WELCOME

To all PGDM Students

From Dushyant tyagi

{M.Sc.(Statistics), M.Phil.}

Permutations
The different arrangement can be made

without replacement & with regard of order of a given no. of things by taking some or all at a time are called permutations. P (n,r) = n! / (n-r)! E.g. permutations made with letters a,b,c by taking two at a time: P(3,2)=6 ab, ba, ac, ca, bc, cb

Combinations
The combination of n different objects taken r at a

time is a selection of r out of n objects with no attention given to order of arrangement C (n,r) = n!/r!(n-r)! e.g. From 5 boys & 6 girls a group of 3 is to be formed having 2 boys & 1 girl is C(5,2) x C(6,1) = 60 ways

Probability
Probability is a concept which numerically measures

the degree of uncertainty or certainty of the occurrence of any event. i.e. the chance of occurrence of any event. The probability of an event A is No. of Favorable cases P(A)= Total No. of Cases

Probability
If P(A)=0, Impossible Event
If P(A)=1, Sure Event 0P(A)1 P(A)= Probability of occurrence P()= Probability of Non-occurrence P(A) + P() = 1

Some Keywords
Equally Likely Events: When the chance of occurrence

of all the events are same in an experiment. Mutually Exclusive Events: If the occurrence of any one of them prevents the occurrence of other in the same experiment. Sample Space: the set of all possible outcomes.

Some Keywords
Independent Events: If two or more events occur in

such a way that the occurrence of one does not effect the occurrence of other. Dependent Events: If the occurrence of one event influences the occurrence of the other.

Classical or Priori Probability

If a trial result in n exhaustive, mutually exclusive and

equally likely cases and m of them are favorable to the happenings of an event E, then the probability P of happening of E is given by: P(E) = m / n

Empirical or Posteriori Probability

The classical def requires that n is finite and that all

cases are equally likely. This condition is very restrictive and can not cover all situations. The above conditions are not necessarily active in this case.

Example

A coin is tossed three times. Find the probability of getting: i) Exactly one head ii) Exactly two head iii) One or two head

Example

One card is randomly drawn from a pack of 52 cards. Find the probability that i) Drawn card is red ii) Drawn card is an ace iii) Drawn card is red and king iv) Drawn card is red or king

Example

A bag contains 3 red, 6 white and 7 blue balls. Two balls are drawn at random. Find the probability that i) Both the balls are white. ii) Both the balls are blue. iii) One ball is red & other is white. iv) One ball is white & other is blue.

Addition Theorem
For any two event A and B the probability for the

occurrence of A or B is given by: P(AUB)= P(A) + P(B) P(AB) If A & B are mutually Exclusive then P(AB)=0 P(AUB)= P(A) + P(B)

Multiplication or Conditional Probability

The probability of an event B when it is known that the

event A has occurred already: P(B/A)= P(A B) / P(A) ;if P(A)>0 ie. P(A B)= P(A).P(B/A) If A and B are Independent event: P(A B)= P(A).P(B)

Example

A bag contains 25 numbered from 1 to 25. Two balls are drawn at random from the bag with replacement. Find the probability of selecting: i) Both odd numbers. ii) One odd & one even. iii) No odd numbers. iv) At least one odd. v) Both even numbers.

Example
Five men in a company of 20 are graduate. If 3 men

are picked up at random, what is the probability that they are all graduate? What is the probability that at least one is graduate.

Example
The probability that A hits a target is 1/3 and the

probability that B hits the target is 2/5. What is the probability that the target will be hit, if each one of A and B shoots at the target.

Bayes Theorem
The Bayes theorem is useful to determine the revised

(Posterior) probability for Prior probability of known outcomes after getting additional information about these outcomes.

Let A1, A2, ... , An be a set of mutually exclusive events

that together form the sample space S. Let B be any event from the same sample space, such that P(B) > 0. Then, P( Ak | B ) = P( Ak B ) P( A1 B ) + P( A2 B ) + . . . + P( An B ) Note: Invoking the fact that P( Ak B ) = P( Ak )P( B | Ak ), Baye's theorem can also be expressed as P( Ak | B ) = P( Ak ) P( B | Ak ) P( A1 ) P( B | A1 ) + P( A2 ) P( B | A2 ) + . . . + P( An ) P( B | An )

Example
In a bolt factory machines A,B and C manufacture

respectively 25 percent, 35 percent and 40 percent of the total production. Of the total of their output 5, 4 and 2 percent are defective bolts, A bolt is drawn at random and is found to be defective. What is the probability that it was manufactured by machine A.

Example
An organization wants to introduce a new product in the

market. Based on its past experience, it has a 65 percent chance of being successful and 35 percent of being not successful. To make a decision, whether to introduce or not, it decides to get additional information on consumer attitude toward the product. For this purpose organization decides on a survey. In the past when a product of this type was successful, survey yield favourable indication 85 percent of the time, whereas unsuccessful products received favourable survey indications 30 percent of the time. Determine the posterior probability of the product being successful given the favourable survey information.

