candidate

theteacher
woman the
205 an circles.
of The
probability:
Marginal
of sample
operations
showing
probability pictorial
probability
a as
bv
knowing events.
Therepresented
events
15/50 Events A for and
Hindi-knowing
seleng
a
3/125. Cvent
OCCrrng.
unconditional AU8 representation
diagram:
PROBABILITY the space and
= Hindi Two
teahcr independent, 6.3
Figure involving
rectangle
= of sample
is
(10/50) Union Venn Space
a
OF a seleting
scleing X discussed because
marginal theby contaned
sample
in
points during the of
particular. Or
(6-2)
FUNDAMENTALS
are 05/50) this
inas:
illustrated
probabilitytwO
cxpressed
is (disjoint),
knowing the individual (6-1) is lurng
cvents it
of
of probabilities then and cOunter be
Probability
Probability × As the are In will
be Diverity
(20/50) ofideas. equijrobable, there 0.7
|0/50 example, in B be the +
exclusivetheir and points events. P(A)
here P(O)
6 Since interested alsothe service have
CHAPTER event
A of or
4OrC be then 0.1
presentation sum A PO)+
P).
unconditional) canall sample will two that
we
tossing events exdusive, +
OFEVENTS are
mutually
andthe contain a
rulc 0.J
persons han (6-2}, 0.3
probabilty
an
of ocCUrnce
or (B) at
to
exhaustioe, tWo some customers 0.6 + +
coinP(T) and
equul +n (S) This IP(2)+
PA,,)Iomula
more 0.3
OF he occurencehe mutually
ar
oe. n(A)n 0.3
ALGEBRA cvents of circles
that
tues as addiion
for
oCCurs.
PB) union
both.
3 3 (0.3 =
2/7 simplify (or stated is or indude + the )ore)
as is A In occurringn(AUB)+ indicatesprobability: + PA)
marginal two exclusive,
formula P(A) two of 0.3 2 usng
event OCCrrng. that or 0.3
theprobbility
20/50; events n(S) the arival 2 cithe knowing
to ofthe bc have B Hcre == to that = o
only states = dcDotes
notatiOns of can both (B)(S)
or circles 0.J
).2 P3)CXpanded UA,) hen3. 4
cases,
AND called
probability we thC
The
of
rulc mutually following A 6.3. of its
that
the
probability
carlier
toSs eventsor B)
P(A
U n n to spae
Hiven
by in bouu, P2,
wOman
requlcd whCn with
pattern +
PROBABILITY event of B thc
B') beonging
Fig.
probability
P(2) U...Interested
Sunday ikely
Mond.av theory
are a onC or (A)(S)
along
samnple
first Tjoe)
n
smgic helpful likcly are A the n n wnion of
a probabilities
head in overlapthe = be PA,A,
the
cquallyselecung least B cvent in = shown Can the
andand Hence setchapter.
Addition Exclusive
Events and
equally B) Open 3)
a
we
use PA) a
or cither expressed
A points Consider ofpersons iidertand
N. the or
) in
ae
luriny
are at (6-J
Saturday
Sunday P'robabiliy of
A
or as
The Pohability i 2 tcvents P(2

RULES probabi
n lty,
sevenof tail that PA (read diagram we
probability rules eents frsbabilitivs. I3 fonula if
tvourable. and of sanple B.
single a of probability probablity B. and it XAnle,
wihesc of Rulesaddition A Band hour
Jllustration: n
(vi) (vii) nbability exhaustive,
tuo is
Such Mutually rule all venn A ee
the both firt
tets
6.9 6.5 6.5.1 The I This
*he of
e the
iis the in
 205
CHAPTER 6 FUNDAMENTALS OF PROBABILITY

(vi) Saturday and Sunday Probability of selecting ateacher = 15/50

(vii) Sunday and
Monday P'robability of selecting a Hindi-knowing candidate
Ofthesc seven cqually likely cases, only the last (wo are =|0/50
the
favourable. Hence the required probability is 2/7. Since the cvents are indcpcndent, the probability of
Probability of selecting a woman = 20/50; university sclcting a Hindi-knowing woman teacher
6.9 =(20/50) × (!5/50) × (10/50) = 3/125.

6.5 RULES OF PROBABILITY AND ALGEBRA OF EVENTS

probability, We use set theory notations to simplify the presentation ofideas. As discussed
In
carlierinthis chapter, the probability of the occurrence of an event Ais expressed as:
PA) = probability of cvent A 0Ccurrence
Such single probabilities are called marginal (or unconditional) probabilities because Marginal probability: The
the marginal unconditionalprobability of an
ais the probability of a sngle event occurring. In the coin tossing example, Cvent OcCurring.
obability of atail or head in a toss can be stated as P(T) or P(H).

6.5.1 Rules of Addition Figure 6.3

knowing
The addition rules are helpful when we have two events and are interested in
Union of Two Events

the probabilitv that at least one of the events occurs. AuB

Mutually Exclusive Events The rule of addition for mutually exclusive (disjoint),
exhaustive. and equally likely events states that
equiprobable, then the
If tuo events A and B are mutually exclusive, exhaustive, and
A B
their individual
þrobability of either event A or B or both occrring is equal to the sum of
probabilities.
This rule is expressed in the following formula
n(AUB) n(A) + n (B)
P(A or B) = P(A U
B) =
n (S) n (S) Venn diagram: A pictorial
representation for showing the
n(A), n(B) = P(A) + P(B) (6-1) sample space and operations
n (S) n (S) involving events. The sample
it is the space is represented bv a
Where A UB (read as A union B') denotes the union of two events A and B and rectangle and events as circles.
both. This rule can also be illustrated by
set of all sample points belonging to A or B or
contain all the sample points in
the Venn diagram shown in Fig. 6.3. Here two circles some
the circles indicates that sample points are contained
eents Aand B. The overlap of
in both A and B.
service counter during
usration: Consider the pattern of arrival of customers at a
Te first hour it is open along with its probability:
4or more
No. of persons 0.1
Probability 0.1 0.2 (0.3 0.3

will be there during the

LderStand the probability that cither 2 or 3persons
first hou, we
have
P(2or 3) = P(2) + P(3) == 0.3 + 0.3 = 0.6
be expanded to include more than two events. In particular.
Creiula
ii therc are nevents in Can
(6-1) a sample space that are mutually exclusive, then the probability of
the 10n of thesc events is given by
A,, U... UA) = P(A,) + P(A,) + . .. + P(A,) (6-2)
For example, if we A,areUinterested in knowing the probability that there will be two or
more persons during the first hour, ihen using lormula (6-2), we have
r(2 or more) P(2.3. 4 or more) = P(2) + P(3) + P(4)
= 0.3 + 0.3 + 0.| = 0.7
206 BUSINESS STATISTICS

Animportant special case of formula (6-1) is for complementary events, A

Let be
event and A be the complement of A. Obviously Aand A are mutually
exhaustive events. Thus, either A occurs or it does not, is given by
exclusive any
P(A or A) = P(A) + P(A) = P(A) + {1 - P(A)} = |
or P(A) = I - P(A)
(6
For example, if adice is rolled, then the probability whether an odd number of.
OCcurs or does not.

