5/13/2012 Prof. P. K.

Dash 1
5/13/2012 Prof. P. K. Dash 2
Probability Rules
Bayes Theorem (Posterior Probability)
Let A1, A2, A3Ak are mutually exclusive
events and collective exhaustive events and B is
another event such that P(B) is not zero, then
1
1
1
) / ( ) (
) / ( ) (
) / (
=

=
=
k
i
A
i
Where
k
i
A
i
B P
A
i
P
A
i
B P
A
i
P
B
i
P
A
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Example
Assume that a factory has two machines. Past record
shows that Machine-1 produces 30% of the output
and machine-2 the rest i.e 70% of the output. Further
5% of the items produced by machine-1 are defective
and 1% by machine 2 are defective. If a defective
item is drawn at random, what is the probability that
the defective item was produced by machine-1 or
machine-2.
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Example - Formulation
A1 EVENT OF DRAWING AN ITEM PRODUCED BY MACHINE-1
A2 EVENT OF DRAWING AN ITEM PRODUCED BY MACHINE-2
B EVENT OF DRAWING A DEFECTIVE ITEM PRODUCED EITHER
BY MACHINE - 1 OR MACHINE - 2.
P(A1) = 30% = 0.3
P(A2) = 70% = 0.7
P(B/A1) = 5%= 0.05, P(B/A2) = 1% = 0.01
WHAT IS P(A1/B) AND P(A2/B) ??
Ans: P(A1/B) = 0.3X0.05 / (0.3X0.05 + 0.7X0.01)=15/22
Similarly P(A2/B) = 7/22
5/13/2012 Prof. P. K. Dash 5
Example
A certain production process produces items that are
10% defective. Each item is inspected before
supplying to customer but the inspector incorrectly
classifies an item 10% of the time. Only items
classified as good are supplied. If 820 items have
been supplied, how many of them are expected to be
defective ?
Ans: 820[0.1X0.1/(0.1X0.1 + 0.9X0.9)] =820x 1/82=10
5/13/2012 Prof. P. K. Dash 6
Home Assignment
Suppose the probability that a particular student will
get a first division in the annual examination is 1/10.
Suppose he appears 10 class tests and obtained first
division in 4 of them. What is the probability now that
the student will get a first division in the annual
examination ?
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Random Variable
A variable is that, which takes
different values as a result of
random experiment.
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Random Variable
1. Outcome of an experiment that
takes on different values
Number observed when rolling a die
(1,2,3,4,5,6)
2. Can be either discrete or continuous

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Random Variable
Continuous R.V
TAKS VALUES WITHIN A GIVEN RANGE
Discrete R.V
TAKS A LIMITED NO. OF VALUES
5/13/2012 Prof. P. K. Dash 10
Discrete vs. Continuous Random
Variables
Discrete Random Variable
Usually a whole number (0, 1, 2, 3 etc.)
Obtained by counting
Usually finite number of values
Poisson random variable is exception ()
Continuous Random Variable
Allowed to assume any value within a
given range
i.e., Measurements
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Discrete Random Variable Examples
Experiment Random
Variable
Possible
Values
Make 100 Sales Calls# Sales 0, 1, 2, ..., 100

Inspect 70 Radios # Defective 0, 1, 2, ..., 70

Answer 33 Questions # Correct 0, 1, 2, ..., 33

Count Cars at Toll # Cars 0, 1, 2, ...,
Between 11 & 1 Arriving
5/13/2012 Prof. P. K. Dash 12
Expected Value of a Discrete Random
Variable
Expected Value
Denoted as E(X)
Mean of probability distribution
Weighted average of all possible values

X
= E(X) = EX

P(x)
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Expected Value
Outcome
2 4 6 8 10 12 15
Frequency
24 22 16 12 7 3 1
Expected value of a discrete R.V = R.V x Probability of occurrence
What is the Expected value ?
5/13/2012 Prof. P. K. Dash 14
Program
Sold
25 40 55 70
Probability 0.1 0.3 0.4 0.2
Reeki the director of Zigma publication is trying to decide how
many programs to print for the Indian teams match in Worldcup
Football going to be held in June 2007. Each program cost Rs. 5
to print and sales for Rs. 15. Any program unsold at the end of
the series must be discarded. Reeki has estimated the following
probability distribution for the program sales.
Reeki has decided to print either 25, 40, 55 or 70 thousand
programs. Which number will minimize the companys loss ?
Application
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Types of Probability Distributions
Classification
Discrete Continuous
Binomial
Poisson
Normal
* *
Exponential
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Binomial Distribution
1. Widely used discrete distribution
2. Data result from experiment known
as Bernoulli Process
3. Characteristics of Bernoulli Process
Two possible outcomes for each trial
Probability of an outcome (success) is
constant from trial to trial(REMAIN FIXED)
Trials are statistically independent
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Binomial Probability Distribution
Function
n
!
n
r r
p
r
!
!
(
)
=

