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Chapter

Five

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

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Chapter Five
A Survey of Probability Concepts
GOALS
When you have completed this chapter, you will be able to:

ONE
Define probability.
TWO
Describe the classical, empirical, and subjective approaches
to probability.
THREE
Understand the terms: experiment, event, outcome,
permutations, and combinations.
Goals
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Chapter Five continued

A Survey of Probability Concepts

GOALS
When you have completed this chapter, you will be able to:

FOUR
Define the terms: conditional probability and joint
probability.
FIVE
Calculate probabilities applying the rules of addition and the
rules of multiplication.
SIX
Use a tree diagram to organize and compute probabilities.
Goals
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Chapter Five continued

A Survey of Probability Concepts

SEVEN
Calculate a probability using Bayes’ theorem.

Goals
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Movie
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There are three definitions of probability: classical,

empirical, and subjective.

The The Empirical Subjective

Classical definition applies probability is
definition when the number based on
applies when of times the event whatever
there are n happens is information is
equally likely divided by the available.
outcomes. number of
observations.

Definitions continued
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Movie
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An Outcome is Experiment: A fair die is cast.

the particular
result of an
experiment.
Possible outcomes: The
numbers 1, 2, 3, 4, 5, 6
An Event is
the collection One possible event: The
of one or more occurrence of an even
number. That is, we collect
outcomes of an
the outcomes 2, 4, and 6.
experiment.
Definitions continued
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Events are Mutually

Events are Independent
Exclusive if the if the occurrence of one event
occurrence of any one does not affect the occurrence
event means that none of another.
of the others can occur
at the same time.
Independence: Rolling a 2
on the first throw does not
Mutually exclusive: influence the probability of
Rolling a 2 precludes a 3 on the next throw. It is
rolling a 1, 3, 4, 5, 6 still a one in 6 chance.
on the same roll.
Mutually Exclusive Events
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Events are Collectively Exhaustive

if at least one of the events must occur
when an experiment is conducted.

Collectively Exhaustive Events

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Throughout her This is an example of the

teaching career empirical definition of
Professor Jones has probability.
awarded 186 A’s To find the probability a
out of 1,200
selected student earned an A:
students. What is
the probability that
a student in her
section this
186
semester will P( A)   0.155
receive an A? 1200

Example 2
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Examples of subjective probability are:

estimating the probability the

Washington Redskins will win
the Super Bowl this year.

estimating the probability

mortgage rates for home loans
will top 8 percent.

Subjective Probability
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If two events
A and B are mutually
exclusive, the
Special Rule of
Addition states that the
Probability of A or B
occurring equals the sum of
their respective
probabilities.

P(A or B) = P(A) + P(B) Basic Rules of Probability

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New England Commuter Airways recently supplied

the following information on their commuter flights
from Boston to New York:

Arrival Frequency
Early 100
On Time 800
Late 75
Canceled 25
Total 1000

Example 3
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If A is the event that a If B is the event that a

flight arrives early, flight arrives late, then
then P(A) = 100/1000 P(B) = 75/1000 = .075.
= .10.

The probability that a flight is either early or late

is:
P(A or B) = P(A) + P(B) = .10 + .075 =.175.

Example 3 continued
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The Complement Rule is used to determine the

probability of an event occurring by subtracting the
probability of the event not occurring from 1.

If P(A) is the probability of event A and P(~A) is

the complement of A,
P(A) + P(~A) = 1 or P(A) = 1 - P(~A).

The Complement Rule

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A Venn Diagram illustrating the complement rule

would appear as:

A
~A

The Complement Rule continued

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Recall example 3. Use the complement

rule to find the probability of an early
(A) or a late (B) flight

If C is the event that a

flight arrives on time, then
P(C) = 800/1000 = .8.

If D is the event that a

flight is canceled, then
P(D) = 25/1000 = .025.

Example 4
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P(A or B) = 1 - P(C or D)
= 1 - [.8 +.025]
=.175

D
C .025
.8
~(C or D) = (A or B)
.175

Example 4 continued
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If A and B are two

events that are not
mutually exclusive,
then P(A or B) is
given by the
following formula:

P(A or B) = P(A) + P(B) - P(A and B)

The General Rule of Addition

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The Venn Diagram illustrates this rule:

A and B
A

The General Rule of

Addition
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In a sample of 500 students, 320 said they had a

stereo, 175 said they had a TV, and 100 said they had
both. 5 said they had neither.

TV
175
Both
Stereo 100
320

EXAMPLE 5
If a student is selected at 5- 23

random, what is the

probability that the student
has only a stereo or TV?
What is the probability
that the student has both a
stereo and TV?

P(S or TV) = P(S) + P(TV) - P(S and TV)

= 320/500 + 175/500 – 100/500
= .79.
P(S and TV) = 100/500
= .20 Example 5 continued
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A Joint Probability measures the likelihood

that two or more events will happen concurrently.