Partially Overlapping (or Joint) Events If events A and B are not mutually exclusive i.
possible for both events to occur simultaneously? This means these cvents have se
sample points in common. Such events are also called joint (or overlapping) vents Th.
sample points in common (belong to both events) represent the joint event A oBre
as: A intersection B). The addition rule in this case is stated as:
If two events A and Bare not mutually exclusive, then the probability of either A or Bor kok
occurring is equal to the sum of their individual probabilities minus the probability of Aand
B occurring together.
This rule is expressed in the following formula:
P(A or B) = P(A) + P(B) P(A and B)
Or P(A UB) = P(A) + P(B) - P(An B) (6-4
This addition rule can also be illustrated by the Venn-diagram shown in Fig. 6.4.
Figure 6.4 A and B
Partially Overlapping Events
A B

(a) Mutually Exclusive Events (b) Partially Overlapping

Ilustration: Suppose 70 per cent of all tourists who come to India will visit Agra whe
60 per cent will visit Goa and 50 per cent of them will visit both Agra and Goa. Ihe
probability that a tourist will visit either Goa or Agra or both is obtained bv applvng
formula (6-4) as follows:
P(Agra or Goa) = PAgra) + P(Goa) - P(both Agra and Goa)
= 0.70 + 0.60 0.50 = 0.8

Consequently, the probability that a tourist will visit neither Agra nor Goa is calculate
by

P(neither Agra nor Goa) = |- P(Agra or Goa) = 1-0.80 = 0.20

The formula (6-4) can be expanded to include more than two events. In particular.
if there are three events that are not mutually exclusive, then the probabilitv of the unet
of these events is given by

P(AU BUC) =P(A) + P(B) + P(C) P(A OB) - P(B o C) (6-3)

- P(Cn A) + P(ABoC)
Remark: The rules of addition are applicable for calculating probability of events
case of simultaneous trails.
Example 6.4: What is the probability that a randomly chosen card from a deck of care
will be either a king or aheart.
Solution: Let event A and B be the king and heart in a deck of 52 cards, respeti
Then, it is given that
 CHAPTER 6
FUNDAMENTALS OF PROBABILITY 207
Probability
Cand Reason
P(A) = 4/52 4kings in a deck of 52 cards
King P(B) = 13/52 13 hearts in a
Heart deck of 52 cards
Aingofheart P(A and (B) = |/52 1King of heart in a
deck of 52 cards
formula (6-4), we get
'singthe
P(A or B) = P(A) + P(B) P(A and B)
4 13 1 16
52 52 52 52 0.3077

unple 6.5: of J000

assembled components, 10 have a working defect and 20 have a
CATUraBdefet. There is a good reasOn to assume that no component has both defects.
sthe probability that randomly chosen component will have either type of defect?
[Delhi Uniu., MBA, 20031
vuton: Let the event A and 3
B
be the component which has
tural detect, respectively. Then it is given that
working defect and has
P(A) = 10/1000 = 0.01, P(B) = 20/1000 = 0.02 and P(A and B) = 0
The probability that a randomly chosen component will have either type of defect is
PA or B) = P(A) + P(B) P(A and B)
= 0.01 + 0.02 - 0.0 = 0.03
umple 6.6: Asurvey of 200 retail grocery shops revealed following monthly income

Monthly Income (Rs) Number of Shops

Under Rs 20,000 102
20,000 to 30,000 61
30,000 and above 37

What is the probability that a particular shop has monthly income under
Rs 20,000
ihat is the probability that a shop selected at random has either an income
neen Rs20,000 and Rs 30,000 or an income of Rs. 30,000 and more?
ution: Let the
tively. exents A, B and Crepresent the income under three categories,
2
Probabi==0.51.
\02200 lity that a particular shop has monthly income under Rs 20,000 is
ProbabiRs lity that shop selected at random has income between Rs 20,000 and
30,000 and more is given by
P(A or B) = P(A) + P(B)
61 37
= 0.305 + 0.185 = 0.49
200
enple 6.7: 200
From of sales
them force
are
of 150 persons, one will be selected to attend a special
"
inmarried willare becollege graduates, find the probability that the sales person
unmarried, 72 are college graduates, and 3/4 of the 52

random
e Let Aand Bbe
neither single nor a college graduate.

gPA)raduate, respectively.
=
he
events that a sales person selected is married and that he is
Then, it is given that

* graduate 32|is: 150,that

P(B)
=
72/150;
probability P(A and B) = (3/4) (52/150) = 39/150
a SalesperSon selected at random will be neither single nOr a
208 BUSINESS STATISTICS

P(AnB) = 1- P(AUB) = 1- {P(A) + P(B) P(An B)}

52 72 39 13
|150 150 150 30

Example 6.8: From a computer tally based on employer records, the personnel manager
per centtof the firm's employees are
25 permanufacturing
and large
ofa firm finds
cent of the firm's that 15are
employees college graduates. He also disscovers that 3 supervisors
Suppose an employee is selecte
per cent are both supervisors and college graduates.
what is the probability of:
random from the firm's personnel records,
graduate and a supervisor?
(a) selecting a person who is both a college
nor a college graduate?
(b) selecting a person who is neither a supervisor
and that k.
Solution: Let A and B be the events that the person selected is a supervisor
is a college graduate, respectively. Given that
P(A) = 15/100; P(B) = 25/100; P(A and B) = 5/100
(a) Probability of selecting a personB)who is both a college graduate and a supervisor ix
P (A and = 5/100 = 0.05
(b) Probabilityof selecting a person who is neither a supervisor nor a college graduate i:
P ( and B) =| - P(A or B) = l - [P(A) + P(B) - P(A and B)]
15 25 5 65
=l = 0.65
100 100 100 100
Example 6.9: The probability that a contractor will get a plumbing contract is 2/3 and
the probability that he will not get an electrical contract is 5/9. If the probability of
probability that he will get both?
getting atJeast one contract is 4/5, what is the
Solution: Let A and B denote the events that the contractor will get a plumbing and
electrical contract, respectively. Given that
P(A) = 2/3; P(B) = 1- (5/9) = 4/9; P(AU B) = 4/3
2 4 4 14
P(A n B) = P(A) + P(B) - P(A U B) = + = 0.31
45
Thus, the probability that the contractor will get both the contracts is 0.31.
Example 6.10: An MBA applies for a job in two firms X and Y. The probability of his
beifig selected in firm X is 0.7 and being rejected at Y is 0.5. The probability of at least
óne of his applications being rejected is 0.6. What is the probability that he will be
selected by one of the firms?
Solution: Let A and B denote the event that an MBA will be selected in firn X and will
be rejected in firm Y, respectively. Then, given that
P(A) = 0.7, P( = l-0.7 = 0.3
P(B) = 0.5, P(B) = 1-0.5 = 0.5, P(AUB) = 0.6
Since P(A O B) = 1- P(A UB) = 1 -0.6 = 0.4
therefore, probability that he will be selected by one of the firms is given by
P(A UB) = P(A) + P(B) P(A n B)
= 0.7 + 0.5 - 0.4 = 0.8
Thus, the probability of an MBA being selected by one of the firms is 0.8.

