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# QMT400 Business Statistics Pn.

Sanizah's Notes
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CHAPTER 8
Prepared by Sanizah Ahmad
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INTRODUCTION TO PROBABILITY
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We often encounter the concept of probability, which is about CHANCE
and OPPORTUNITY, in our daily lives and conversations.

 “I have a 50-50 chance of passing this course.”
 “There is a 40% chance of rain this evening.”
 “There will most likely be heavy traffic the day before Hari
Raya.”

All the statements above have something in common – they are NOT
FACTS; they may or may not happen.

Probability is an analysis of the likelihood that an event will
happen.

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In this chapter, you are going to learn:
 COUNTING RULES
 PERMUTATION
 COMBINATION
 PROBABILITY
 EVENT AND SAMPLE SPACE
 THE RULES OF PROBABILITY
 BAYES’ THEOREM
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QMT400 Business Statistics Pn. Sanizah's Notes
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COUNTING RULES
PERMUTATIONS
AND
COMBINATIONS

ARE METHODS TO SOLVE CERTAIN
TYPES OF WORD PROBLEMS.
BOTH
PERMUTATIONS
AND
COMBINATIONS
USE A COUNTING METHOD
CALLED FACTORIAL.
Factorials
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 A FACTORIAL is a counting method that uses consecutive whole
numbers as factors.

 Definition of Factorials

Example 1 Evaluate the following:
a) 3! = 3 x 2 x 1 = 6
b) 5! =
c) 0! =
d) 5!/3! =

7 First, we’ll do some
permutation problems.

Permutations are
“arrangements”.
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PERMUTATION
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 An arrangement of n distinct orders in a specific
order is called a permutation.

 For example, how many different arrangements are
possible for 3 people to line up to get on a bus.

The different arrangements are called permutation.
 In a permutation, the order of the books is
important.
 Each different permutation is a different arrangement.

Illustration of PERMUTATION
 If an art dealer has 3 paintings, say A, B and C, to
arrange in a row on a wall, how many different
arrangements are there to display the paintings?

ABC BAC CAB
ACB BCA CBA

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PERMUTATION
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 Definition

Example 2:
In how many different ways can 4 people be arranged in a row for a
photograph?

Solution:
This is a permutation of 4 objects. Hence

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24 = 1 × 2 × 3 × 4 = ! 4
Permutation Formulas
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For n distinct elements taken r at a time, where :

 Illustration:

n r s s 1
)! (
!
r n
n
P
r
n
÷
=
840
! 3
! 3 4 5 6 7
! 3
! 7
)! 4 7 (
! 7
4
7
= = =
÷
= P
A permutation of n elements taken r at a time is an ordered
arrangement , without repetitions, of r of the n elements. The number
of permutations of n elements taken r at a time is denoted by
n
P
r
.
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QMT400 Business Statistics Pn. Sanizah's Notes
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Example 3
(a) In how many different ways can 3 people be arranged in a
row for a photograph if they are selected from a group of 5
people?

(b) In how many different ways can a chairperson and
secretary be selected from a committee of 9 people?

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Permutation : Special Case
DISTINGUISHABLE PERMUTATIONS
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 So far we have considered permutations of distinct objects.
Permutations can also be formed using collections of objects not all of
which are distinct from one another.

Given n objects of which r
1
are alike, r
2
are alike and r
3
are alike,
the number of permutations can be computed using the following
formula:

 Illustration: Find the number of distinguishable (different) permutations
using all of the letters in the word BOOK.
Number of arrangements =
! ! !
!
3 2 1
r r r
n
12
! 2
! 2 3 4
! 2
! 4
=
· ·
=
Example 4
 How many different permutations can be formed from the
words:
(a) MAMA
(b) STATISTICS
(c) PROBABILITY
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Permutation : Special Case
Circular Permutation
 Permutations that occur by arranging objects in a circle
are called circular permutations.

 The number of permutations of n objects arranged in a
circle is

 Example
How many arrangements are there for seven people to
seat themselves around a circular table?
Solution:

)! 1 ( ÷ n
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soudertonmath.wikispaces.com/file/view/10.2ss.ppt
There are some problems where
the order of the items is NOT
important.
These are called combinations.
You are just making selections
(choosing), not making different
arrangements.
ILLUSTRATION
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 Consider a set with 4 elements A, B, C, and D.
 The permutations of these 4 elements taken 3 at a time are:
ABC ABD ACD BCD
ACB ADB ADC BDC
BAC BAD CAD CBD
BCA BDA CDA CDB
CAB DAB DAC DBC
CBA DBA DCA DCB

The combinations of these 4 elements taken 3 at a time are
ABC ABD ACD BCD

 Note: The number of combinations is a lot fewer than the number of permutations.
COMBINATION
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 When finding permutations, we are interested in the number of ways or
ordering elements of a set. In many counting problems, however,
order is NOT important. Now we develop a formula for counting in
situations where order doesn’t matter.

Definition
Combinations give the number of ways r elements can be selected
from nelements. The formula used to determine the number of
combinations is

which is read as “the number of combinations of n elements selected r
at a time” or “n choose r”.