An example would
be the event that a
student has both a
stereo and TV in his
or her dorm room. Joint Probability
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The Special Rule of Multiplication

requires that two events A and B are
independent.

Two events A and B are independent if the

occurrence of one has no effect on the probability of
the occurrence of the other.

This rule is written: P(A and B) = P(A)P(B)

Special Rule of Multiplication

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Chris owns two stocks, IBM 5-year stock prices

IBM and General GE
45
Electric (GE). The 40
35
probability that IBM 30

Stock price $
stock will increase in 25
20

value next year is .5 and 15

10

the probability that GE 5

0
stock will increase in 1 2 3 4 5
Year
value next year is .7.
Assume the two stocks
are independent. What
is the probability that P(IBM and GE) = (.5)(.7) = .35
both stocks will increase
in value next year? Example 6
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W hat P(at least one)

is th e
p r o b a b ility
= P(IBM but not GE)
th a t a t le a s t + P(GE but not IBM)
o n e o f th e se sto c k s + P(IBM and GE)
in c r e a s e s in v a lu e in
th e n e x t y e a r ?
T h is m e a n s th a t (.5)(1-.7)
e ith e r o n e c a n + (.7)(1-.5)
in c r e a s e o r
b o th . + (.7)(.5)
= .85

Example 6 continued
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A Conditional Probability is the

probability of a particular event occurring,
given that another event has occurred.

The probability of
event A occurring
given that the event
B has occurred is
written P(A|B).

Conditional Probability
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The General It states that for two

events A and B, the
Rule of
joint probability that
Multiplication is both events will happen
used to find the joint is found by multiplying
probability that two the probability that
events will occur. event A will happen by
the conditional
probability of B given
that A has occurred.

General Multiplication Rule

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The joint probability,

P(A and B), is given by the
following formula:

P(A and B) = P(A)P(B/A)

or
P(A and B) =
P(B)P(A/B)
General Multiplication
Rule
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The Dean of the School of Business at Owens University

collected the following information about undergraduate
students in her college:

Major Male Female Total

Accounting 170 110 280

Finance 120 100 220

Marketing 160 70 230

Management 150 120 270

Total 600 400 1000

Example 7
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If a student is selected at random, what is the
probability that the student is a female (F)
accounting major (A)?

P(A and F) = 110/1000.

Given that the student is a

female, what is the
probability that she is an
accounting major?

P(A|F) = P(A and F)/P(F)

= [110/1000]/[400/1000] = .275
Example 7 continued
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A Tree Diagram is Example 8: In a bag

useful for containing 7 red
portraying chips and 5 blue
conditional and chips you select 2
joint probabilities. chips one after the
It is particularly other without
useful for replacement.
analyzing business Construct a tree
decisions involving diagram showing this
several stages. information.

Tree Diagrams
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6/11 R2

7/12 R1
5/11 B2
7/11 R2
5/12 B1
4/11 B2

Example 8 continued
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Bayes’ Theorem is a method

for revising a probability
given additional information.

It is computed using the

following formula:

P( A1 ) P( B / A1 )
P ( A1 | B) 
P( A1 ) P( B / A1 )  P( A2 ) P( B / A2 )

Bayes’ Theorem
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Duff Cola Company

recently received several
complaints that their bottles
are under-filled. A
complaint was received
today but the production
manager is unable to
identify which of the two
Springfield plants (A or B)
filled this bottle. What is
the probability that the
under-filled bottle came
from plant A?
Example 9
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The following table summarizes the Duff

production experience.

% of
% of total underfilled
  production bottle

A 5.5 3.0

B 4.5 4.0

Example 9 continued
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P ( A) P (U / A)
P( A / U ) 
P ( A) P (U / A)  P ( B ) P (U / B )
.55(.03)
  .4783
.55(.03)  .45(.04)

The likelihood the bottle was filled in

Plant A is reduced from .55 to .4783.

Example 9 continued
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The Multiplication Example 10: Dr.

Formula indicates Delong has 10
that if there are m ways shirts and 8 ties.
How many shirt
of doing one thing and n
and tie outfits
ways of doing another does he have?
thing, there are m x n
ways of doing both.
(10)(8) = 80

Some Principles of Counting

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A Permutation is any arrangement of r

objects selected from n possible objects.

Note: The order of arrangement is important in

permutations.

n!
n Pr 
( n  r )!

Some Principles of Counting

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A Combination
is the number of
ways to choose r
n!
objects from a nCr 
group of n objects r! (n  r )!
without regard to
order.

Some Principles of Counting

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There are 12 players

on the Carolina
Forest High School
basketball team.
Coach Thompson
must pick five
players among the
twelve on the team to
comprise the starting 12!
lineup. How many 12C 5   792
5! (12  5)!
different groups are
possible? (Order
does not matter.)
Example 11
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Suppose that in
addition to
selecting the
group, he must
also rank each of
the players in
that starting
lineup according 12!
to their ability 12 P 5   95,040
(order matters).
(12  5)!

Example 11 continued