Introduction:

       The principles of probability serves as a bridge in understanding inferential statistics

from the world of descriptive statistics. (Berenson, et.al, 2012). Recall that inferential
statistics involves making an inference about the population from the statistic taken from the
sample. And the process incurs uncertainty. This is how the concept on probability comes in.

      The use of probability models can greatly help businesses in optimizing their policies and
making safe decisions and though complex, knowledge of these methods or models can
increase the profitability and success of a business. (Verial, 2019).

Learning Objectives:

At the end of module 2, the students are expected to do the following:

1. Define probability and identify the different methods of assigning probability

2. Explain the different laws of probability.

3. Discuss the uses, application, and importance of studying probability in business. 

4. Solve and discuss the given application problems of probability especially on areas of
business, economics, and management.

5. Create mathematical model describing the likelihood of the occurrence of one event in the
light of using conditional probability.

6. Manifest open-mindedness, creativity, critical thinking, good communication skills,

patience, and honesty in working with the different tasks involving probability.

Sample Space and Events

Probability is the basis of statistical analysis, in making forecasts and predictions. It is a value
associated with mathematical or random experiments.

A mathematical or random experiment is any procedure or process of obtaining a set of

observations which may be repeated under basically the same conditions which lead to well
defined outcomes.

Tossing a coin twice and rolling a die are examples of random experiments.
SAMPLE SPACES AND EVENTS

So far, we have been using such words as outcome, experiment, and event, assuming that
you have an idea of what these terms mean in mathematics. Let us take a moment to clarify
their meanings when used in a mathematical context.

An experiment is any process or activity that generates a set of data.

Experiments that are of real interest are those whose outcomes cannot be predicted with
certainty. In tossing a coin experiment, there are two possible outcomes, head or tail. Each
repetition of an experiment is called a trial.

Sample space. The set of all possible outcomes of a statistical experiment is called the
sample space and is denoted by the symbol S.

Each outcome in a sample space is called an element or a member of the sample space or
simply a sample point. If the sample space has finite number of elements, we can enumerate
the members in a set form called roster method. Elements are separated by commas and
enclosed by braces. Thus, the sample space S, of possible outcomes when a coin is tossed,
may be written:  S = {H, T}

where H and T refer to “head and tail,” respectively.

Event. Let S be a sample space for an experiment. Any subset A of S will be referred to as

an event.

 Two events or subsets of S are of particular interest: S itself and the empty set or null
set denoted by ∅.
 The sample space corresponding to a physical event that is certain to occur is called
the sure event or certain event.
 The empty set corresponds to physical events that are impossible to occur. Thus, we
refer ∅ as an impossible event.

EXAMPLE 1:

Consider  the experiment and the sample space for this experiment is

S = {1, 2, 3, 4, 5, 6, 7, 8, 9, 10}
A = {numbers less than 7} = {1, 2, 3, 4, 5, 6 }

B = {numbers divisible by 3} = {3, 6, 9}

C = {numbers between 5 and 10} = {6, 7, 8, 9}

D = {numbers greater than 10} = { } = ∅

EXAMPLE 2:

A pair of coin is tossed once. What were the sample points?

SOLUTION 2:

  The sample points are:

S = {(H, H), (H, T), (T, H), (T, T)}

  where H and T are head and tail, respectively.

SIMPLE AND COMPOUND EVENTS

  If an event is a set containing only one sample space, then it is called a simple event.

  A compound event is one that can be expressed as the union of simple events.

EXAMPLE 3:

Consider  the experiment of drawing a card at random from an ordinary deck of 52 cards. Let
us consider some sets that may be served as simple or compound events.

a.) The event of drawing a diamond

simple event

b.) The event of drawing a red card

compound event
The rectangle represents the sample space and circles as events. These events are subsets
of the sample space S. See the illustration below.

OPERATIONS WITH EVENTS

As you can see, we sometimes consider more than one event in a single experiment.
Operations with events will form new events that are subsets of the sample space as the
given events.

Union of Events. The union of two events A and B, denoted by the symbol A U B,

consists of all sample points that are in event A, or in event B, or in both A and B.

When referring to the union, we can also write A or B.

The sample points of A U B may be listed as in roster method or defined by the rule method.
It can also be illustrated using the Venn diagram as shown in the figure below. The shaded
area represents A U B.

EXAMPLE 4:

  Let  S = {1, 2, 3, 4, 5, 6, 7, 8, 9, 10}

  Let  A = {1, 2, 3, 4, 5} and

  B = {3, 5, 7, 9};  then

  A U B = ?

