Probability:

An introduction to
Modeling Uncertainty
 LO1 Explain the terms
event, probability

Event and Probability

 Probability is the numerical measure of the likelihood that 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.

 Eg. Ellsberg paradox

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 LO1 Explain the terms
event, probability
Event and Probability
Ways of Assigning Probability
There are three ways of assigning probability:
1. CLASSICAL PROBABILITY
Based on the assumption that the outcomes of an experiment
are equally likely.
2. EMPIRICAL PROBABILITY
The probability of an event happening is the fraction of the time
similar events happened in the past.
3. SUBJECTIVE CONCEPT OF PROBABILITY
The likelihood (probability) of a particular event happening that
is assigned by an individual based on whatever information is
available.

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 LO1 Explain the terms
event, probability

Event and Probability

Classical Probability

Consider an experiment of rolling a six-sided die. What is the

probability of the event “an even number of spots appear face
up”?
The possible outcomes are:

There are three “favorable” outcomes (a two, a four, and a six) in

the collection of six equally likely possible outcomes.

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 LO1 Explain the terms
event, probability
Event and Probability
Empirical Probability

Empirical approach to probability is based on what is

called the Law of Large Numbers.
Key to establishing probabilities empirically – larger
number of observations provides a more accurate
estimate of the probability.

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 LO1 Explain the terms
event, probability

Event and Probability

Empirical Probability - Example
On February 1, 2003, the Space Shuttle Columbia
exploded. This was the second disaster in 123 space
missions for NASA. On the basis of this information,
what is the probability that a future mission is
successfully completed?

Number of successful flights

Probability of a successful flight 
Total number of flights
121
  0.98
123

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 LO2 Complement of an
event

Some basic relationships of

probability
The Complement Rule
The complement rule is used
to determine the probability of
an event occurring by
subtracting the probability of the
event not occurring from 1.

P(A) + P(~A) = 1

or P(A) = 1 - P(~A).

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 LO3 Calculate probabilities using rules
of addition.
Rules of Addition/ Addition Law for Computing
Probabilities
Rules of Addition
 Special Rule of Addition - If two events
A and B are mutually exclusive, the
probability of one or the other event’s
occurring equals the sum of their
probabilities.
P(A or B) = P(A) + P(B)

 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)

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 LO3
Mutually Exclusive and
Independent 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 independent if the
occurrence of one event does not
affect the occurrence of another.

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 LO3

The General Rule of Addition

The Venn Diagram shows the result of a survey

of 200 tourists who visited Florida during the
year. The survey revealed that 120 went to
Disney World, 100 went to Busch 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 – .30 = .80

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 LO5 Define the term joint probability.

Joint Probability – Venn Diagram

JOINT PROBABILITY A probability that
measures the likelihood two or more events
will happen concurrently.

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 LO3

Addition Rule – Mutually Exclusive Events

Example
An automatic Shaw machine fills plastic bags with a mixture of beans,
broccoli, and other vegetables. Most of the bags contain the correct
weight, but because of the variation in the size of the beans and other
vegetables, a package might be underweight or overweight. A check of
4,000 packages filled in the past month revealed:

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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 LO3

Addition Rule – Not Mutually Exclusive Events

Example

What is the probability that a card chosen at

random from a standard deck of cards will be
either a king or a heart?

P(A or B) = P(A) + P(B) - P(A and B)

= 4/52 + 13/52 - 1/52
= 16/52, or .3077

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 LO4 Define the term conditional probability.

Conditional Probability
 A conditional probability is the
probability of a particular event occurring,
given that another event has occurred.

 The probability of the event A given that

the event B has occurred is written P(A|B).

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 LO5 Calculate probabilities using the
rules of multiplication.

Conditional Probability
Special Rule 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 occurrence of the other.

 This rule is written: P(A and B) = P(A)P(B)

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 LO5

Multiplication Rule-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.
Since the number of AAA members is very large, it can be
assumes that R1 and R2 are independent.
P(R1 and R2) = P(R1)P(R2) = (.60)(.60) = .36

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 LO5

General Multiplication Rule

The general rule of multiplication is used to find the joint
probability that two events will occur.

