COMPILED BY

DIVYA JIJU
 Uncertainties

• We often base our decisions on an analysis

of uncertainties such as the following:

*What are the chances that sales will decrease

if we increase prices?
*What is the likelihood a new assembly method
method will increase productivity?
*What is the probability that the team will win
the match?
 Probability
Probability is a numerical measure of the likelihood
that an event will occur.

Probability values are always assigned on a scale

from 0 to 1.

A probability near zero indicates an event is quite

unlikely to occur.

A probability near one indicates an event is almost

certain to occur.
 Probability as a Numerical Measure
of the Likelihood of Occurrence
Increasing Likelihood of Occurrence

0 .5 1
Probability:

The event The occurrence The event

is very of the event is is almost
unlikely just as likely as certain
to occur. it is unlikely. to occur.
 An Experiment and Its Sample Space
• An experiment is any process that
generates well-defined outcomes.
• The sample space for an experiment is the
set of all experimental outcomes.
• An experimental outcome is also called a
sample point.
 An Experiment and Its Sample Space

Experiment Experiment Outcomes

Toss a coin Head, tail
Inspection a part Defective, non-defective
Conduct a sales call Purchase, no purchase
Roll a die 1, 2, 3, 4, 5, 6
Play a football game Win, lose, tie
Fundamental Principle of Counting
• If there are p ways to do one event and q ways
to do another event, then there are p x q ways
to do both the events.
• Eg: Suppose you have 3 shirts (say A,B,C) and
4 pants (say w,x,y and z) then you have
3 x 4 = 12 possible outfits
 Counting Rule for Combinations
 Number of Combinations of N Objects
Taken n at a Time
A second useful counting rule enables us to count
the number of experimental outcomes when n objects
are to be selected from a set of N objects.

 N N!
CnN   
 n  n !(N  n )!

where: N! = N(N  1)(N  2) . . . (2)(1)

n! = n(n  1)(n  2) . . . (2)(1)
0! = 1
 Counting Rule for Permutations
 Number of Permutations of N Objects
Taken n at a Time
A third useful counting rule enables us to count
the number of experimental outcomes when n
objects are to be arranged from a set of N objects,
where the order of selection is important.

 N N!
PnN  n !  
 n  (N  n )!

where: N! = N(N  1)(N  2) . . . (2)(1)

n! = n(n  1)(n  2) . . . (2)(1)
0! = 1
 DEFINING PROBABILITY

•THEORETICAL APPROACH
•EXPERIMENTAL APPROACH
•AXIOMATIC APPROACH
 THEORETICAL PROBABILITY

• Based on the possible chances of

something to happen
• Based on the reasoning behind
probability
 EXPERIMENTAL PROBABILITY

• Based on the observations of an

experiment.
• No: of possible outcomes by the
total number of trials.
 AXIOMATIC PROBABILITY

• Based on Kolmogrov’s three

axioms.
• The chances of occurrence or non
occurrence of events can be
quantified.
 Assigning Probabilities

 Basic Requirements for Assigning Probabilities

1. The probability assigned to each experimental

outcome must be between 0 and 1, inclusively.

0 < P(Ei) < 1 for all i

where:
Ei is the ith experimental outcome
and P(Ei) is its probability
 Assigning Probabilities

 Basic Requirements for Assigning Probabilities

2. The sum of the probabilities for all experimental

outcomes must equal 1.

P(E1) + P(E2) + . . . + P(En) = 1

where:
n is the number of experimental outcomes
THANK YOU