)! ( !
!
r n r
n
C
r
n
÷
=
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Example 5
(a) How many ways can a student choose four out of six questions
in an examination?

(b) Three members of a jury will be randomly selected from five
people. How many different combinations are possible?

(c) There are 12 people entering a room where there are only 10
chairs. How many ways can two people be chosen to remain
standing?

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PROBABILITY
Some Important Terms in Probability
 Experiment – chance process by which an
observation (or measurement) is obtained
Example : Tossing a coin

 Outcome – the result of a single trial of an
experiment
Example: Whether a Head or a Tail

 Sample Space - set of all possible outcomes of an
experiment
Example : S={Head, Tail}

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Examples of Experiments, Outcomes, and
Sample Spaces
Experiment Outcomes Sample Space
Toss a coin once Head, Tail S = {Head, Tail}
Roll a die once 1, 2, 3, 4, 5, 6 S = {1, 2, 3, 4, 5, 6}
Toss a coin twice HH, HT, TH, TT S = {HH, HT, TH, TT}
Play a game Win, Lose S = {Win, Lose}
Take a test Pass, Fail S = {Pass, Fail}
Select a student Male, Female S = {Male, Female}
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EVENTS
An event is the subset of a sample space.

Recall earlier Example:
 Experiment: Toss a fair coin
 Outcomes: Head or Tail
 Sample space: S = {Head, Tail}
 Event: Choose head to be an event
A = {Head}

Example 5
Consider an experiment of throwing a fair die

Sample space : S = { }
Event :
 A is the event of obtaining number 1.
A = { }
 B is the event of obtaining numbers greater than 3.
B = { }
 C is the event of obtaining odd numbers.
C = { }
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Venn and Tree Diagrams
 The sample space for an experiment can also be illustrated by drawing
either a Venn diagram or a tree diagram.
 A Venn diagram is a picture that depicts all the possible outcomes for
an experiment.
 In a tree diagram, each outcome is represented by a branch of the tree.
 Recall Example 1: Tossing a fair coin.

H
T
H
T
S
Head
Tail
Outcomes
(a)
(b)
Venn Diagram Tree diagram coin

Example 6
 Draw the Venn and tree diagrams for the experiment
of tossing a coin twice.

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T
H
Final
outcomes
(b)
T
TT
HH
H
TH
HT
H
T
Second
toss
First toss
HH
TT
S
(a)
TH
HT
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Operations on Events
 In many problems of probability we are interested in
events that are actually combinations of two or more
events:
UNION
INTERSECTION
COMPLEMENT
MUTUALLY EXCLUSIVE
UNION
 Union – consists of all the elements contained in
event A, in event B or both

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B A
S
INTERSECTION
 Intersection – consists of all the elements
contained in both A and B

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B A·
COMPLEMENT
 Complement event A – Consists of all elements
in the sample space that are not contained in A.

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S
A A
' A or A
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MUTUALLY EXCLUSIVE
 Mutually exclusive – if events A and B have no
elements in common.
- OR both events cannot occur at the same time

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| = ·B A
Example 7
Consider an experiment of throwing a fair die.
A is the event of getting even numbers.
B is the event ‘the numbers obtained is greater than 3’.
C is the event of getting the prime numbers.

a) Draw the Venn diagram to illustrate the above
events.
b) Find:
i) A · B ii) A C iii) B’ C
c) Which events are mutually exclusive?

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Classical Definition of Probability
( )
( )
( )
Space Sample :
Event :
y Probabilit :

space sample in the outcomes of number total
event in the outcomes of number
S
E
P
S n
E n
E P
=
=
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Example 8
A fair die is thrown. What is the probability of
(i) getting number 4
(ii) not getting number 4

S = {1,2,3,4,5,6}
(i) E={4)

(ii) E={1,2,3,5,6}

( )
( )
( )
= =
S n
E n
E P
( )
( )
( )
= =
S n
E n
E P
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QMT400 Business Statistics Pn. Sanizah's Notes
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Laws of Probability

1)When an event cannot occur,
the probability will be zero.
When an event is certain to
occur, the probability is 1.
2) The sum of the probabilities
of all the outcomes in the
sample space is 1.
3) The probability that an event
will not occur is equal to 1
minus the probability that the
event will occur.

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( )
( )
1 ) ( ) (
) ( 1 ) ( ) 3
1 ) 2
1 0 ) 1
= +
÷ =
=
s s
¿
E P E P or
E P E P
E P
E P
The Addition Rules
1) Mutually exclusive events:
both events A and B cannot occur at the same time.

2) Non-mutually exclusive events:
both events A and B can occur together.

