (.43)(.19) = .0817

Probability matrix for problem 4.42:

Reduce
Yes No
Yes .3483 .0817 .43
Save
No .1017 .4683 .57
.4500 .5500 1.00

4.43
The steel case workplace index studied the type of work related activities that Americans did
while on vacation of the summer. Among other things, 40% read work related material. 34%
checked in with the boss. Respondent to the study were allowed to select more than one activity.
Suppose that of those who read work related material, 78% checked in with the boss. One of
these survey respondents is selected randomly.

a) What is the probability that while on vacation this respondent checked in with the boss
and read work related material?

b) What is the probability that while on vacation this respondent neither read work-related
material nor checked in with the boss?

c) What is the probability that while on vacation this respondent read work-related material
given that the respondent checked in with the boss?
d) What is the probability that while on vacation this respondent did not check in with the
boss given that the respondent read work-related material?
e) What is the probability that while on vacation this respondent did not check in with the
boss given that the respondent did not read work-related material?
f) Construct a probability matrix for this problem.

Let R = read
Let B = checked in the with boss

P(R) = .40 P(B) = .34 P(BR) = .78

a) P(B  R) = P(R)P(BR) = (.40)(.78) = .312

b) P(NR  NB) = 1 - P(R  B)

but P(R  B) = P(R) + P(B) - P(R  B) =

.40 +.34 - .312 = .428

P(NR  NB) = 1 - .428 = .572

c) P(RB) = P(R  B)/P(B) = (.312)/(.34) = .9176

d) P(NBR) = 1 - P(BR) = 1 - .78 = .22

e) P(NBNR) = P(NB  NR)/P(NR)

but P(NR) = 1 - P(R) = 1 - .40 = .60

P(NBNR) = .572/.60 = .9533

 f) Probability matrix for problem 4.43:

B NB
R .312 .088 .40
NR .028 .572 .60
.340 .660 1.00

4.44

Health rights hotline published the result of a survey of 2400 people in northern California in
which consumers were asked to share their complaints about managed care. The number one
complaint was denial of care, with 17% of the participating consumers selecting it. Several other
complaints were noted including inappropriate care (14%), consumers service (14%), payment
disputes (11%), specialty care (10%), delays in getting care (8%), and prescription drugs (7%).
These complaints categories are mutually exclusive. Assume that the result of this survey can be
inferred to all managed care consumers. If a managed care consumer is randomly selected,
determine the following probabilities:

a) The consumer complaints about payment disputes or specialty care.

b) The consumer complaints about prescription drugs and consumer service.
c) The consumer complaints about inappropriate care given that the consumer complaints
about specialty care.
d) The consumer does not complain about delays in getting care nor does the consumer
complain about payment disputes.

Let: D = denial
I = inappropriate
C = customer
P = payment dispute
S = specialty
G = delays getting care
R = prescription drugs

P(D) = .17 P(I) = .14 P(C) = .14 P(P) = .11

P(S) = .10 P(G) = .08 P(R) = .07

a) P(P  S) = P(P) + P(S) = .11 + .10 = .21

b) P(R  C) = .0000 (mutually exclusive)

 c) P(IS) = P(I  S)/P(S) = .0000/.10 = .0000

d) P(NG  NP) = 1 - P(G  P) = 1 - [P(G) + P(P)] =

1 – [.08 + .11] = 1 - .19 = .81

4.45

Companies use employee training for various reasons including employee loyalty, certification,
quality, and process improvement. In a national survey of companies, B1 learning Systems
reported that 56% percent of the responding companies named employee retention as a top
reason for training suppose 36% of the companies replied that they use training for process
improvement and for employee retention. In addition, suppose that of the companies that use
training for process improvement 90% use training for employee retention. A company that uses
training is randomly selected.

a) What is the probability that the company uses training for employee retention and not for
process improvement?
b) If it is known that the company uses training for employee retention, what is the
probability that it uses training for process improvement?
c) What is the probability that the company uses training for process improvement?
d) What is the probability that the company uses training for employee retention or process
improvement?
e) What is the probability that the company neither uses training for employee retention nor
uses training for process improvement?
f) Suppose it is known that the company does not use training for process improvement.
What is the probability that the company dose use training for employee retention?

Let R = retention
P = process

P(R) = .56 P(P  R) = .36 P(RP) = .90

a) P(R  NP) = P(R) - P(P  R) = .56 - .36 = .20

b) P(PR) = P(P  R)/P(R) = .36/.56 = .6429

c) P(P) = ??

P(RP) = P(R  P)/P(P)

so P(P) = P(R  P)/P(RP) = .36/.90 = .40

 d) P(R  P) = P(R) + P(P) - P(R  P) =

.56 + .40 - .36 = .60

e) P(NR  NP) = 1 - P(R  P) = 1 - .60 = .40

f) P(RNP) = P(R  NP)/P(NP)

but P(NP) = 1 - P(P) = 1 - .40 = .60

P(RNP) = .20/.60 = .33

4.46

Pitney Bowes surveyed 302 directors and vice presidents of marketing at large and midsized U.S.
companies to determine what they believe is the best vehicle for educating decision makers on
complex issues in selling products and services. The highest percentage of companies chose
direct mail/catalogs, followed by direct sales/sales rep. direct mail/catalogs was selected by 38%
of the companies. None of the companies selected both direct mail/catalogs and direct sales/sales
rep. Suppose also that 41% selected neither direct mail/catalogs nor direct sales/sales rep. if one
of these companies is selected randomly and their top marketing person interviewed about this
matter, determine the following probabilities:

a) The marketing person selected direct mail/catalogs and did not select direct sales/sales
rep.
b) The marketing person selected direct sales/sales rep.
c) The marketing person selected direct sales/sales rep. given that the person selected direct
mail/catalogs.
d) The marketing person did not select direct mail/catalogs given that the person did not
select direct sales/sales rep.