q
n r
Probability of r successes in n trials
n = sample size
p = probability of success
q = probability of failure (1 - p)
r = number of successes in sample (r = 0, 1, 2, ..., n)
! = factorial i.e., 3! = (3)(2)(1) = 6
5/13/2012 Prof. P. K. Dash 18
n
!
n
r r
p
r
!
!
(
)
=

q
n r
Probability of r successes in n trials
Binomial Probability Distribution
Example
Experiment: Toss a fair coin 3 times. Whats the probability
of 2 heads?
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Binomial Probability Distribution
Example
3
!
3
2 2
.5
1
!
!
(
)
(
) =

Probability of 2 successes in 3 trials
.5
2
(
)
n
!
n
r r
p
r
!
!
(
)
=

q
n r
Probability of r successes in n trials
Experiment: Toss a fair coin 3 times. Whats the probability
of 2 heads?
5/13/2012 Prof. P. K. Dash 20
Binomial Probability Distribution
Example
1
3
!
3
2 2
.5
!
!
(
)
(
) =

Probability of 2 successes in 3 trials
.5
2
(
)
3 x 2 x 1
(2 x 1)(1 x 1)
(. 25)(.50)
=
= 0.375 =
6
2
(0.125)
Experiment: Toss a fair coin 3 times. Whats the probability
of 2 heads?
n
!
n
r r
p
r
!
!
(
)
=

q
n r
Probability of r successes in n trials
5/13/2012 Prof. P. K. Dash 21
Binomial Distribution
Measures of Central Tendency and Dispersion
Mean
Standard Deviation

o
E X np
npq
= =
=
( )
Mean: = np
= (10)(.2) = 2
packages Standard Deviation:
o = npq
= (10)(.2)(.8)
= 1.265 packages
A packaging machine produces
20% defective packages. For a
random sample of 10 packages,
compute the mean and the
standard deviation of the number
of defective packages.
5/13/2012 Prof. P. K. Dash 22
Binomial Distribution
EXAMPLE
Manager Quality Control of Maruti Udyog Limited, is inspecting the
Gearboxes made ready for assembly. As per procedure, 10 Gearboxes
are picked and checked for any manufacturing defects. Historically
only 3% of the Gearboxes have flaws. Assume that flaws occurs
independently in Gearboxes.
(A)What is the probability that, the sample contains more than 2
manufacturing flaws ?
(B) What is the probability that non of the Gearboxes selected has
any manufacturing flaws ?

0.0028
0.7374
5/13/2012 Prof. P. K. Dash 23
Binomial Distribution Thinking
Challenge
Youre a telemarketer
selling service contracts for
Macys. Youve sold 20 in
your last
100 calls (p = .20). If you
call 12 people tonight,
whats the probability of
A. No Sales?
B. Exactly 2 Sales?
C. At Most 2 Sales?
D. At Least 2 Sales?
5/13/2012 Prof. P. K. Dash 24
Consider the following conditions:
When p is very small and approaches 0
example: a 100 sided dice instead of a 6 sided dice, p = 1/100 instead of 1/6
example: a 1000 sided dice, p = 1/1000
N is very large and approaches
example: throwing 100 or 1000 dice instead of 2 dice
The product Np is finite
Example: radioactive decay
Suppose we have 25 mg of an element
very large number of atoms: N 10
20
(avogadros number is large!)
Suppose the lifetime of this element t = 10
12
years 5x10
19
seconds
probability of a given nucleus to decay in one second is very small: p =
1/t = 2x10
-20
/sec
The number of decays in a time interval is a Poisson process.
Poisson distribution can be derived by taking the appropriate limits of the
binomial distribution