SOLUTION 4:

  A U B = {1, 2, 3, 4, 5, 7, 9}

EXAMPLE 5:
  Consider  S = {a, b, c, d, e, f, g, h, i}

  Let  A = {a, b, c, d}  and  B = {e, f};  then

  A U B = ?

SOLUTION 5:

  A U B = {a, b, c, d, e, f}

Intersection of Events. The intersection of two events A and B, denoted by A ∩ B

represent the simultaneous occurrence of both A and B, and therefore must be those
sample points that are common to both A and B. These sample points may either be
listed or defined in a set notation. This operation can be illustrated using the Venn diagram
as shown in the next slide. The shaded region corresponds to the event A ∩ B.

EXAMPLE 6:

  Let  S = {1, 2, 3, 4, 5, 6, 7, 8, 9, 10}

  A = {1, 2, 3, 4, 5} and

  B = {3, 5, 7, 9}; then

  A ∩ B = ?

SOLUTION 6:

   A ∩ B = {3, 5}

EXAMPLE 7:

  Let  S = {a, b, c, d, e, f, g, h, i, j}

  A = {a, b, c, d} and

  B = {a, d, g, j}; then

    A ∩ B = ?

SOLUTION 7:

   A ∩ B = {a, d}

EXAMPLE 8:

  Let S be the set of all letters from the English alphabet;

  A is the set of all vowels letters; and

  B is the set of all consonant letters, then

   A ∩ B = ?

SOLUTION 8:

   A ∩ B have no sample points in common. Therefore, A ∩ B = Ø.

Mutually Exclusive Events. Two events A and B are mutually exclusive if they have no
sample points in common. In symbols, A ∩ B = Ø.

Two mutually exclusive events A and B are illustrated in the Venn diagram. When we shade
the areas corresponding to the events A and B, we find no overlapping shaded area
representing the event A ∩ B. Hence, it is empty.

EXAMPLE 9:

  Let  S = {1, 2, 3, …, 10}

  A = {1, 3, 5, 7, 9} and

  B = {2, 4, 6, 8, 10}; then

  A ∩ B = ?
SOLUTION 9:

   A ∩ B = Ø since the two sets have no sample points in common.

Complement of an Event. The complement of an event A with respect to S is the set of

all sample points that are not in set A. It is denoted by A' or Ac

EXAMPLE 10:

  Let A be the event that diamond card is drawn from an ordinary deck of 52 playing cards
and let S be the entire deck. What is Ac

SOLUTION 10:

  Then Ac is the event that the card drawn from the deck that is not diamond.

In many cases, the wording of a problem identifies the appropriate operation of sets.
Remember, when the conjunction or is used, the union of two or more sets is involved. The
conjunction and (or but) entails a set intersection; and the word not calls for a set
complement.

EXAMPLE 11:

In a survey, 100 students were asked to answer the following questionnaire:

Have you joined any math contests this year?

Have you joined any writing contests this year?

If 68 students circled Y for math, 42 circled Y for writing, and 27 circled Y for both subjects,
how many students circled N for both questions?

SOLUTION:

Answer: 17 students

EXAMPLE 12:
In a survey of 500 people, pet food manufacturer found that 200 owned a dog but not a cat,
150 owned a cat but not a dog, and 100 owned neither a dog nor a cat.

  a.) How many owned both a dog and a cat?

  b.) How many owned a dog?

SOLUTION:

Answer:    a.) 50 people

b.) 250 people

EXAMPLE 3:

  In a survey of 120 people, 55 said they had bread for breakfast that morning, 40 said they
had coffee for breakfast, and 70 said they had bread or coffee for breakfast.

  a.) How many had both bread and coffee for   breakfast?

  b.) How many had bread but no coffee?

  c.) How many had neither bread nor coffee for breakfast?

Answer:    a.) 25 people

b.) 30 people

c.) 50 people

EXAMPLE 14:

  In a survey, students were asked about their favorite subjects. The results are as follows:

  132 students like Math

  163 students like Science

  73 students like English

  51 students like Science and English

  36 students like Math and Science

  38 students like Math and English

  22 students like all three subjects

Determine:

a.) the number of students who like Math only;

b.) the number of students who like Science only;

c.) the number of students who like English only;

d.) the total number of students in the survey.

SOLUTION:

Answer:  

 a.) 80 students

b.) 98 students

c.) 6 students

d.) 265 students

Probability Distribution

Probability Distribution
Probability theory was developed as a result of man’s interest in games of chance
and gambling. Gamblers sought the help of mathematicians like Pascal, Leibniz,
Fermat, and Bernoulli for strategies that will increase their winnings.