Random variable
Random variable is a numerical valued function based

on sample space(S) of a random experiment. Example: If we toss two coins ,and a random variable X is define as numbers of head. Then the possible values of X is 0, 1, 2

Types of random variable

A random variable can be classified as being either discrete or continuous depending on the numerical values it assumes.
A discrete random variable may assume either a finite number of values or an infinite sequence of values. A continuous random variable may assume any numerical value in an interval or collection of intervals.

Expected Value of Probability

Let X be the random variable with the following

distribution: X : x1 x2 P(X) :P(x1) P(x2) Expected Value is given by: E(X) = xi . P (xi)

x3.. P(x3)..

Example
A player tossed two coins. If two heads show he wins

Rs. 4. if one head shows he wins Rs. 2, but if two tails show he pays Rs. 3 as penalty. Calculate the expected value of the game to him. Solution: E(X)= (-3) + (2) + (4) =1.25

Example
An insurance company sells a particular life insurance

policy with a face value of Rs. 1000 and a yearly premium of Rs. 20. If 0.2% of the policy holder can be expected to die in the course of a year, what would be the companys expected earning per policy holder per year. E(X)= (-980) 0.002 + (20) 0.998=18

Probability Distributions
The probability distribution for a random variable describes how probabilities are distributed over the values of the random variable.
The probability distribution is defined by a probability function which provides the probability for each value of the random variable.

Binomial Distribution
The probability of x success in n trials where p is the

probability of success and q is the probability of failure is given by: P(x) = C(n,x) px qn-x x=0,1,2.. Mean= np Variance= npq

Assumptions of Binomial Distt

The repeated trials are independent.
Each trial has only two possible outcome. The probability of success or failure in each trails are

constant. P and q are the two parameters of BD Mean of BD is np. Standard Deviation of BD is npq.

Example
In tossing 10 coins. What is the probability of having

exactly 3 heads.

Example

If mean & variance of a binomial distribution are 4 and 2 respectively. Find the probability of i) Exactly two successes ii) Less than two successes iii) More than 6 successes iv) At least 2 successes

Poisson Probability Distribution

It is another discrete probability distribution having

specific use. It is a limiting case of binomial distribution, when n is large and p is small binomial distribution tends towards Poisson distribution. It is defined as p (x)= e- x / x! X=0,1,2

Poisson Probability Distribution

Consider a case when n=1000 and p=1/100 then and

x=3 p(3)= C(1000,3) (1/100)3 (99/100)997 It is very difficult to calculate this expression.

Properties- Poisson Distribution

Statistical independence is assumed.
When p, probability of occurrence is very small and n

is very large. The only parameter is =np The mean and variance of PD is . Each trial has only two possible outcome. It is a limiting case of Binomial distt.

Some example of Poisson Distt

No. of defective products in a large box.
No. of air accidents in India in a year. No. of telephone calls received at a particular exchange

in a unit time.

Example
Suppose that the chance of an individual coal-miner

being killed in a mine accident during a year is 1/1400. Find the probability that in the mine employing 350 miners, there will be at least one fatal accident in a year. (given e-0.25=0.78) Sol. =350/1400=0.25 Probability = 1-P(0)=0.22

Example
A manufacturer of blades knows that 5% of his

product is defective. He sells blades in boxes of 100, and guarantees that not more than 4 blades will be defective. Find the probability that a box will meet the guaranteed quality. (given e-5=0.0067) Sol. =np=100*0.05=5 P(x4)=p(0)+p(1)+p(2)+p(3)+p(4)=.438

Normal Distribution
It is a continuous probability distribution in which the

relative frequencies of a continuous variable are distributed according to the normal probability law. It is a symmetrical distribution in which frequencies are distributed evenly about the mean of the distribution.

Normal Distribution
The

normal distribution of a variable, when represented graphically, takes the shape of a symmetrical curve, known as normal curve. This curve is asymptotic on either side. It is discovered by De-Movire & Friedrich Gauss.

The Normal Probability Distribution

(x ) Graphf of the Normal Probability Density Function

Properties Normal Distt or curve

The normal curve is symmetrical about the vertical

axis through mean. Mean() & SD() are known as the parameter of the distribution. The curve is Asymptotic to X-axis. The problems related to Normal distt can be solved by using the properties of Normal Curve.

Properties Normal Distt or curve

The random variable X should be transform to

Standard Normal Variable z using Z = (X-)/ After the transformation the probability (area) can be find using Normal distribution table. The total are under the normal curve is 1.

Given any positive value for z, the table will give us the following probability

The table will give this probability

Given positive z

The probability that we find using the table is the probability of having a standard normal variable between 0 and the given positive z.

Example

2000 students appeared in an examination. Distribution of marks is assumed to be normal with mean=30 and SD=6.25. How many students are expected to get marks. i) Between 20 and 40 ii) Less than 35.

Example
Assuming that the mean height of students is an

exactly normal distribution be 68.22 inches and variance of 10.8 inches2. how many students in a college of 1000 students would you expect to be over six feet tall?

Example
In a distribution exactly normal, 7% of the items are

under 35 and 89% are under 63. What are the mean and standard deviation of the distribution.

Example
From a large group of men, 5% are under 60 inches in

height and 40% are between 60 and 65 inches. Assuming a normal distribution, find the mean height & standard deviation.