6.5.2 Rules of Mutiplication

Statisticaliy Independont Events When the occurrence of an event does not affect and
not affected by the probability of occurrence of any other event, the event is said to
statistically independent event. There are three types of probabilities under statistlta
independence: marginal, joint, and conditional.
 CHAPTER 6 FUNDAMENTALs OF PROBABILITY 209

" Marginal Probability: A marginal or unconditional probability is the simple

bability of the occurrence ot an event. For example, in a fair coin toss, the
outcome of each toss is an event that is statistically independent of the outcomes
of every other toss of the coin.
" Joint Probability: The probability of two or more independent events occurring
Joint probability: The
together or in succession is called the joint probability. The joint probability of probability of two events
two or more independent events is equal to the product of their marginal occurring together or in
probabilities. In particular, if Aand Bare independent events, the probability succession.

a
tbat both A and B will occur is given by
P(AB) = P(An B) = P(A) xP(B) (6-6)
Suppose we tosS a coin twice. The probability that in both the cases the coin
by
will turn up head is given
1
he P(H,H,) = P(H) XP(H,) = ,X 4

The foula (6-6) is applied here because the probability of any outcome is not
words, outcomes are independent.
affected by any preceding outcome, in other occuring, given
1s:
Conditional Pyobability: It is the probability of a particular event Conditional
probability: The probability
probability of event A, given
is: chaf another event has occurred. The conditional P (A|B). Similarly, we may write
of an event occurring, given
written as:
that event B has already occurred is 'given' and events appearing to the right of
that another event has

p (BIA), The vertical bar is read as occurred. Two events A and B are said to be
occurred.
have
the bar are those that you know Otherwise, events are
independent if and only P(A|B) = P(A) or P(B|A) = P(B).
and said to be dependent. of
of occurrence of eithercoin
case of independent events the probabilityother, therefore in the
y of Since. in the affect the occurrence of
the
that head
depend or given
the events does not probability ofa head occurrence in the second toss, because of the
P(H,). It is
tossing example, the 0.5. That is, P(H, | H,)
= 0.5 =
toss and in no way
and
resulted in the first toss, is stillheads and tails are the same for everyprevious toss.
probabilities of occurred in the
fact that the was a head or tail which
inluenced by whether it upon or
is dependent
probability of an event said statistically Statistical dependence: The
Events When the to be
Statistically Dependent event, the events are
dependence: joint,
condition when the
occurrence of any other under statistical probability of occurrence
of
affected by the types of probabilities dependent upon,
dependent. There are three probability as
an event is
or affected by, the
occurrence
f his conditional, and marginal. events, then the joint product of event.
least B are dependent equal to the of some other
If Aand longer
il be " Joint Probability: statistical dependence case is no events
discussed under is, for dependent
probabilites. That
d will their respective P(A n B) # P(A)
X P(B)
P(A and B) = A)
and P(B) P(B | succession
Accordingly. P(A) = P(A | B) B occurring together or in
events A and
probability of
The joint dependences is given by
under statistical P(B|A)
P(A n B) = P(A) X
B) probability
P(A nB) = P(B)× P(Adependence, the conditional
Probability: Under
statistical
"Cmditiona! given that event Ahas already
occurred, is given by r(Bl)
Of event B, P(ANB)
P(B| A) = P(A) occurred, is
given that event B has
of A,
conditional probability
Similarly, the P(A O B)
andis
P(A | B) = statistical
to be a P(B)
of an event under statistical
probability under
of an event
atistical marginal
Marginal Probability: The the marginal probability
dependence is the same as
independence.
10
 CHAPTER 6 FUNDAMENTALS OF PROBABILITY 211
Probabilitythat the equipment will fail before the end of
the year is given by
P(A UBuC) = |- P(A oBo k)
= |- P(A ). P(B).
= | - {0.85 × P(C)
0.95 x ).90} = |-0.726 = 0.274
Example 6.14: market research firm is
A
interested
smallcommunity. There are 125 households broken down surveying certain attitudes in
in
a
ta telephone, and ownership of a TV. according to income, ownership
Households uith Annual
Income of Rs 8O00 or Less Households with Annual Tòlal
Income Above Rs 8000
Telephone No
Telephone No
subscriber telephone suhscriber tele phone age
No
Own TV set 27 20 18
So TV set 18 75
12 10 50
Toal 45 30 30 20 125
a What is the probability of getting a TV owner in arandom draw?
A Ifahousehold has an income of over Rs
8000 and is a telephone subscriber, what is
the probability that he owns a TV?
in What is the conditional probability of drawing a
that the household is a telephone subscriber? household that owns a TV, given
d Are the events 'ownership of aTV' and 'telephone
Comment.
subscriber' statistically independent?
[Himachul Uniu., MBA, 1998]
Solution: (a) Probability of drawing a TV owner at random,
S P(TV owner) = 75/125 = 0.6
(b) There are 30(18 + 12) persons whose household income is
e
above Rs 8000 and
ae also telephone subscribers. Out of these, 18 own TV sets. Hence,
.
the probability of
ths group of persons having a TV set, is: 18/30 = 0.6.
(c) Out of 75( 27 + 18 + 18 + 12) households who are
l6, households have TV sets. Hence, the telephone subscribers, 45(27 +
conditional probability of
that owns a TV given that the household is a telephone subscriber is:drawing household
a
45/75 = 0.6.
(d) Let A and B be the events representing TV owners and
telephone subscribers
tepectively. The probability of a person owning a TV, PA)= 75/125. The probability of
perSon being a telephone subscriber, P(B) = 75/125.
Ihe probability of a person being a telephone subscriber as well as a TV
owner is:
P(A and B) = 45/125 = 9/25
Bur
P(A) x P(B) = (75/125) (75/125) = 9/25
ePAB) = P(A) xP(B), therefore, we conclude that the events
and 'ownership of a
'telephone subscriber' are statistically
independent.
Ple.15: A
B
per cent tof ecompany andhS two plants to manufacture scooters. Plant I
manufactures
scogters Plant II manufactures 20 per cent. In plant I, only 85 out
sCooters are considered to be of standard quality. In plant II, only 65 out of 100
are
considered to be of standard quality. What is the probability that a scooter
lerted at random
Mndras Unio., MCom, came from plant I, if it is known that it is of standard quality?
1996; Delhi Uniu., MBA, 1998]
Solution: Let A= The sCooter purchased is of standard quality
B= The sCooter is of standard
C= quality and came from plant I
The scooter
is of standard quality and came from plant II
D= The scooter came from plant I
t
centhe ofpercentage
of
scCOoters
per Cent, that is. manufactured in plant I that are of standard quality is 85
80 0.85 × (80 + 100O) = 68 per Cent or P(B) 0.68.
212 BUSINESS STATISTICS

that are of standard ov

The percentage of scooters manufactured in plant II
65 per cent of 20 per cent, that is, 0.65 X (20+ 100) = 13 per cent or P(C) = o o
quality scooter from the
The probabilitythat a customer obtains a standard
is, 0.68 + 0.13 = 0.81. compan:
it is kn.
The probability that the scooters selected at random came from plant I, if
that it is of standard quality, is given by
P(D andA) 0.68 0.84
P(D|A) = 0.81
P(A)
two vacancies in the
Example 6.16: A husband and wife appear in an interview for selection is 1/5
of husband's selection is 1/7 and that of wife's
post. The probability
is the probability that
(a) both of them will be selected,
(b) only one of them will be selected, and
(c) none of them will be selected.
[Bharthidasan Uniu., MCom, 1996; Delhi Univ.. MBA. 19901
respectivelh
Solution: Let Aand B be the events of the husband's and wife's selection,
Given that P(A) = 1/7 and P(B) = /5.
selected is:
(a) The probability that both of them will be
P(A and B) = P(A) P(B) = (1/7) x (1/5) = I/35 = 0.029
(b) The probability that only one of them will be selected is:
PI(A and B) or (B and A)= P(A and B) + P(B and A)
= P(A) P(B) + P(B) P(A )
= P(A) [1 - P(B)] + P(B) [1 - P(A)]