It states that for two events, A and B, the joint probability

that both events will happen is found by multiplying the
probability that event A will happen by the conditional
probability of event B occurring given that A has occurred.

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 LO5

General Multiplication Rule - Example

A golfer has 12 golf shirts in his closet.
Suppose 9 of these 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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 LO6 Define the term random variables.

Random Variables
RANDOM VARIABLE A quantity resulting from an experiment
that, by chance, can assume different values.

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 LO7 Distinguish between discrete
and continuous random variable.

Types of Random Variables

DISCRETE RANDOM VARIABLE A random variable that can
assume only certain clearly separated values. It is usually the
result of counting something.

CONTINUOUS RANDOM VARIABLE can assume an infinite number

of values within a given range. It is usually the result of some type
of measurement

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 LO7

Discrete Random Variables

DISCRETE RANDOM VARIABLE A random variable that can

assume only certain clearly separated values. It is usually the
result of counting something.

EXAMPLES
 The number of students in a class.
 The number of children in a family.
 The number of cars entering a carwash in an hour.

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 LO7

Continuous Random Variables

CONTINUOUS RANDOM VARIABLE can assume an infinite number

of values within a given range. It is usually the result of some type
of measurement

EXAMPLES
 The length of each song on the latest SNSD album.
 The weight of each student in this class.
 The temperature outside as you are reading this book.

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 LO8 Identify the characteristics of
a probability distribution.

What is a Probability Distribution?

PROBABILITY DISTRIBUTION A listing of all the outcomes of an
experiment and the probability associated with each outcome.

Experiment:
Toss a coin three
times. Observe the
number of heads. The
possible results are:
Zero head,
One head,
Two heads, and
Three heads.
What is the probability
distribution for the
number of heads? 6-23
 LO8

Characteristics of a Probability Distribution

CHARACTERISTICS OF A PROBABILITY
DISTRIBUTION
1.The probability of a particular outcome is between
0 and 1 inclusive.
2. The outcomes are mutually exclusive events.
3. The list is exhaustive. So the sum of the
probabilities of the various events is equal to 1.

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 LO8

Probability Distribution of Number of Heads

Observed in 3 Tosses of a Coin

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Normal probability distribution

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 LO9 Compute the mean of a
probability distribution.

The Mean of a Random Variable

MEAN
•The mean of a random variable represents the
central location of its probability distribution.
•The mean of a probability distribution is also
referred to as its expected value.

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 LO9

Mean, Variance, and Standard

Deviation of a Random Variable - Example

John Ragsdale sells new cars for

Pelican Ford. John usually sells the
largest number of cars on Saturday. He
has developed the following probability
distribution for the number of cars he
expects to sell on a particular Saturday.

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 LO9

Mean of a Random Variable - Example

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 LO10 Compute the variance and standard
deviation of a probability distribution.

The Variance and Standard

Deviation of a Random Variable
Measures the amount of spread in a random variable’s
distribution
• The computational steps are:
1. Subtract the mean from each value, and square this
difference.
2. Multiply each squared difference by its probability.
3. Sum the resulting products to arrive at the variance.

The standard deviation is found by taking the

positive square root of the variance.

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 LO10

Variance and Standard

Deviation of a Random Variable - Example

   2  1.290  1.136
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 LO11 List the characteristics of the
normal probability distribution.

Normal probability distribution

Characteristics of a Normal Probability Distribution
1. It is bell-shaped and has a single peak at the center of the
distribution.
2. It is symmetrical about the mean
3. It is asymptotic: The curve gets closer and closer to the X-
axis but never actually touches it. To put it another way, the
tails of the curve extend indefinitely in both directions.
4. The location of a normal distribution is determined by the
mean,, the dispersion or spread of the distribution is
determined by the standard deviation,σ .
5. The arithmetic mean, median, and mode are equal
6. The total area under the curve is 1.00; half the area under
the normal curve is to the right of this center point, the mean,
and the other half to the left of it.

