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Introduction to Probability
Course outline
Experiments, Counting Rules, and Assigning
Probabilities
Events and Their Probability
Some Basic Relationships of Probability
Conditional Probability
Bayes Theorem
Uncertainties
Manager often base their decisions on an
analysis of uncertainties such as the following:
What are the chances that sales will decrease if we
increase prices?
o What is the likelihood a new assembly method will
increase productivity?
o How likely is it that the project will be finished on
time?
o What is the chance that a new investment will be
profitable?
Probability
Probability is a numerical measure of the likelihood that an
event will occur.
Probability values are always assigned on a scale from 0 to 1.
Example:
a near 0 probability of rain tomorrow almost no chance of
rain
o 0.9 probability of rain tomorrow
very likely to rain
o 0.5 probability of rain tomorrow
as likely to occur as not
o
Some concepts
Experiment as a process that generates well-defined
outcomes.
The sample space for an experiment is the set of all
experimental outcomes. The sample space is
denoted by S
A sample point is an element of the sample space,
any one particular experimental outcome.
Tree diagram
A tree diagram is a helpful graphical
representation of a multiple-step experiment.
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Combinations - examples
In a group of five parts, how many combinations
of two parts can be selected?
Example - permutation
consider again the quality control process in
which an inspector selects two of five parts to
inspect for defects. How many permutations may
be selected?
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Combination vs Permutation
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References
Statistics for Business and Economics, Anderson,
Sweeney, and Williams, West Publishing
Company.
Statistics for Business and Economics., South
Western/Thompson Learning
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