Let M = mail
S = sales

P(M) = .38 P(M  S) = .0000 P(NM  NS) = .41

a) P(M  NS) = P(M) - P(M  S) = .38 - .00 = .38

 b) P(S):

P(M  S) = 1 - P(NM  NS) = 1 - .41 = .59

P(M  S) = P(M) + P(S)

Therefore, P(S) = P(M  S) - P(M) = .59 - .38 = .21

c) P(SM) = P(S  M)/P(M) = .00/.38 = .00

d) P(NMNS) = P(NM  NS)/P(NS) = .41/.79 = .5190

where: P(NS) = 1 - P(S) = 1 - .21 = .79

4.47

A small independent physicians’ practice has three doctors. Dr.Sarabia sees 41% of the patients,
Dr. tran sees 32% and Dr.jackson sees the rest. Dr.sarabia requests blood tests on 5% of her
patients, Dr.tren requests blood tests on 8% of his patients, and Dr. Jackson requests blood tests
on 6% of her patients. An auditor randomly selects a patient from the past week and discovers
that the patient had a blood test as a result of the physician visit. Knowing this information, what
is the probability that the patient saw Dr. Sarabia? For what percentage of all patients at this
practice are blood tests requested?

Let S = Sarabia
T = Tran
J = Jackson
B = blood test

P(S) = .41 P(T) = .32 P(J) = .27

P(B S) = .05 P(B T) = .08 P(B J) = .06

Event Prior Conditional Joint Revised

P(Ei) P(BEi) P(B  Ei) P(BiNS)

S .41 .05 .0205 .329
T .32 .08 .0256 .411
J .27 .06 .0162 .260
P(B)=.0623
4.48

A survey by the Arthur Andersen enterprise group/national small business united attempted to
determine what the leading challenges are for the growth and survival of small businesses.
Although the economy and finding qualified workers were the leading challenges, several other
were listed in the results of the study, including regulations, listed by 30% of the companies, and
the tax burden, listed by 35%. Suppose that 71% of the companies listing regulations as a
challenge listed the tax burden as a challenge. Assume these percentages hold for all small
businesses. If a small business is randomly selected, determine the following probabilities:

a) The small business lists both the tax burden and regulations as a challenge.
b) The small business lists either the tax burden or regulations as a challenge.
c) The small business lists either the tax burden or regulations but not both as a challenge.
d) The small business lists regulations as a challenge given that it lists the tax burden as a
challenge.
e) The small business dose not list regulations as a challenge given that it lists the tax
burden as a challenge.
f) The small business does not list regulations as a challenge given that it does not list the
tax burden as a challenge.

Let R = regulations
T = tax burden

P(R) = .30 P(T) = .35 P(TR) = .71

a) P(R  T) = P(R)P(TR) = (.30)(.71) = .2130

b) P(R  T) = P(R) + P(T) - P(R  T) =

.30 + .35 - .2130 = .4370

c) P(R  T) - P(R  T) = .4370 - .2130 = .2240

d) P(RT) = P(R  T)/P(T) = .2130/.35 = .6086

e) P(NRT) = 1 - P(RT) = 1 - .6086 = .3914

f) P(NRNT) = P(NR  NT)/P(NT) = [1 - P(R  T)]/P(NT) =

 (1 - .4370)/.65 = .8662

4.49

According to the public for food and health policy, approximately 27% of all soup products in a
recent year did not carry nutritional labeling. Approximately 83% of hot dog products did not
have nutritional labeling. Assume that if there groups of foods were combined, 60% would be
soup products, 35% would be breakfast meats, and 5% would be hot dogs. A researcher is
blindly given a food product from one of these three groups and is told that the product does
have nutritional labeling. Revise the probabilities that the product is a soup product, a breakfast
meat, and a hot dog product.

Event Prior Conditional Joint Revised

P(Ei) P(NSEi) P(NS  Ei) P(EiNS)

Soup .60 .73 .4380 .8456
Breakfast
Meats .35 .17 .0595 .1149
Hot Dogs .05 .41 .0205 .0396
.5180

4.50

A survey conducted for lifetime’s daily half-hour series “the great American TV poll” asked
American what they consider to be the most important thing in their lives. Twenty-nine percent
said “good health,” 21% responded “a happy marriage,” and 40% replied “faith in god.” Because
they were asked which of these things the most important thing is, a respondent could not select
more than one answer.

a) What is the probability that a person replied “a happy marriage” or “faith in god”?
b) What is the probability that a person replied “a happy marriage” or “faith in god” or good
health?

c) What is the probability that a person replied “a happy marriage” and “faith in god”?
 d) What is the probability that a person replied neither “a happy marriage” nor “faith in
god” nor good health?

Let GH = Good health

HM = Happy marriage
FG = Faith in God

P(GH) = .29 P(HM) = .21 P(FG) = .40

a) P(HM  FG) = P(HM) + P(FG) - P(HM  FG)

but P(HM  FG) = .0000

P(HM  FG) = P(HM) + P(FG) = .21 + .40 = .61

b) P(HM  FG  GH) = P(HM) + P(FG) + P(GH) =

.29 + .21 + .40 = .9000

c) P(FG  GH) = .0000

The categories are mutually exclusive.

The respondent could not select more than one

answer.

d) P(neither FG nor GH nor HM) =

1 - P(HM  FG  GH) = 1 - .9000 = .1000