--})-)-6-)
10
= 0.286

(c) The probability that none of them will be selected is:

P(A) X P(B) = (6/7) X (4/5) = 24/35 = 0.686
Example 6.17: The odds that A speaks the truth is 3: 2 and the odds that B speaks an
the
each other on
truth is5:3. In what percentage of cases are they likely to contradict MBA, 1999)
[Delhi Uni.,
identical point?
Solution: Let X and Y denote the events that A and B speak truth, respectively. Gel
that
P(X) = 3/5; P(X) = 2/5; P(Y) = 5/8: P(Y) = 3/8
The probability that A speaks the truth and B speaks a lie is: (3/5) (3/8) = 940
The probability that Bspeaks the truth and Aspeaks a lie is: (5/8) (2/5) = 1040
10 19
So the compound probability is: 40 40 40
(19/40) × 100 = 412
Hence, percentage of cases in which they contradict each other is
per cent.
Example 6.18: The data for the promotion and academic qualification of acompany
given below:
Promotional Status Academic Qualification
MBA(A) Non-MBA Total

Promoted (B) 0.14 0.26 0.40

0.60
Non-promoted 0.21 0.39

Total 0.35 0.65 1.00

 CHAPTER 6 FUNDAMENTALS OF PROBABILITY 213

Calculatethe conditional probability of promotion after an MBA has beenidentified.

(a) Calculatethe conditional probability that it is an MBA when a promoted employee
has been chosen.
Find the probability that a promoted employee was an MBA.
[IGNOU, 1995]
Solution:Ittiis given that, P(A)=0.35, P=0.65, P(B)=0.40,P=0.60, and P(A n B)=0.14
(a) The probability of being 'promoted' after an MBA employee has been identified
P(B| A) = P(AnB) 0.12
= 0.34
P(A) 0.35
A lfapromoted employee has been chosen, then the probability that the person is
anMBAis:

P(A | B) = P(An B) 0.12

= 0.30
P(B) 0.40
c) The probability that a promoted employee was an MBA is:
P(A OB) = P(A) P(B A)= 0.35 × 0.34 = 0.12
P(A O B) = P(B) x P(A | B)= 0.40 x 0.30 = 0.12
Frample 6.19: The probability that a trainee will remain with a company is 0.6. The
nrobability that an employeeearns more than Rs 10,000 per month is 0.5. The probability
ihat an emplovee who is a trainee remained with the company or who earns more than
Rs 10.000 per month is 0.7. What is the probability that an employee earns
more than Rs

10000 per month given that he is a trainee who stayed with the company?
Salution: Let AandB be the events that a trainee who remained with the company and
the event that an employee earns more than Rs 10,000, respectively. Given that
P(A) = 0.6, P(B) = 0.5, and P(A or B) = PAU B) = 0.7
trainee
The probability that an employee earns more than Rs 10,000, given that he is
who remained with the company, is given by
P(A and B) P(A n B)
P(B|A) =
P(A) P(A)
We know that P(AU B) = PA) + P(B) P(An B),
or P(An B) = P(A) + P(B) - P(AU B) = 0.6 + 0.5 - 0.7 = 0.4
Hence the required probability is:
P(B|A) =
(An B) 0.4
= 0.667
P(A) 0.6
ample 6.20: Two computers A and B are to be marketed. A salesman who is assigned
of
cjoo of finding customers for them has 60 per cent and 40per cent chances
ucceeding for computers A and B. respectively. The two computers can be sold
ependently. Given that he was able to sell at least one computer, what is the probability
a computer Ahas been sold? [IGNOU, MBA, 2002; Delhi Univ., MBA, 1999, 2002]
Solution: Let us define the events
marketed.
E, = Computer A is marketed and E, = Computer B
Sgven that P(E,) = 0.60, P(E,) = 0.40
P(E, and E,) or P(E, NE,) = P(E,). P(E,) = 0.60 x 0.40 = 0.24
Hence, the
to sell at
probability that computer Ahas been sold given that the salesman was
least one computer is given by
P(E)
PrE,|EU E) = P{E,P(E,n(EUEp)}
UEg) P(E, VEg)
P(E) 0.60
0.60 + 0.40 -0.24
P(E) + P(E,) - P(E, n Ez)
0.60
= 0.789
0.76
214 BUSINESS STATISTICS

four occupations: (.l.

Example 6.21: A study of job satisfaction was conducted forwas measured on a scal
maker lawyer, doctor and systems analyst. Job satisfaction
following table:
0-100. The data obtained are summarized in the

Occupation Under 50 50-59 60-69 70-79 80-89 Total

Cabin maker 4
2 1 10
6
Laweyer 1 2 10
Doctor 2
4 3 10
Systems Analyst 2 1
3 40
8 10

(a) Develop a joint probability table. studied had a satisfaction score in

(b) What is the probability of one of the participants
80's?
80's, given the study particivant
(c) What is the probability of asatisfaction score in the
was a doctor?
studied was a lawyer.
(d) What is the probability of one of the participants and received a score
(e) What is the probability of one of the participants was a lawyer
under 50?
a person is a lawver.
() What is the probability of a satisfaction score under 50 given
70 or higher?
(g) What is the probability of a satisfaction score of
[Delhi Uniu., MB4, 20031
Solution: (a) Joint probability table is given below
Under 50 50-59 60-69 70-79 80-89
Occupation
0.050 0.100 0.075 0.250
Cabin maker 0.000
0.150 0.050 0.025 0.023 0.230
Lawyer
Doctor 0.000 0.125 0.050 0.025 0.230
0.100 0.073 0.250
System Analyst 0.050 0.025

(b) P(Satisfaction score in the 80's) = 3/40

2/40
(c) P(Satisfaction score in 80's, given participant was doctor) = 10/40
(d) P(Participant was doctor) = 10/40
P(Lowyer n Score under 50) 6
(e) P(Lawyer and score under 50) = 40
P(Score under 50)
P(Score under 50 o Lawyer) 6/40 6
() P(Score under 50Lawyer) = 10/40
P(Lawyer)
(g) P(Satisfaction score of 70 or higher) = P(Score of 70 and above) t P(Score o:
80 and above)
8 3 11
+
40 40 40
Example 6.22: A market survey was conducted in four cities to find out the preteretntc
for brand A soap. The responses are shown below:
Delhi Kolkata Chennai Mumbai
Yes 45 55 60 50
No 35 45 35 45
No opinion 5 5 5 5

