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Probability is the relative frequency with which an event occurs. Probabilityhelps managers make rationaldecisions in situations involving uncertainty. There are 3types of probability: Empirical Probability
Probability is the relative frequency with which an event occurs. Probabilityhelps managers make rationaldecisions in situations involving uncertainty.There are 3types of probability:
- Empirical Probability is determined by observation. For example, the number of defects in 10,000 widgets was observed to be 25. So, P(defective) = 25/10,000.
- Subjective Probability - Subjective probability measures the likelihood of an event subjectively.
- Rationally derived from experience of the past,knowledge, and conditions of the present.
- A "personal belief ", allowing substantial variation in measures.
- Example: Based on past experience, I feel that the probability of candidate A winning the election is about 60%.
- Classical Probability requires enumerating all possible outcomes, counting the outcomes of interest, and computing probability of the outcome(s) of interest = number of the outcome(s) of interest / the total number of outcomes.
- Example: If there are 40 even numbers and 60 odd numbers randomly distributed randomly in a box, the probability of drawing an even number, P(even) = 40/(40+60).
The Probability Rules:
- Probability of an outcome can take any value from 0 or 0% (impossible) to 1 or 100% (certainty).
- The probability of all outcomes is 100%.
- An event consists of 1 or more outcomes.
- The probability of an event not occurring is 1 minus the probability that it occurs.
Select all VALID probabilities values.
49/50
50/49
1
110%
1.01
-0.25
0%
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