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Asset-V1 MITx+CTL - sc0x+2T2020+Type@Asset+Block@SC0x M2Unit1 ProbabilityBasics CLEAN
Asset-V1 MITx+CTL - sc0x+2T2020+Type@Asset+Block@SC0x M2Unit1 ProbabilityBasics CLEAN
Asset-V1 MITx+CTL - sc0x+2T2020+Type@Asset+Block@SC0x M2Unit1 ProbabilityBasics CLEAN
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Zippy Bright
• Zippy Bright manufactures electric toothbrushes that are sold
through large retail outlets. Zippy Bright is concerned with
how variable the sales are at different stores. They requested
and received a year of weekly sales data on their premiere
product, the XP219, for three stores from one of their
retailers, Sellco.
• What can we say about the weekly sales in store A?
Week Unit Sales Week Unit Sales Week Unit Sales Week Unit Sales Week Unit Sales
1 1 11 3 21 2 31 1 41 2
2 5 12 2 22 4 32 2 42 3
3 3 13 3 23 4 33 3 43 3
4 2 14 4 24 3 34 4 44 3
5 3 15 2 25 4 35 5 45 4
6 3 16 1 26 1 36 5 46 1
7 3 17 3 27 2 37 1 47 2
8 2 18 4 28 3 38 5 48 3
9 5 19 4 29 4 39 5 49 4
10 2 20 3 30 4 40 1 50 2
2
Zippy Bright – Graphing it out!
3
Zippy Bright - Distributions
A histogram for the weekly sales.
Weekly Sales at Store A • A graphical representation of the distribution by mutually
20 exclusive and collectively exhaustive “bins” or intervals.
Number of Weeks
5
Basic Probability
• Probability Theory
Mathematical framework for analyzing random events or experiments.
Experiments are events we cannot predict with certainty, e.g., weekly sales!
• Notation Events:
P(A) = probability that event A occurs, • A = “Sales = 5 units”
• B = “Sales ≥4 units”
P(A)= 0.12
• C = “Sales are an Odd number”
P(B)= P(4) + P(5) = 0.34 • D = “Sales are ≤2 units”
P(C) = P(1) + P(3) + P(5) = .14 + .30 + .12 = 0.56
P(A’) = complement of P(A) = probability some other event that is not A occurs
P(A’)= 1 – P(A) = 0.88
P(B’)= 1 – P(B) = 0.66
P(C‘) = 1 – P(C) = 1 - 0.56 = 0.44
Cumulative • P(B U C) = P[(Sales≥4) OR (Sales =1,3,5)]
Value Probability Probability È = Union of sets (OR) = P[Sales = 1, 3, 4, or 5] = 0.78
• P(B C) = P[(Sales≥4) AND (Sales =1,3,5)]
U
1 .14 .14
Ç = Intersection of sets (AND) = P[Sales = 5] = 0.12
2 .22 .36
• P(A D) = P[(Sales=5) AND (Sales≤2)] = 0
U
3 .30 .66 Æ = Null or Empty set
• P(A U A’) = P[(Sales=5) OR (Sales≠5)] = 1.00
4 .22 .88
5 .12 1.00
Cumulative
Four Laws Value Probability Probability
1 .14 .14
Events:
• A = “Sales = 5 units”
• B = “Sales ≥4 units”
of Probability 2
3
4
.22
.30
.22
.36
.66
.88
•
•
C = “Sales are an Odd number”
D = “Sales are ≤2 units”
5 .12 1.00
8
Cumulative
Four Laws Value Probability Probability
1 .14 .14
Events:
• A = “Sales = 5 units”
• B = “Sales ≥4 units”
of Probability 2
3
4
.22
.30
.22
.36
.66
.88
•
•
C = “Sales are an Odd number”
D = “Sales are ≤2 units”
5 .12 1.00
Conditional Probability
P(A|B) = Probability that Event A occurs, GIVEN THAT Event B has occurred.
e.g., P(D|C) = P[(Sales≤2) Given That (Sales=1, 3, or 5)]
9
Cumulative
Four Laws Value Probability Probability
1 .14 .14
Events:
• A = “Sales = 5 units”
• B = “Sales ≥4 units”
of Probability 2
3
4
.22
.30
.22
.36
.66
.88
•
•
C = “Sales are an Odd number”
D = “Sales are ≤2 units”
5 .12 1.00
Independence
A and B are independent if knowing that B occurred
does not influence the probability of A occurring