(a) What is the probability that a consumer selected at r'andom, preferred brand
(b) What is the probability that a consumer preferred brand Aand was from Chennu:
 CHAPTER 6 FUNDAMENTALS OF PROBABILITY 215
(c) Whatisthe probability that a consumer preferred brand A, given that he was from
Chennai?
Given that a consumer preferred brand A, what is the
[Delhi Univ., MBA, 2002; probability that he was from
d)Mumbai?
Kumaon Univ., MBA, 1999]
The information from
Solution: responses during market survey is as follows:
Delhi Kolkata Chennai Mumbai Tolal
Ves
45 55 60 50 210
35 45
No 45 160
No opinion 5 5
20
Total 85 105 100 100 390
denote the event that a consumer selected at random preferred brand A. Then
la) The probability that a consumer selected at random preferred brand Ais:
P(X) = 210/390 = 0.5398
(b) The probability that a consumer preferred brand Aand was from Chennai (C) is:
P(XnC) = 60/390 = 0.1538
() The probability that a consumer preferred brand A, given that he was from
Chennai:

P(x|c) = P(AnC) 60/390 0.153

= 0.597
P(C) 100/390 0.256
(d) The probability that the consumer belongs to Mumbai, given that he preferred
brand A
P(MAX) 50/390 0.128
P(M|X) =

210/390 0.538
= 0.237
P(X)
Erample 6.23: The personnel department of a company has records which show the
following analysis of its 200 engineers.
Age Bachelor's Degree Only Master's Degree Total

Under 30 90 10 100
30 to 40 20 30 50

Over 40 40 10) 50

Total 150 50 200

Hone engineer is selected at random from the company, find:

9 The probability that he has only a bachelor's degree.
b The probability that he has a master's degree, given that he is over 40.
Ihe probability that he is under 30, given that he has only a bachelor's degree.
[Kumaon Uniu., MBA 19981
Soluion: Let A, B, C, and Ddenote the events that an engineer in under 30 years of
Theyear of age, has bachelor's degree only, and has a master's degree, respectively.
Ther(a)eforeThe: probability of an engineer who has only a bachelor's degree is:
P(C) = 150/200 = 0.75
b) The probability of an engineer who has a master's degree, given that he is over
) vears is:

P(D o B) 10/200
P(D|B) = = 0.20
P(B) 50/200
() The probability of an engineer who is under 30 years, given that he has only
ahedor's degree is: 90/200 90
P(A nC) 0.60
P(A|C) 150/200
=

150
P(C)
 451
Average 60/150 (150/500) (60/150) = 0.120
150/500
45/150 (150/500) (45/150) = 0.090

Above Average
30 /50 93/300

72/300
(300/500) (93/300) = 0.186
(300/500) (72/300)= 0.144
(300/500) (135/300) = 0.270
135/300 Total = 1.000

Conditional
Probabilities Joint Probabilities

Self-Practice Probie ms 6B
statistics is given to five students,
which there are 2 prizes 6.14 \A problem in business chances of solving it are 1/2,
6.10 Mr. Xhas 2 shares in a lottery in in a lottery in which A, B, C, D, andE. Their the probability
and 5 blanks. Mr. Y has 1 share 0Y3, 1/4, 1/5, and 1/6 respectively. What is
Show that the chance of solved?
there is l prize and 2 blanks. that the problem will be
is 15 :7. Uni., MBA, 2000]
Mr. X's success to that of Mr. Y's [Madras Uniu, BCom, 1996; Kumaon interview for two
following claims
6.11 Explain whether or not each of the in an
6.15 A husband and wife appear probability of husband's
could be correct:
probability that he vacancies for the same post. The What is
selection is l/5.
(a) A businessman claims that the selection is 1/7 and that of wife's
will get contract A is 0.15 and that he will get contract the probability that
claims that the selected?
Bis 0.20. Furthermore, he (a) oniy one of them wiil be
probability of getting A or B is 0.50. (b) both of them will be selected?
(b) A market analyst claims that the probability of selected?
(c) none of them will be
selling ten million rupees of plastic A or five million
that the
posts.
6.16 A candidate is selected for interviews for threesecond,
e
rupees of plastic B is 0.60. He also claims For the first, there are 3 candidates, for the
probability of selling ten million rupees ofA and What is the
five million rupees of B is 0.45. there are 4, and for the third, there are 2.
probability of his getting selected for at least one post?
6.12 The probability that an applicant for a Management 6.17 Three persons A, B, and Care being
considered for
Accountant's job has a postgraduate degree is 0.3, he appointment as Vice-Chancellor of a university, and
has had some work experience as a chief Financial
Accountant is 0.7. and that he has both is 0.2. Out of whose chances of being selected for the post are in the
o00 applicants, approximately, what number would have proportion 14:2:3 respectively. The probability that
eIther a postgraduate degree or some professional work A if selected, will introduce democratization in the
experience? university structure is 0.3, and the corresponding
D13 Acan hit a target 3 times in 5 shots; B, 2 times in 5 probabilities for B and C doing the same are respectuvely
shots; C, 3 times in 4 shots. They fire a volley. What is 0.5 and 0.8. What is the probability that democratization
the probability that 2 shois hit? would be introduced in the university?
 218 BUSINESS STATISTICS

