Decision Science

June 2022
Question 1:
Answer 1:
Introduction
In business, uncertainty is involved while making any kind of decision. To overcome this uncertainty
probability plays an important role. The probability theory allows us to describe, evaluate, and solve
issues in which future events cannot be predicted with certainty. It is impossible to predict the
outcomes of many administrative decision problems, especially those with strategic significance.
Hence, in conditions where it becomes necessary to understand uncertainty and to reach for rational
decisions to achieve the aim. As a result, probability theory is required for making reasonable
decisions. Because there is randomness everywhere, probability theory can be used to analyze chance
events.

Concepts and Application:

Many areas of scientific inquiry rely heavily on probability. As a manner of expressing their findings,
researchers can incorporate uncertainty into their research models. This enables a forecast distribution
of data based on what has already been seen. Data scientists frequently use probability to explain
scenarios where experiments conducted under similar conditions generate diverse outcomes (as in the
case of throwing dice or a coin). It also has a wide range of applications in the commercial world.
Take the insurance sector, for example, where actuarial data track the life expectancy of people of a
specific age. Rather than predicting what will happen to a single person, the goal is to capture a
collective outcome involving a huge number of people.
A probability tree diagram is the representation of the outcome of probability analysis with events in
space. A probability tree diagram is a visual representation of the probabilities and outcomes of an
event. There are two parts in a probability tree diagram: nodes and branches. An event is represented
by a node. The term "branch" refers to the link between an occurrence and its outcome.
As per the data shared the airlines flying for Srinagar named, Amira, Biyas, and Chinar. The
percentage of flying of these flights are:
Amira: 50%
Biyas: 30%
Chinar: 20%
And their on-time flying rates are:
Amira: 80%
Biyas: 65%
Chinar: 40%
A probability tree is made up of two sections. The nodes and branches are the nodes and branches,
respectively. A parent node and a sibling node can be added to the list of nodes. The parent node
denotes a specific occurrence with a probability of one. Other alternative occurrences or consequences
are represented by the sibling nodes. In terms of a node's chance, it refers to the risk of an event
occurring following the occurrence of its figure event. The chances of a selected node's main
sequence of events arising are the same as that node's product and its parents' probabilities. The
branches represent the likelihood of these events occurring.
So to represent the above airline data in tree diagram we can follow below steps:
Lets us denote probability for flight schedule for Amira airlines:
P[A] = 0.50
Lets us denote probability for flight schedule for Biyas airlines:
P[B] = 0.30
Lets us denote probability for flight schedule for Amira airlines:
P[C] = 0.20

Now, the probability of flight left on time:

P[E|A] = 0.80
P[E|B] = 0.65
P[E|C] = 0.40
Now tree diagram will be

Joint Probability

0.5 x 0.8 = 0.4

0.8

0.2
0.5
0.5 x 0.2 = 0.1

0.65 0.3 x 0.65 = 0.195

Biyas
0.3
0.35

0.3 x 0.35 = 0.105

0.2 0.4
0.2 x 0.4 = 0.08

0.6

0.2 x 0.4 = 0.12

Thus, from above tree diagram, solution for flight schedules of airline can be depicted. A tree diagram
contains all possibilities that consists flights which are both on time and being late. The joint
probability values at the end of the branches are further used to calculate posterior probabilities
Answer part (b):
The probability of identifying events to groups given the data is known as the posterior probability. A
prior probability is the chance that an observation will belong to a group before the data is collected.
Hence in case of flight schedule and their being on time, we can access the data collected earlier and
revise the original probabilities. Here the a new value of probability will be generated by diving joint
probability of Amira flight by the total probability of all flights being on time.

Let us consider the event for Flight left on time as E, and for each flight the probability will be as
P[E|A] -probability for flight Amira left on time
P[E|B] -probability for flight Biyas left on time
P[E|C] -probability for flight Chinar left on time
Now to calculate probability if a flight on time it was the Amira, then by using Bayes’ rule of revising
the probabilities, we can state that:
P [Flight is A | Flight on time] = P [ E|A] x P[A]
P [E|A] x P[A] + P[E|B] x P[B] + P[E|C] x P[C]

= (0.8 * 0.5)
(0.8 * 0.5) + (0.65 * 0.3) + (0.4 * 0.2)

= 0.4
0.4 + 0.195 + 0.08
= 0.5925
Thus, we can say that the flight which left on time has probability of being Amira flight is 59.25%.
Hence, we can easily calculate the Postetier probability by using Bayes’ rule for revised probability.
Even tree diagram plays important role to understand about base data or statics which were available
earlier.

