TUM School of Management

Production and Supply Chain Management

Prof Martin Grunow Technische Universität München

Quality Engineering & Management

Session 2.1: Probability vs Statistics

Dr. Holly Ott

Production and Supply Chain Management
Chair: Prof. Martin Grunow
TUM School of Management

Holly Ott Quality Engineering & Management – Module 2.1 1

 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Learning Objectives

•  Explain the difference between "Probability" and "Statistics."

•  Give examples of "measurement" and "attribute" data.
•  Describe how statistics are used in the field of quality engineering.
•  List major statistical methods used in quality engineering.

Holly Ott Quality Engineering & Management – Module 2.1 2

 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Probability and Statistics

Game: I will flip a coin (one "Euro")
•  For every "number", you receive 1€.
•  But for every "eagle," you have to pay me 1€.

Why are you complaining?

How can you justify your complaint, considering the
-  Sample size?
-  The relative frequency of each result?

©Reiner Hutwelker

Holly Ott Quality Engineering & Management – Module 2.1 3

 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Probability and Statistics

Probability

Model
Inference Statistics
(Population)

Statistics

©Argon Chen

Holly Ott Quality Engineering & Management – Module 2.1 4

 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

An Example: Taiwan Big Lotto

http://www.taiwanlottery.com.tw/Lotto649/index.asp

Holly Ott Quality Engineering & Management – Module 2.1 5

 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

An Example: Taiwan Big Lotto

6 numbers chosen from 49 numbers
•  Mr. Chang chooses numbers randomly and never believes in any
historical analysis of number appearance.
•  Mr. Fang chooses numbers that most frequently appear in the
history.
•  Mr. Wang chooses numbers that most rarely appear in the history.
•  Mr. Yang chooses meaningful numbers, such as the date of
birthday.
Who is correct?

©Argon Chen

Holly Ott Quality Engineering & Management – Module 2.1 6

 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Probability of Taiwan Big Lotto

6 numbers chosen from 49 numbers
What is the probability of winning the first prize?
Answer: From probability theory, we know that this is 1 over the
number of the possible combinations of 49 distinct objects taken 6 at
a time.
Is this answer based on probability or statistics?
The winning probability inferred from the model.
What are the assumptions behind this answer?
Every number has the identical probability to be chosen
independently each time!
©Argon Chen

Holly Ott Quality Engineering & Management – Module 2.1 7

 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Statistics of Taiwan Big Lotto

6 numbers chosen from 49 numbers
What numbers do we expect to appear?
Answer: “Statistics” is used to estimate the appearance probability
of each number.
How do we do this?
We use statistics to infer the “model” from the “sample.”

©Argon Chen

Holly Ott Quality Engineering & Management – Module 2.1 8

 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Taiwan Big Lotto (Cont’d)

Back to Mr. Chang, Mr. Fang, Mr. Wang and Mr. Yang,
Who is correct?
•  Mr. Chang chooses numbers randomly and never believes in any
historical analysis of number appearance.
•  Mr. Fang chooses numbers that most frequently appear in the
history.
•  Mr. Wang chooses numbers that most rarely appear in the history.
•  Mr. Yang chooses meaningful numbers, such as the date of
birthday.

©Argon Chen

Holly Ott Quality Engineering & Management – Module 2.1 9

 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

A Note on “Models”

“All models are wrong, but some are useful.”

- George E. P. Box (1979)

Holly Ott Quality Engineering & Management – Module 2.1 10