6.18 There are three brands, sav X, Y, and Z of an item defective is 0.01,0.02, and 0.05, respectively. Wha:
available in the market. A consumer chooses exactly the probability that the assembled product will no
one of them for his use. He never buvs two or more defective?
brands simultaneously. The probabilities that he buys 6.27 The daily production of a machine producing aen
brands X. Y, and Zare 0.20, 0.16. and 0.45, respectively. complicated item gives the following probabilities f
(a) What is the probability that he does not buy any of the number of items produced: P) =0.20, PI9)
the brands? 0.35, and P(3) = 0.45. Furthermore, the probability of
defective items being produced is 0.02. Defective iten
(b) Given that a customer buvs some brand, what is
the probability that he buys brand X? are assumed to occur independently. Determine tk 6.3
probability of no defectives during a day's production
6.19 There is 50-50 chance that a contractor's firm, A, will
6.28 The personnel department of a company has records
bid for the construction of a multi-storeyed building. which show the following analysis of its 200 engineere
Another firm, B, submits a bid and the probability is 3/
5 that it will get the job, provided that firm A does not Age (Years) Bachelor's Master's Tolal 6.3
submit a bid. If firm A submits a bid, the probability Degree only Degree
that firm B will get the job is only 2/3. What is the
probability that firm B will get the job? Under 30 90 10 100
6.20 Plant I of XYZ manufacturing organization employs 5 30 to 40 20 30 50
production and 3 maintenance foremen, plant II of same Over 40 40 10 50
organization emplovs4 production and 5 maintenance 150 50 200
foremen. From any one of these plants, a single selection
of two foremen is made. Find the probability that one Ifone engineer is selected at random from the company,
of then would be a production and the other a find:
6.
maintenance foreman. [Bombay Univ., MMS, 1997]
(a) the probability that he has only a bachelor's degree;
6.21 Two sets of candidates are competing for positions on (b) the probability that he has a master's degree given
the board of directors of a company. The probability that he is over 40;
that the the first and second sets will win are 0.6 and 0.4 (c) the probability that he is under 30 given that he
respectively. If the first set wins, the probability of has only a bachelor's degree.
introducing a new product is 0.8 and the corresponding [HP Univ., MBA,; Kumaon Uni., MBA 1998]
probability if the second set wins is 0.3. 6.29 In a certain town, males and females form 50 per cent
(a) What is the probability that the new product will be per cent of the
of the population. It is known that 20 unemployed.
inroduced? males and 5 per cent of the females are A
the
(b) If the new product was introduced, what is research student studying the employment situation
directors? What is the
probability that the first set won as selects unemployed persons at random. male. (b)
that the person selected is (a)
6.22 Ifa machine is correctly set up, it will produce 90 per cent probability
acceptable items. Ifit is incorrectly setup, it will produce female?
1998]
40 per cent acceptable items. Past experience shows that [Delhi Uniu. MCom, 1999; Kumaon Uni., MBA,
80 per cent of the setups are correctly done. If after a cent
6.30 You note that your officer is happy in 60 per happy, cases
ifhe is he
certain setup, the machine produces 2 acceptable items ofyour calls. You have also noticed that
as the first 2 pieces, find the probability that the machine accedes to your requests with a probability of 0.+,
is correcly set up. [Delhi Uni, BCom, (Hons), 1998] whereas if he is not happy, he accedes to your requests
6.23 A frm plans to bid Rs 300 per tonne for a contract to with a probability of0. 1. Youcallon him one day and he
supply 1,000 tonnes of ametal. It has two competitors request. What is the probability of his
accedes to your [HP MBA, 1996]
A and B. It assumes the probability of A bidding less being happy? respondents were
than Rs 300 per tonne to be 0.3 and B's bid to be less 6.31 Ina telephone survey of 1000 adults,
management education
than Rs 300 per tonne to be 0.7. If the lowest bidder asked about the expenses on a
form of financal
gets all the business and the firms bid independently, and the relative necessity of some
what is the expected value of the contract to the firm? assitance. The respondents were classified according to
school
whether they currently had a child studying in a
6.24 An investment consultant predicts that the odds against thought that the loan
the price of a certain stock going up during the next of management and whether they too hign.
week are2: I and odds in favour of theprice remaining burden for most management students is:
right amount, or too little. The proportions respondlng
the same are l:3. What is the probability that the price
in each ategory are given below.
of the stock will go down during the next week?
6.25 An article manufactured by a company consists of two Tòo Little
parts Aand B. In the process of manufacture of part A, Tòo High Right Amount (C)
9out of 100 are likely to be defective. Similarly, 5 out of (4) (B)
100 are likely to be defective in the manufacture of part
B. Calculate the probability that the assembled part will Child studying 0.01
not be defective. management (D): 0.35 0.08
No child studying
6.26 A product is assembled from three components X, Y, management (E): 0.25 0.20
0.11
and Z, the probability of these components bcing
 CHAPTER 6 FUNDAMENTALS OF PROBABILITY 219

Suppose one respondent is chosen at random from this remain with the
than your present position, would you in the
group.Then company?" The responses of 200 executives
(a) Whatis the probability that the respondent has a their length of service with
survey cross-classified with
child studying management. the company are shown below:
(b) Given that the respondent has a child studying Length of Service
management, what is the probability that helshe 6-10 More than Tòtal
ranks the loan burden as 'too high', Less than 1-5
Loyalty Iyear years years 10 years
(c) Are events Dand Aindependent? Explain.
8a Inacolour preference experiment, eight toys are placed Would
t acontainer. The tovs are identical except for colour remain 10) 30 5 75 120
- [WO are red, and six are green. A child is asked to Would
80
choose two toys at random. What is the probability that not remain 25 15 10 30

the child chooses the two red toys?

Asurvey of
executives dealt with their loyalty to the
6.33
company. One of the questions was, "If you were given
an offer by another company equal to or slightly better
aae
No
What is the probability of randomly selecting an
executive who is loyal to the company (would remain)
and who has more than 10 years of service.

Hints and AnsWers

-B-)
success. 27
6.10 Considering Mr.X's chances of P(ü) = P(E, O , nE,) 100
A= event that l share brings a prize and 1 share goes
blank. 12
B=event that both the shares bring prizes. 100
C= event that X succeeds in getting atleast one prize Since all the three events are mutually exclusive
=AUB. events, hence the required probability is given by
Since Aand B are mutually exclusive, therefore 6 27 12 9
2C, x 5C,, 2C xCo P(i) + P(i) + P(ii) = 100 100 100 20
PC)= P(AUB) = P(A) + P(B) =
7Co 6.14 P(problem will be solved)
Similarly, if D denotes the event that Y succeeds in = l- P(problem is not solved)
getting a prize, then we have =l- P(all students fail to solve the problem)
=1 - P
P(D) = 3
15 = l -P(A) P(B) P(Õ) P(D) P( )
-1-(----]-)
X's chance of success: Y's chance of success =
21
= 15: 7.
6.11 (a) PIAO B) =-0.15 1 5

(b) P(A) + P(B) = 1.05

6.12 Let A= Applicant has PG degree; B = Applicant has =1-6 6
6.15 P(only one of them will be
selected)
(HoW)
work experience; = P(HO W)u(HnW) = P(HA W) +
Given, P(A) = 0.3. P(B) = 0.7, and P(An B) 0.2.
= P(H)P(W) + P(H) P(W)
Therefore
300 x P(AU B) = 300[P(A) + P(B) P(An B)] = 240
6.13 The required event that two shots may hit the target,
nhappen in the following mutually exclusive cases:
----}
(b) P(both of them will be selected)
) AandB hit andCfails to hit the target P(H O W) = P(H) P(W) =
) AandChit and B fails to hit the target 35
a) Band C hit and A fails to hit the target (c) P(none of them will be selected)
Hence,
the
gven by, P=Tequired probabilitythat any twoshots hit is
P(Ho W) = P(H) P(W) =
24
Pá) + Püi) + P(iü). 35

IetB, andE,ECrespectively.
,and Therefore
be the event ofhitting the target by A, 6.17 PD) = Prob. of the event that democratization
be introduced
would

PÓ) =P(E nE, nE) =P(E)· P(E,) P(Es) = P[(An D) [(Bn D) U (Cn D)]