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 LO11

The Normal Distribution - Graphically

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 LO11

The Family of Normal Distribution

Equal Means and Different Different Means and

Standard Deviations Standard Deviations

Different Means and Equal Standard Deviations

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 LO11

The Family of Normal Distribution

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 LO11

The Family of Normal Distribution

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 LO11

The Family of Normal Distribution

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To sum up
 Event and probability
 Some basic relationship of probability
 Conditional probability
 Random variable
 Probability distribution
 LO12 Convert a normal distribution to
the standard normal distribution.

The Standard Normal Probability

Distribution
 The standard normal distribution is a normal
distribution with a mean of 0 and a standard
deviation of 1.
 It is also called the z distribution.
 A z-value is the signed distance between a
selected value, designated X, and the population
mean , divided by the population standard
deviation, σ.
 The formula is:

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 LO12

Areas Under the Normal Curve

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 LO13 Find the probability that an observation on a
normally distributed random variable is between two
values.

The Normal Distribution – Example

The weekly incomes of
shift foremen in the
glass industry follow the
normal probability
distribution with a mean
of $1,000 and a
standard deviation of
$100.
What is the z value for
the income, let’s call it X,
of a foreman who earns
$1,100 per week? For a
foreman who earns
$900 per week?
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 LO13

Normal Distribution – Finding Probabilities

In an earlier example
we reported that the
mean weekly income
of a shift foreman in
the glass industry is
normally distributed
with a mean of $1,000
and a standard
deviation of $100.

What is the likelihood

of selecting a foreman
whose weekly income
is between $1,000
and $1,100?

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 LO13

Normal Distribution – Finding Probabilities

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 LO13
Normal Distribution – Finding Probabilities
(Example 2)

Refer to the information

regarding the weekly income
of shift foremen in the glass
industry. The distribution of
weekly incomes follows the
normal probability
distribution with a mean of
$1,000 and a standard
deviation of $100.
What is the probability of
selecting a shift foreman in
the glass industry whose
income is:
Between $790 and $1,000?

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 LO13
Normal Distribution – Finding Probabilities
(Example 3)

Refer to the information

regarding the weekly income
of shift foremen in the glass
industry. The distribution of
weekly incomes follows the
normal probability
distribution with a mean of
$1,000 and a standard
deviation of $100.
What is the probability of
selecting a shift foreman in
the glass industry whose
income is:
Less than $790?

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 LO13
Normal Distribution – Finding Probabilities
(Example 4)

Refer to the information

regarding the weekly income
of shift foremen in the glass
industry. The distribution of
weekly incomes follows the
normal probability
distribution with a mean of
$1,000 and a standard
deviation of $100.
What is the probability of
selecting a shift foreman in
the glass industry whose
income is:
Between $840 and $1,200?

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 LO13
Normal Distribution – Finding Probabilities
(Example 5)

Refer to the information

regarding the weekly income
of shift foremen in the glass
industry. The distribution of
weekly incomes follows the
normal probability
distribution with a mean of
$1,000 and a standard
deviation of $100.
What is the probability of
selecting a shift foreman in
the glass industry whose
income is:
Between $1,150 and $1,250

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 LO13

Using Z in Finding X Given Area - Example

Layton Tire and Rubber

Company wishes to set a
minimum mileage guarantee on
its new MX100 tire. Tests
reveal the mean mileage is
67,900 with a standard
deviation of 2,050 miles and
that the distribution of miles
follows the normal probability
distribution. Layton wants to set
the minimum guaranteed
mileage so that no more than 4
percent of the tires will have to
be replaced.
What minimum guaranteed
mileage should Layton
announce?

48
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 LO13

Using Z in Finding X Given Area - Example

Solve X using the formula :
x -  x  67,900
z 
 2,050

The value of z is found using the 4% information

The area between 67,900 and x is 0.4600, found by 0.5000 - 0.0400
Using Appendix B.1, the area closest to 0.4600 is 0.4599, which
gives a z alue of - 1.75. Then substituting into the equation :

x - 67,900
- 1.75  , then solving for x
2,050

- 1.75(2,050)  x - 67,900

x  67,900 - 1.75(2,050)

x  64,312

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