Poisson Distribution
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Characteristics of a Poisson Process
1. Constant event probability
Average of 60/hr Is 1/min for 60
1-minute intervals
2. Mean no. occurrence per
interval is estimated from past
data.
3. At most one event in small
intervals and probability is very
small. Dont occur together
4. Independent events
Arrival of 1 person does not
affect anothers arrival
1984-1994 T/Maker Co.
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Poisson Distribution
Examples

Calls going through a switchboard system
Demand for service at healthcare facility
Arrival of vehicles at a toll booth
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Poisson Probability Distribution
Function
P (X) = probability of X occurrences
= expected (mean) number of occurrences
= np ( From Past Data )
e = 2.71828 (base of natural logs)
X = number of occurrences
P
X
X
x
( )
!
=


e
-
5/13/2012 Prof. P. K. Dash 28
Poisson Probability
An Example
Suppose an intersection has a mean accident rate of 5
per month. The number of accidents is distributed
according to a Poisson Distribution. What is the
probability that exactly 0, 1, 2, 3, or 4 accidents will
occur in any given month?
= 5 accidents per month
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Solution
P(x) = probability of x occurrences
= expected (mean) number of occurrences
e = 2.71828 (base of natural logs)
x = number of occurrences
P
x
x
x
( )
!
=


e
-
P( 1 )
5
1
(e
- 5
)
1!
=
P( 0 )
5
0
(e
- 5
)
0!
=
=
(1)(0.00674)
1
=
(5)(0.00674)
1
P( 3 )
5
3
(e
- 5
)
3!
=
P( 2 )
5
2
(e
- 5
)
2!
=
=
(25)(0.00674)
(2)(1)
=
(125)(0.00674)
(3)(2)(1)
= 0.00674
= 0.03370
= 0.084225
= 0.14042
5/13/2012 Prof. P. K. Dash 30
Poisson Probability Distribution
of Accidents Per Month
x P(x) = Probability
Number of Exactly
Of Accidents that Number

0 0.00674
1 0.03370
2 0.08425
3 0.14042
4 0.17552
5 0.17552
6 0.14627
7 0.10448
8 0.06530
9 0.03628
10 0.01814
11 0.00824
0 thru 11 0.99486
12 or More 0.00514
1.00000
5/13/2012 Prof. P. K. Dash 31
x P(x) = Probability
Number of Exactly
Of Accidents that Number

0 0.00674
1 0.03370
2 0.08425
3 0.14042
4 0.17552
5 0.17552
6 0.14627
7 0.10448
8 0.06530
9 0.03628
10 0.01814
11 0.00824
0 thru 11 0.99486
12 or More 0.00514
1.00000
Poisson Probability Distribution
of Accidents Per Month
0 1 2 3 4 5 6 7 8 9 10 11 12
Number of Accidents
0.18 -
0.16 -
0.14 -
0.12 -
0.10 -
0.08 -
0.06 -
0.04 -
0.02 -

P(x)
5/13/2012 Prof. P. K. Dash 32
Poisson Distribution an Approximation of
Binomial Distribution
No. of trials (n) is indefinitely large
Probability of success for each trial is
indefinitely small
np Substitute =
5/13/2012 Prof. P. K. Dash 33
Poisson Distribution
Example
Suppose on an average 1 house in 1000
in a certain district has a fire during
summer. If there are 2000 houses in
that district, what is the probability that
exactly 5 houses will have a fire during
the year.
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Poisson Distribution
Example
n = 2000 ; p = 1/1000


2
1000
1
2000 = = = x np
036 . 0
5
2
) 5 (
2
5
=
'
=

e
x
P
5/13/2012 Prof. P. K. Dash 35
Poisson Distribution
Example
Maruti Udyog is very much worried about its
elderly employees ability to beep up minimum
work pace. In addition to the normal daily
breaks, these employees stops for short rest
periods an average of 4.1 times per hour. The
rest period is fairly consistent 3 minutes each
time. Maruti has decided that if the probability of
employee resting for 12 minutes (apart from
normal rest) or more per hour is greater than
0.5, then it will try to divert them to other job.
Should it do so ?
5/13/2012 Prof. P. K. Dash 36
Poisson Distribution an Approximation
of Binomial Distribution
No. of trials (n) is indefinitely large
Probability of success for each trial is
indefinitely small
Poisson is a good approximation of Binomial if n is greater
than or equal to 20 and p is less than or equal to 0.05.
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