Conclusion:
The possibility tree diagram comes in handy when you need to calculate mixed probabilities for a
number of events. It allows someone to visually map out the possibilities of a variety of adjustments.
The use of advanced probability calculations is no longer necessary with this method. In some cases,
it may be difficult for someone working on a complicated probability computation to determine
whether to multiply or add possibilities. A probability tree diagram can help simplify the process
Question 2:
Answer 2:
Introduction:
Variables defines the parameter to be measured while conducting any type of experiment, analysis or
measurement of a certain kind of qualitative or quantitative aspect of a component. A variable is can
be a expressed for the parameter that one is trying to measure: an object, an event, an idea, a
sensation, a time period, temperature, length, height, weight etc. variables are of two types one in
Independent variable and other dependent variable.
Independent variables as the word means is independent from other variables It's a stand-alone
variable that isn't affected by the other variables you're trying to track. A person's age, for example,
could be an independent variable. Other parameter could be as what they eat, how many people go to
college, and what they study, will have no effect on their age. In fact, when one is searching for a
connection between variables, and trying to determine whether the independent variable brings a
change in the dependent variables. Independent in this context means that they are self-contained and
are unaffected by other variables in the model. They are also know as Predictors, Explanatory
variables, Right-hand-side variables (as they appear on right side of regression equation)
Dependent variables are those who can change with change in independent variables, and their
existence is completely dependent on other parameters. These are the variables which are studied,
tested, and various experiments are performed to evaluate their functioning with change in
independent variables. The dependent variables are also known as Response variables, Left-hand-side
variables, and outcome variables.

Concept and Analysis:

Since variables are the object which helps us to evaluate, measure, and perform test in various
condition, it become necessary to define the types of variables involved in the analysis. Based on the
characteristics we can distinguish between independent and dependent variable in a given situation. If
the variable is not getting changed with other factors, and it brings change to other variable then it is
an independent variable. Also, an independent variable comes prior to other variables. Similarly for
identifying a dependent variable, one must notice if the variable is changing with change in other
variables. And a dependent variable is generally output of other variables.
Part (1): Hence, in this case as per the data given the variables segregation could be :
S.no. Variables Type of Variable
1 Sales Dependent Variable
2 Spending in Advertising Independent Variable
3 No. of Sales Representatives Independent Variable
4 Customer Satisfaction Independent Variable

Part (2): Regression Equation

Sales = Intercept+ (a*Adv. Spending) + (b*no of Sales Person) + (c*Consumer Satisfaction)
Here; a, b, c are respective co-efficient of variables
Part (3): Regression Analysis Excel:

Regression Statistics

Multiple R 0.98109

R Square 0.96253

Adjusted R Square 0.9438

Standard Error 3721.76

Observations 10

Part (4):

Anova
The measurement of difference group means is known as Analysis of variance (ANOVA). Anova
measures determines whether the means of two different parameters differs. In order to run ANOVA,
you'll need at least a continuous dependent variable and a categorical independent variable that
separates your data into comparison groups.

df SS MS F Significance F
Regression 3 2135139002 711713000.8 51.3818 0.00011
Residual 6 83108800.55 13851466.76
Total 9 2218247803

Standard P- Lower Upper Lower Upper

Co-efficient t Stat
Error value 95% 95% 95.0% 95.0%
3.7893
Intercept 32355.3 8538.4000 82 0.0090 11462.5 53248 11462.5 53248

1.1243
Spending 1.6868 1.500232 82 0.3038 -1.9841 5.357 -1.9841 5.357

-
Sales
0.1465
Person -155.53 1061.6134 02 0.8883 -2753.2 2442.14 -2753.2 2442.14

Consumer
4.3677
Satisfaction 11309.3 2589.2629 81 0.0047 4973.64 17645 4973.64 17645

4. Regression Statistics:
● Higher R and R Square Value suggest positive correlation
● Even Adjusted R Square Value is near 1 show highly positive impact of variables on Sales.
 ● Standard Error is also very low.
● Combined all the factors; Higher Adjusted R Square, Low Standard Error means better
predictability of sales based on variables.