( ) ( ) ( ) ( )
( ) 0 :
B or
= ·
+ = =
B A P Note
B P A P B A P A P
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( ) ( ) ( ) ( )
( ) 0 : = ·
· ÷ + =
B A P Note
B A P B P A P B A P
Example 9
Which of the two events are not mutually exclusive?

a) Rolling a die and getting a 6 or a 3.
b) Drawing a card from a deck and getting a club or an
ace.
c) Tossing a coin and getting a head or a tail.
d) Tossing a coin and getting a head and rolling a die
and getting an odd number.
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Example 10
Which of the two events are mutually exclusive?

a) Drawing a card from a deck and getting a king or a
club.
b) Rolling a die and getting an even number or a 6.
c) Tossing two coins and getting two heads or two
tails.
d) Rolling two dice and getting doubles or getting a
sum of eight.
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QMT400 Business Statistics Pn. Sanizah's Notes
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The Multiplication Rules
1) Independent events:
two events are statistically independent when the
occurrence of one event is not affected by the result
of the other event.

2) Non-independent (dependent) events:
when the occurrence of one event is effected by the
occurrence of another event.

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( ) ( ) ( ) B P A P B A P × = ·
( ) ( ) ( )
) ( ) ( ) ( B A P B P B A P
A B P A P B A P
× = ·
× = ·
Example 11
Determine whether the two events are
independent or dependent:

a) Tossing a coin and selecting a card from a deck.
b) Driving on ice and having an accident.
c) Drawing a ball from an urn, not replacing it, and
then drawing a second ball.
d) Having a high I.Q. and having a large hat size.
e) Tossing one coin and then tossing a second coin.

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Conditional Probability
Event A and B are dependent.
 If event B already occur, the probability of getting event A
is:

 If event A already occur, the probability of getting event B
is:

• If A and B are independent events,
then either
( )
( )
( ) B P
B A P
B A P
·
= |
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( )
( )
( ) A P
B A P
A B P
·
= |
( )
( ) ) ( |
or ) ( |
B P A B P
A P B A P
=
=
 The general rule of multiplication for dependent
events:
( )
( )
( )
( ) ( ) ( )
( )
( )
( )
( ) ( ) ( ) A P A B P B A P
A P
B A P
B|A P
B P B A P B A P
B P
B A P
A|B P
× = ·
·
=
× = ·
·
=
| then , If
| then , If
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QMT400 Business Statistics Pn. Sanizah's Notes
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Example 12
 Let A and B are two events with P(A)=1/3, P(B)=1/2
and P(A B)=3/4. Determine P(B|A).
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Example 13
 Consider a bag contains 3 red balls and 2 blue balls.
Two balls are withdrawn from the bag one at a time.
Find the probability that the second ball is red.
(Use tree diagram)
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Example 13
 Consider a bag contains 3 red balls and 2 blue balls.
One ball is withdrawn from the bag and replaced.
Find the probability that the second ball is red.
(Use tree diagram)
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Example 14
 Table 1 gives the classification of all employees of a
company given by gender and college degree.

Table 1: Classification of Employees by Gender and Education

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QMT400 Business Statistics Pn. Sanizah's Notes
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Example 14 cont.
 If one of these employees is selected at random for
membership on the employee management
committee, what is the probability that this employee
is a female and a college graduate?

Solution
Calculate the intersection of event F and G
P (F and G ) = P(F · G) = P (F )P (G |F )
P (F ) = 13/40
P (G |F ) = 4/13
P (F · G ) = (13/40)(4/13) = 0.100

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Tree diagram for Example 14
M
F
G | M
N | M
G | F
N | F
4/13
9/13
20/27
7/27
24/40
13/40
Graduates / nongraduates Male / female Final outcomes
P(M and G) = (27/40) (20/27) = .175
P(M and N) = (27/40) (20/27) = .500
P(F and N) = (13/40) (9/13) = .225
P(F and G) = (13/40) (4/13) = .100
Partition
S
B
1

B
2
B
3

A
) ( ) | ( ) ( ) | ( ) ( ) | ( ) (
3 3 2 2 1 1
B P B A P B P B A P B P B A P A P · + · + · =
Law of Total Probability
)) ( ) ( ) ((
)) ( (
) ( ) (
2 1
2 1
n
n
B A B A B A P
B B B A P
S A P A P
· · · =
· =
· =

Let the events B
1
, B
2
, ., B
n
partition the finite discrete
sample space S for an experiment and let A be an event
defined on S.
QMT400 Business Statistics Pn. Sanizah's Notes
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Law of Total Probability
¿
=
· =
· + + · + · =
· + + · + · =
· · ·
n
i
i i
n n
n
n
B P B A P
B P B A P B P B A P B P B A P
B A P B A P B A P
B A B A B A P
1
2 2 1 1
2 1
2 1
) ( ) | (
) ( ) | ( ) ( ) | ( ) ( ) | (
) ( ) ( ) (
)) ( ) ( ) ((

. ) ( ) | ( ) (
1
¿
=
· =
n
i
i i
B P B A P A P
Bayes’ Theorem
 Suppose that the events B
1,
B
2,
B
3, . . . ,
B
n
partition
the sample space S for some experiment and that A
is an event defined on S. For any integer, k, such
that , we have n k s s 1
( )
( ) ( )
( ) ( )
¿
=
=
n
j
j j
k k
k
B P B A P
B P B A P
A B P
1
|
|
|