Probability

Probability
A value between zero and one, inclusive, describing the relative possibility
(chance or likelihood) an event will occur
 Probability Rules
Rules of Addition

Mutually
A B Exclusive

Joint
A B Probability
 Probability Rules
Rules of Addition

B C
 Probability Rules
Rules of Addition
 Probability Rules
Rules of Addition
Suppose we are playing a board game that involves rolling two dice. Due to the rules of the
game, we need to get at least one of the die to be a two, three or four to win. What is the
probability of this?
The probability of rolling a Two
The probability of rolling a Three
The probability of rolling a Four
The probability of rolling a Two and a Three
The probability of rolling a Two and a Four
The probability of rolling a Three and a Four

The probability of rolling a Two, a Three and a Four

Probability of getting at least a Two, a Three or a Four

 Probability Rules
Rules of Addition

A B

C D
 Probability Rules
Rules of Addition
Mutually Exclusive

Weight Event Package Qty Prob

Under A 100 0.025
Satisfactory B 3600 0.9
Over C 300 0.075
Total 4000 1

Joint Probability

Card Event Qty Prob

Heart A 13 13/52
King B 4 4/52
King of Heart A&B 1 1/52
 Probability Rules
Rules of Multiplication

For All Independent Events

For All Dependent Events

 Probability Rules
Rules of Multiplication

For All Independent Events

For All Dependent Events

 Probability Rules
Rules of Multiplication
Independent Events
0.5
H 0.5
H
T 0.5
Coin
Toss
H 0.5
T
T 0.5
0.5

Dependent Events
Length of Service
Loyalty < 1 yr 1 – 5 yrs 6 – 10 yrs > 10 yrs Total
Would remain 10 30 5 75 120
Would not remain 25 15 10 30 80
Total 35 45 15 105 200
 Probability Rules
Rules of Multiplication
Dependent Events < 1 yr 0.050

1-5 yrs 0.150

Would
remain
6-10 yrs 0.025
120/200
> 10 yrs 0.375
Employee

< 1 yr 0.125

1-5 yrs 0.075

Would not
remain
80/200 6-10 yrs 0.050

> 10 yrs 0.150

 Probability Rules
Bayes’ Theorem
 Probability Rules
Bayes’ Theorem
Prior Probability: Initial probability based on present level of information

Conditional Probability

Posterior Probability: Revised probability based on additional information

 Probability Rules
Bayes’ Theorem

Prior Conditional Joint Posterior

Event Probability Probability Probability Probability

0.05 0.9 0.0450 0.24

0.95 0.15 0.1425 0.76
0.1875 1.00
 Probability Rules
Bayes’ Theorem

Prior Conditional Joint Posterior

Event Probability Probability Probability Probability

0.30 0.03 0.009 0.231

0.20 0.05 0.010 0.256
0.50 0.04 0.020 0.513
0.039 1.000
 Probability Rules
Tree Diagram
Defective

Good

Defective

Supplier
Good

Defective

Good

Prior Probability Conditional Probability Joint Probability