ANOVA Table:
● Alpha (Significance of F) is less than 0.05 shows significant relationship between sales and
variables.
● Comparatively lower SSE and MSE shows lower variation and higher predictability.
● Higher p values for Spending on advertisement a Sales Person suggests no significant impact
as compared to Consumer Satisfaction on Sales. i.e., Only Consumer Satisfaction can be used
for predicting sales while other 2 variables can be ignored.

Conclusion:
Thus, from the above discussion we can understand parameters can assessed by performing certain
evaluations. The relative mathematical expressions help us to take further decision and gives better
understanding of on-going procedures and their outputs.

Question 3:
Answer 3 (a):
Introduction:

With evolution in use of internet and social media, it has become a part of daily activity for various
people to stay online and updated on their social media account. Many application-based software are
popular among all kind of age groups. One of these applications, which is most favored by people is
Instagram. People post their story, pictures, thoughts, and even short videos which are commonly
known as reels. These reels are short videos with various filters options, audio options, and editing
options which makes anyone to fall for it. If a specific trend is started for making reel people like
catch up to that and make reel of themselves with ongoing trend.
Concept and Application:
Since, now is the age of social media, people post about there likes and dislikes, what they are doing,
what they prefer to eat, where they are visiting on a vacation, what they like to shop. Hence, it is
advisable to analysis the likes and dislikes of people, for better understanding of future possibilities in
terms of business growth. For this most commonly used way is Binomial Distribution. Most of the
business statistics are studied under binomial distribution. In binomial distributions, N number of
trials are assessed, which have two possible outcomes. Each trial is considered as independent to the
other trial.
Binomial Formula
P(x) = nCx x P x x Qn-x
Where,
n = number of trials or samples
x = number of desired success
P = probability of getting a success in one trial
Q = probability of getting failure in one trial
Q=1-P

For the given problem where it is stated that 75% users like reels
The probability of users to like reels
i.e. P = 0.75
The number of users on which assessment(samples) is to be done is 25
i.e., N =25
The probability of users to dislike reels
Q = 0.25
x = 15,20
Probability for 15 users to like reels
P(x) = nCx x P x x Qn-x
P (15) = 25 C15 x (0.75)15 x (0.25)10
= 3268760 x 0.01336 x 0.00000095
= 0.0416

Probability for 20 users to like reels

P(x) = nCx x P x x Qn-x
P (15) = 25 C20 x (0.75)20 x (0.25)
= 53130 * 0.00317 * 0.000977

= 0.1645

Conclusion:
Thus, with the help of binomial distribution one can understand the market trend and forecast for
future planning and road map which will be helpful for business growth. The business success rate is
dependent upon the customers preferences and these preferences can be analyzed easily if
demographically segregated data and statistics are used to prepare base data.
Answer 3 (b):
Introduction:
Most of the people on prefer to book their travel and hotel reservations through online mode now a
days. Various travel booking agencies, has now initially started their business through online mode.
Companies has opted various marketing strategies to attract their customers and retain them in the
business. Eye-catchy online post on website or on social media platforms are part of these new
marketing strategies. The more your website or post has visits or likes, the more chances increase to
get noticed by people and built a strong brand in market.
Concept and Application:
Here in given case of Bharatdardhan, an online travel booking agency, they have built a online
platform where customers can view the details of different places and also view videos of those places
where they intend to go. This is one of the trendy possible way of attracting viewers and converting
them to potential customers. In order to study the online likes, one needs to analyze the statistics and
data available. In order to study normally distributed data with certain variables normal distribution is
used. Normal distribution is the symmetric distribution of many random variables.
The normal distribution is defined by two parameters one is mean (µ) and other is standard deviation
(σ). The difference between these parameters is considered as normal distribution. But with every
change there is change in normal distribution, hence a different mechanism is developed which known
as Standard Normal Distribution.
Formula;
Z= x- µ / σ
Now,
The probability of getting more than 12,000 hits
Z= (x- µ) / σ
Z = (12000-10000) / 2400
= 2000 /2400
Z = 0.83
Therefore, as per z table P = 0.7977
However, ask required ‘greater than’ value, we need to subtract the probability from 1
P = 1 – 0.7977 = 0.2023

The probability of getting fewer likes than 9000

Z = (x-µ)/σ
z = (9000 – 10000) / 2400
z = -1000/2400
z = -0.42
Therefore, as per z table P = 0.3384

Conclusion:
Hence, from above details one can identify the probability of getting noticed and increasing it
capacities to feature itself more and more in market to increase market share and business value. With
marking online presence, any organization can generate heavy revenues.