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Probability that birth month is April is 10/94 = 0.106

Birth months by gender Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Females 4 1 4 3 5 4 4 8 3 2 1 1 Males 6 3 4 7 6 6 3 7 5 3 2 2 .

Birth months.075 .106 For a male: 0.1296 = P(April│Male) Probability that birth month is April: For a person: 0.conditional probabilities Month Jan Feb Mar Apr May Jun Females 4 1 4 3 5 4 4 8 3 2 1 1 Males 6 3 4 7 6 6 3 7 5 3 2 2 Number of males = 54 Jul Aug Sep Oct Nov Dec Number of females = 40 April birth month: What if the person chosen is known to be male? Probability is now 7/54 = 0.1296 For a female: 0.

this changes to the “size” of the common bit. With the extra information that C has occurred. relative to the “size” of C for P(C)0 = P(A and C) P(C) .Restricting the sample space S C A If C is known to have occurred then how does P(A) change? P(A) is the “size” of the red event relative to the entire sample space.

e. .Rules for tree diagrams Probability entered on a branch is that of reaching the end of that branch. all possibilities catered for) Multiplication principle Probability of traversing a path of branches is the product of the probabilities on the path. conditional on having reached the start Probabilities emanating from any node must add to 1 (i.

leaving 7 equally likely outcomes.Tossing three coins Given that I throw at least one head. Tail Probability of getting three heads is thus 1/7. Head Tail Tail Head Head Tail Tail Head Tail Tail From definition of conditional probability There are 8 equally likely outcomes P(3 heads and at least 1 head)= P(3 heads)=1/8 P(at least one head) = 7/8 1/ 8 1 So P(3 H │at least 1) = 7/8 7 . what is the chance that I throw three? Restricted sample space method Head Head Head We should ignore the bottom path.

Of these two thirds used a store card (C) of whom only one in ten had a positive balance. Of the women (W).Example 1 A survey of customers using credit cards in a home improvements store showed that 60% were men (M). Find the probability that a randomly chosen customer is (i) a man with a credit card (ii) a woman without a credit card (iii) a woman with a positive balance (iv) What proportion of customers who have a positive balance are women? . three quarters had a store card and one third of these had a positive balance.

4 Pos Pos Neg P(+) = 0.1 + 0.14 ] .1 = 0.4 x ¼ = 0.1 iii) P(W and +) = 0.1 2/3 C 0.6 x 2/3 x 0.04 + 0.4 x ¾ x 1/3 = 0.1 C W Not C =0.1 + 0.6 x 2/3 0.14 = 0.6 1/3 3/4 iv) P(W│+) =P(W and +) 2/3 1/4 =0.714 [ P(+) = 0.4 Neg ii) P(W and no card) Not C 1/3 0.Example 1 i) P(M and C) = 0.1/0.9 M 0.

05 0.2 = 0.7 x 0.7 x 0. (i) What is the probability that a candidate goes onto final selection? (ii) What proportion are rejected? (i) P(Final selection) = 0.7 OK Reject 0.532 0.3 + 0.2 0.95 0.8 = 0.3 Reference OK Reference not OK Rejected at interview . Those with satisfactory references are interviewed.Example 2 When recruiting for a management post. references are taken up on the remainder and only 5% of all references are unsatisfactory.532 (ii) P(rejection) = 0. 20% of interviewees are rejected and the rest go on for final selection. 30% of applicants are immediately rejected on academic grounds.05 + 0.95 x 0.95 x 0.7 x 0.8 Final selection 0.468 or 1 – 0.

. calculate the probability that the person has the disease. A diagnostic test for the disease gives a positive result with probability 0.02. Given that the test gives a positive result. If the disease is not present. the probability of a positive result is 0.Medical diagnosis example It is known that 10% of the population suffers from a certain disease. Find the probability of this test giving a positive result. A test is given to a randomly selected person.95 if the disease is present.

Medical diagnosis example POSITIVE DISEASED NEGATIVE POSITIVE HEALTHY NEGATIVE .

113 .95 + 0.02 = 0.9 x 0.1 x 0.Medical diagnosis example POSITIVE 95% DISEASED 5% NEGATIVE 10% POSITIVE 2% 90% HEALTHY 98% NEGATIVE P( positive result) = 0.

1 x 0.Medical diagnosis example 84% of those with positive results have the disease – 16% of those with positive results do NOT have the disease! POSITIVE 95% DISEASED 5% NEGATIVE 10% POSITIVE 2% 90% HEALTHY 98% NEGATIVE P( has disease│ positive) = 0.84 0.95 = 0.113 .

1.40 = £80 .6 Loss = -£100 with probability 0.4 Expected profit = 200 x 0.Expected Value and Decision Trees The Expected Value of a random quantity is calculated by multiplying the outcome by its probability. Value of sale = £ 150. If there are two possibilities: Profit = £200 with probability 0.6 -100 x 0. Examples. Probability of sale = 2/3 Expected value =150 x 2/3 = £100 2.4 =120 .

1 Expected: -20 + .20 + 0 + 35 + 20 = 15 So the expected profit is £15 .2 0.1 0.3.35 0. Five possible outcomes: Profit (£) -200 -100 0 100 200 Probability 0.25 0.

Decision Trees. failure £4m loss.9. The probabilities of success in each of A. The corresponding figures for strategy B are: success £10m profit. 0. Example A company is considering three possible sales strategies. B and C are respectively 0. Tree diagrams may also be used to show the probability and expected value of an outcome under different strategies.8. If strategy A is a success the predicted profit is £5 million as against an £8m loss if it is a failure. For C they are profit £5m.2 and 0. Which strategy brings the greatest expected profit? . loss £5m.

Solution 0.2 x 8 = £2.8 0.1 Strategy A Expected profit = 0.1 x 5 = £4 million Choose Strategy C .2 S £5 m F S .9 x 5 – 0.8 x 5 – 0.9 F -£4 m S £5 m F -£5 m C 0.8 A 0.4 million Strategy B Expected profit = 0.2 0.2 x 10 – 0.£8 m £10 m B 0.8 x 4 = -£1.2 million Strategy C Expected profit = 0.

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