Presented To:Reeta Chauhan,mam

12/15/2015

Presented by:1.Anil Chauhan2.Siddharth Gupta3.Vishnu Sharma

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Prestige institute of management

probability,terminologies of probability,utility of probability

In decision making

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1.What is Probability?2.Problem where uses of probability?3 Types of probability?4.Terminologies of Probability?5.Utility of probability?

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Contents

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1. To check the occurences or chances of any event drawn from the sample space is called probability. Laplace

How to Interpret Probability The probability that an event will occur is expressed as a

number between 0 and 1. Notationally, the probability of event A is represented by P(A).

2. If P(A) equals zero, event A will almost definitely not occur.3. If P(A) is close to zero, there is only a small chance that

event A will occur.

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Probability

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3. If P(A) equals 0.5, there is a 50-50 chance that event A

will occur.4. If P(A) is close to one, there is a strong chance that

event A will occur.5. If P(A) equals one, event A will almost definitely occur.

Formula: no. of favourable outcome/Total no. of outcomes

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Problem,SolutionQ.1 What is the probability of occurrence of head in one flip of coin?

sol. Total outcome -2(HEAD,TAIL) Total outcome is the total getting after fliping the coin. It is either head ,tail so total outcome is 2. Favourable outcome-1(HEAD) Favourable outcome is the outcome which we can get after flipping the coin once. Then, probability- no. of favourable outcome Total outcome = 1 2

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1. Mathematical Probability-If the probability of an event can be

calculated even before the actual happening of the event, that is, even before conducting the experiment, it is called Mathematical probability.For example tossing of coin,throwing of dice we can predict the answer in advance. Mathematical probability is often called priori probability or classical probability.

2. Statistical Probability- If the probability of an event can be determined only after the actual happening of the event, it is called statistical probability .The Statistical probability calculated by conducting an actual experiment is also called a posterior probability.

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Types of probability

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3. Subjective approach-This probability is based on the past

evidence is available.This is computing by taking the past evidence of any thing.

For ex.- If a teacher wants to find out the probability of a student getting first position in the

class which is based on such factors past academic performance, attendance record, performance in periodic

performance etc.4. Axiomatic probability-The modern approach of probability is

purely axiomatic in nature it is derived by A.N. Kolmogorov in 1933.

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Types of probability

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1. Sample space: When a statistical experiment is conducted,

there are a number of possible outcomes. These are called sample space and are often denoted by S. Example: A coin is tossed. The sample space is: S = {head, tail}.

2. Random Experiment: Those experiments whose result depend on chance such as tossing of a coin etc.

3. Trial : One specific instance of an experiment.4. Outcome: The result of a single trial.

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Terminologies

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6. Event Space/or Sample Space: The set of all possible

outcomes of an experiment.7. Experiment: The term experiment refers to describe an

act which can be repeated under some given condition.8. Equally likely events: Two or more events are said to

be equally likely if each one of outcome has an equal chance of occurring.

9. Independent Events:if a coin is tossed twice, the results of the second throw would in no way be affected by the results of the first throw.

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Terminologies

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9. Exhaustive events-Events are said to exhaustive when there totality

include all the possible outcomes of a random experiment.

10. Mutually exclusive events-Two events are said to be mutually exclusive when both can not occur in a single trial.Like head ,tail cannot occur in a single trial.

11. Event: A selected outcome, such as getting 6 from rolling two dice.

12. Complementry event-In any event A if the chances if happening of it is ½ then the chances of not happening it is also ½ .This ½ is the complementry of event A.It is denoted by A

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Terminologies

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1. Probability theory is being applied in the solution of

social, buisness,economic problems.2. In buisness probability theory is used to

determine calculation of short term gains and long term gains3. Risk Evaluation-If the company want to open

new buisness and wants to generate the revenue of 500000$,their probability distribution tells them there is 10 percent chances that revenue will be less than 500000$,the company know what level of risk it is facing.

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Utility of probability

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4. To determine probability of demand of product at

particular time. For example the demand of gun is high at the time of war then in daily.

5. To make certain assumption about the prediction in capital market.

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Utility of probability

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1. Which probability is called posterior probability? Statistical probability.2. When two events can not occur in a single time called?

Mutually exclusive event. 3. Which probability is called classical probability? Mathematical probability. 4. What is the event name where both the event have equal chances of occuring. Equally likely events.

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QUIZ

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