BJB-) 6
= P[(A D) + P(B oD) +P(Co D)
100
 CHAPTER 6 FUNDAMENTALS OF PROBABILITY 221
629 Giventhat
0
6.31 (a) P(D)= P(A) + P(B) + P(C) = 0.35 + 0).08 + 0.01
Employed
Males 0.40
Unemployed Total = 0.44
0.10
down Females
Total
0.475
0.875
0.025
0.125
0.50
0.50
(b) P(A|D) = P(AnD)
P(D)
0.35
0.44
= 0.80

aining Tot MandFbe the male and female chosen,

U =Male, respectively.
I.00 (c) Since P(A|D) = 0.80 and P(A) = 0.35 +0.25 = 0.80,
events A and D must be independent.
of the female chosen is uncmployed 6.32 Let R= Red toy is chosen and G=Green toy is chosen.
(a) P(MU) = P(MoU) 0.10 P(Both toys are R) = P(Ron first choice n Ron second
= ).80
P(U) 0.125 choice)
P(R on first choice). P(R on
(b) P(F|U) = P(FoU) = 0.20 second choice | Ron first choice)
P(U)
parts = (2/8) (1/7) = I/28.
&90 The probability that the officer is happy and accedes to 6.33 Let A :Executive who would remain with the
requests= 0.6 × 0.4.
ective: The probability that the officer is unhappy and accedes
company
offer
despite an equal or slightly better
to requests = 0.4 >X 0.1 = 0.04. B:Executive who has more than 10 years of
Total probability of acceding to requests =0.24 + 0.04 service with the company
= 0.28.
P(A and B)=P(A) P(B|A) =(120/200) (75/120) = 0.375
The probability of his being happy if he accedes to
requests = 0.24/0.28 = 0.875.

ties of
6.7 BAYES' THEOREM

In the 18th century, reverend Thomas Bayes,an English Presbyterian minister, raised a
P(BC) question: Does God really exist? To answer this question, he attempted to develop a
formula to determin the probability that God does exist, based on evidence that was
).0010 available to him on earth. Later, Laplace refined Bayes' work and gave it the name Bayes
Theorem.
act wil The Bayes' theorem is useful in revising theoriginal probabiiity estimates of known Bayes' theorem: A method
outcomes as we gain additional information about these outcomes. The prior probabilities, to compute posterior
When changed in the light of new information, are called revised or posterior prebebilities. probabilities (conditional
duced probabilities under statistical
Suppose A,,Aq, ..., A, represent n mutualy exciusive and collectively exhaustive
events with prior marginal probabilities P(A,), P(Ag), -., P(A,). Let B be an arbitrary
dependence).

= 0.02. cient with P(B) = 0 for which conditional probabilities P(B|A,), P(B| A,), ..., P(B|A,)
duced
te also known. Given the information that outcome B has occured, the revised (or
OCCur POserior)
the formula:probabilities P(A |B) are determined with the help of Bayes' theorem using

P(A,|B) = P(A, n B) (6-8)

P(B)
0.98) where the posterior probability of events A, given event Bis the conditional probability
3
PIA |B).
day's are mutually exclusive and collectively exhaustive, the
tventnt tents to Ag,...,
Bis bound Aj, A, either
occur with Aj, Ag, ..., A,. That is,
B = (A,nB) U(A,B) U...U (A,nB)
where the posterior probability of A, given Bis the conditonal probability P(A,| B). Posterior probability: A
revised probability of an event
Since (AA,nB), (AgnB)... (A,nB) are mutually exclusive, we get obtained after getting
additional information.
P(B) = P(A,nB) + P(A, n B) + .. . + P(A,nB) = P(A, OB)
i=l

= PA,) P(B|A,) + P(A,) P(B|A,) + ...+ P(A,) P(B|A)

- /P(A,) P(B|A)
222 BUSINESs STATISTICS

From formula (6-8) for a fixed i, we have

P(A, | B) =
P(A, ^B) P(B|A,). P(A,)
P(B) P(B)
P(B| A,).PA,)
P(A).P(B|A) +P(A) P(B|A,) +...+ P(A,) P(B|A,)
Example 6.25: Suppose an item is manufactured by three machines X, Y, and Z. Al he pro
threg fmachines have equal capacity and are operated at the same rate. It is known that har

she percentages of defective items produced by X, Y, and Zare 2, 7, and 12 per Cent, ind

respectively. Allthe items produced by X, Y, and Zare put into one bin. From this bin, Ex
one item is drawn at random and is found to be defective. What is the probability that Cell
this item was produced on Y? an
Wh
Solution: Let Abe the defective item. We know the prior probability of defective items
produced on X, Y,and z, that is, P(X) = 1/3;P) = 1/3and P(Z) = 1/3. We also knon
that
Sol
P(A|X) = 0.02, P(A|Y) = 0.07, P(A|z) = 0.12 an
Now, having known that the item drawn is defective, we want to know the probability
that it was produced by Y. That is
P(A|Y). P(Y)
P(Y |A) =
P(X). P(A|X) +P(Y). P(A|Y) + P(Z). P(A|Z) Th
(0.07). (1/3) = 0.33
(1/3) (0.02) + (1/3) (0.07) + (1/3) (0.12)
Example 6.26: Assume that a factory has two machines. Past records show that machine
Iproduces 30 per cent of the items of output and machine 2 produces 70 per cent of the
items. Further, 5 per cent of the items produced by machine 1 were defective and only
lper cent produced by machine 2 were defective. If a defective item is drawn at random,
what is the probability that the defective item was produced by machine l or machine 2?
Solution: Let A, = Event of drawing an item produced by machine 1,
A, = Event of drawing an item produced by machine 2,
and D = Event of drawing a defective item produced either by machine
Ior machine 2.
From the data in the problem, we know that ma
P(A,) = 0.30, P(A,) = 0.70; P(D | A,) = 0.05, P(D| A,) = 0.!
The data of the problem can now be summarized as under:
Event Prior Conditional Joint Probability Posterior (rmised)
Probability Probability Event Probability
PA,) PD|4,) PA, and D) P4,|D) P4, and ) 6.
(1) (2) (3) (2) × (3)
0.015/0.022 = 0.682
A 0.30 0.05 0.015
0.007/0.022 = 0.318
A, 0.70 0.01 0.007

Here P(D) = P(D|A,) P(A,) = 0.05 x 0.30 + 0.01 x 0.70 = 0.22

From the above table, the probability that the defective item was produced by machie
1is 0.682 or 68.2 per cent and that by machine 2 is only 0.318 or 31.8per cent. he 6

now saythat the defective item is more likely drawn from the output produced by mache
Example 6.27: Acompany uses a 'selling aptitude test' in the selection of salesmen. r
experience has shown that only 70 per cent of all persons applying for a sales poe
achieved a classification 'dissatislactory' in actual selling, whereas the remaindet
classified as 'satisfactory', 85 per cent had scored a passing grade in the aptitubis
Only 25 per cent of those classified dissatisfactory, had passed the test on the basIs
information. What is the probability that a candidate would be a satislactory siles
given that he passed the aptitude test?
 CHAPTER 6 FUNDAMENTALS OF PROBABILITY 223

Solution: Let AandIB be the event representing 'unsatisfactory' classification as asalesman

zndpassingthe test', respectively. Now, the probability that a candidate would be
satistactory'salesman given that he passed the aptitude test is:
P( A|B) = (0.70)(0.85) 0.595
(0.70)(0.85) + (0.30)(0.25) = 0.888
0.595 + 0.075
Assuming change in the type of candidates applying for the selling positions, the
probabilitythat a random applicant would be satisfactory is 70 per cent. On the other
hand.if the company only accepts an applicant if he passed the test, the probability
per cent.
increases to 88.8
Erarmple 6.28: In a bolt factory, machines A, B, and C manufacture 25 per cent, 35 per
Ea 40 per cent of the total output respectively. Of the total of their output, 5, 4,
and 2 per centcare
defective bolts. A bolt is drawn at random and is found to be defective.
What js the DEebability that it was manufactured by machines A, B, or C?
[Punjab Uniu, MCom; Madurai Univ, MCom, 1998]
Calaion: Let, A, (i = 1, 2, 3) be the event of drawing a bolt produced by machine A, B,
that
nd C, respectively. From the data we know
P(A,) = 0.25; P(A) = 0.35, and P(A) = 0.40
Erom the additional information, we know that
B = the event of drawinga defective bolt
Thus, P(B|A,) = 0.05; P(B|A) = 0.04; and P(B|A) 0.02
The table of posterior probabilities can be prepared as under:
Conditional Joint Probability Posterior Probability
Event Prior
Probability Probability
P(B|4) (2) x (3)
PA)
(4) (5)
(1) (2) (3)
0.0125 0.0125 +0.0345 = 0.362
0.25 0.05
0.014 + 0.0345 = 0.406
0.04 0.0140
0.35 0.008+ 0.0345 = 0.232
0.02 0.0080
0.40
1.000
Total 1.00 0.0345

was defective and produced by

Ihe above table shows the probability that the item C is 0.232.
Miachine Ais 0.362, by machine B is 0.406. and machine

Self-Practice Problems 6C
clerkB or
probability that it was processed by clerk Aor
Amanufacturing firm produces steel pipes inthree plants clerk C.
With daily production volumes of 500, 1000, and 2000 certain production process produces items 10 per
units respectively. According to past experience, it is 6.36 A before
cent of which defective. Each item is inspectedtime the
Anown that the fractions of defective output produced but 10 per cent of the
by the three plants are respectively 0.005, 0.008, and supplying to customers item. Only items
inspector incorrectly classifies an items have been
010. Ifa pipe is selected from a day's total production
and found tootbe defective, find out(a) from which plant classified as good are supplied. If 820 be
supplied in all, how many of them are expected to
the pipe Comes, (b) what is the probability that it2004]
came
defective?
from the first plant? [IIT Roorkee MBA, of output by three
535 In a post office, three clerks are assigned to process 6.37 A factory produces certain types are:
machines. The respective daily production figures
ithencomisecond
ng maiclerk,l. TheB, first clerk, A, pr
processes 40 per cent;
processes 35 per cent; andthe third Machine A = 3000 units; Machine B = 2500 units; and
Machine C = 4500 units. Past experience shows that
derk, C, processes 25 per cent of the mail. The first lper cent of the output produced by machine A is
lerk has an error rate of 0.04. the second has an error
rate of 0.06, and the third has an error rate of 0.03. A defective. The corresponding fractions of defectives for
mail selected at random from aday's output is found to the other two machines are 1.2 and 2 per cent
have an error. The Postmaster wishes to know the respectively. An item is drawn at random from the day's
224 BUSINESS STATISTICS

6.40 Aworker-operated machinc produces a

production and is found to be defcctive. What is
probability that it comes from the output ol
(a) Machine A: (b) Machine B; (c) Machine C?
6.38 ln a bolt lactory machines A, B, and C manulaCture
25 per cent, 30 per cent and 40 per cent of the total
output respectively. Of the total of their output 5,4, and
2per cent are defective bolts. Abolt is drawn at random
from the lot and is found to be defective. What are the
probabilities that it was manufactured by machines A,
B, or C?
6.39 In a factory manufacturing pens, machines X, Y, and Z
manufacure 30, 30, and 40 per cent of the total
production of pens, respectively. Of their output 4, 5,
and 10 per centof the pens are defective. If onepen is
selected at random, and it is found to be defective, what
is the probability that it is manufactured by machine Z?
defetmahne'
with probability 0.01,if the worker follows the ive tem
if he does not. If the worker follows the probabil1y 9.49,
operating instruction exactly, and with
instructionsitemy
per cent of the time, what proportion of all
produced by the machine will be defcctivc:
)
6.41 Medical case histories indicate that different illhee
may produce identical symptoms. Supposc a particular
set of symptoms, 'H' occurs only when one of th
illnesses: A, Bor Coccurs, with probabilities 0.01.,0 0:
and 0.02 respectively. The probability of devcloping
the symptoms H, given a illness A, B and C are 0 0
0.95 and 0.75 respectively. Assuming that an illperson
shows thc symptomns H, what is the probability tha:
person has illness A?

Hints and Answers

6.34 Let A,, A, and A, - production volume ofplant I, II, Given P(A) = 0.40, P(B) = 0.35, and P(C) = 02%
and Iil, respectively. P(E | A) = 0.04, P(E | B) = 0.06,
E = defective steel pipe and P(E| C) = 0.03
P(A,) = 500/3500 = 0.1428: P(A)P(E|A)
P(A,) = 1000/3500 = 0.2857;
:. PA | E) =
P(E)
P(A;) = 2000/3500 = 0.5714 P(A) P(E|A)
P(E | A,) = 0.005, P(E |A,) = 0.008, P(A) P(EJA)+ P(B)P(E|B) + PC) P(E|C)
and P(E|A) = 0.010. 0.40 x 0.04
= 0.36
P(A, nE) = PAJ) P(E|A) 0.40 (0.04) + 0.35 (0.06) + 0.25 (0.03)
= 0.1428 x 0.005 = 0.0007;
P(A, n E) = P(A,) P(E|A,) Similarly P(B|E) = [P(B) P(E|B)]/P(E) = 0.47
= 0.2857 x 0.008 = 0.0022
P(C|E) [P(C) P(E|C)J/P(E) = 0.17
P(A, O E) = P(A,) P(E | A) 6.36 P(D) = Probability of defective item = 0.I; P(clasified
= 0.5714 x 0.010 = 0.057 as good | defective) = 0.1
P(E) = P(A, O E) + P(A, n E) + P(A, O E) :. P(G) = Probability of good item = 1- P(D)
=|-0.l = 0.9
= 0.0007 + 0.0022 + 0.057 = 0.0599
0.0007
P(classified as good | good) = | - P(classified as
(a) P(A, |E) = P(Aj nE) = 0.0116 good dcfective)
P(E) 0.0599 =|-0.l = 0.9
P(A;^ E) 0.0022 :. P(defective | classified as gouod)
P(A,|E) = 0.0599
0.0367:
P(E) P(D)· P(classified as good | defecive)
P(A,nE) 0.057 [P(D)-P(classified as good | D)
P(A,|E) = 0.951
P(E) 0.0599 + P(G) P(classified as good | G))
Since PA, | E) is highest, the defective steel pipe has 0.lx0.1 0.01 = 0.012.
mostlikely come from the third plant 0.1x0.1+0.9x0.9 0.82
P(A,|E) = KA, nE) P(A,) P(E|A)
(b) P(E) P(E)
6.37 (a) 0.20 (b) 0.20 (c) 0.60
6.38 P(A) = 0.37, P(B)= 0.40, P(C) = 0.23
(500/3500)x 0.005
0.0119 6.39 P(Z) = 0.6639
0.0599
6.40 P(A) = 0.012
6.35 Let A, B, andC =mail processed by first, sccond,and 6.41 PA| H) = 0.3130
third clerk, respectively
E = mail containing error