The early development of probability resulted to the development of more

applications of probability in other fields such as sports, business, politics, weather
forecasting, predictions, education, psychology, engineering, and medical and
scientific researches.

The accuracy of predictions and generalizations is very crucial to the success of a

business venture and to the welfare and safety of mankind. For example, wrong
weather forecasts might lead to unnecessary worries and panic among the people.

An understanding of the basic probability theory is important in the accuracy of these

predictions and generalizations. Probability is a discipline that links between
descriptive and inferential statistics.

In this discussion we will deal with some counting techniques without direct
enumeration of the number of possible outcomes of a particular experiment or the
number of elements in particular set. Such techniques are sometimes called
combinatorial analysis.

FUNDAMENTAL PRINCIPLE OF COUNTING:

Multiplication Rule

  The solution of some problems in statistics requires a more sophisticated counting

procedure. Let us approach this topic by first discussing an illustrative example.

EXAMPLE 1:

Suppose that a family has three children. How many possible outcomes for the
genders of the children?

SOLUTION 1:
2×2×2=23=8 ways

EXAMPLE 2:

On an English test, a student must write two essays. For the first essay, the student
must select from topics A, B, and C. For the second essay, the student must select
from topics 1, 2, 3, and 4. How many different ways can the student select the two
essay topics?

SOLUTION 2:

3×4=12 ways

EXAMPLE 3:

There are 5 children in a preschool.  How many different ways can the teacher sit
these 5 children in a row of 5 chairs?

SOLUTION 3:

(5)(4)(3)(2)(1)=120 ways

EXAMPLE 4:

The digits 1, 2, 3, 4, and 5 are to be used to form a five-digit number. How many
different numbers can be formed if:

a) repetitions are permitted?

b) repetition is not allowed?

c) the number must be odd and repetitions are not allowed?

d) the number must be greater than 30,000 and repetition is not allowed?

SOLUTION 4:

a.) (5)(5)(5)(5)(5)=55=3,125 ways
b.) (5)(4)(3)(2)(1)=120 ways
c.) (4)(3)(2)(1)(3)= 72 ways\
d.) (3)(4)(3)(2)(1)= 72 ways

PERMUTATION

Basic to counting is the idea of permutations. Before discussing the idea of this
technique, let us first introduce a useful shorthand notation – the factorial (A
collection of n different items can be arranged in order n! different ways.

This factorial rule reflects the fact that the first item may be selected n different ways,
the second item may be selected n-1 ways, and so on). The symbol n! read as “n
factorial” is defined as the product of the first n integers, that is:

   n! = n (n - 1)(n - 2)(n - 3)…(3)(2)(1)

   where n is an integer greater than or equal to 1.

A permutation is an arrangement of objects in a definite order. It is denoted by

the symbol nPr where n is the total number of objects and r is the number of objects
to be taken at a time in each arrangement.

1) Linear Permutation = permutation of n distinct objects taken all together

   nPr = n!  (if n = r)

EXAMPLE 1:

If a set of seven textbooks is to be placed on a shelf, in how many ways can the
seven books be arranged?

SOLUTION 1:

7P7=5,040 ways
2) The number of permutation of n different objects taken r at a time

nPr=n!(n−r)!         if r <n

EXAMPLE 2:
How many possible arrangements can be formed using the letters A, B, C, D, and E if
the letters are taken:

a) three at a time?

b) five at a time?

SOLUTION 2:

a.) 5P3 = 5!(5−3)!=60 ways
b.) 5P5 = 5!(5−5)!=120 ways
3) Permutations with Repeated Elements

There are times when the objects that are being arranged are not unique.

For instance, the word “STATISTICS”. The letter “s” appears 3 times, “a” appears once, “t”
appears 3 times with “i” and “c” appears once.

EXAMPLE 3:

In how many ways can you arrange the letters of the word “SUCCESS”?

SOLUTION 3:

n(S) = 3

n(C) = 2

n(U) = 1

n(E) = 1

P = 7!(3!)(2!)(1!)(1!)=420 ways

EXAMPLE 4:

How many different numbers can be formed by using all of the following digits 2, 2, 4,
4, and 5?
SOLUTION 4:

P=5!(2!)(2!)=30 ways

4.) Circular Permutation

A special type of permutation where the objects are arranged in a circular pattern 

nPr = (n - 1)!

EXAMPLE 7:

How many ways can you sit 10 people in a round table with 10 seats?

SOLUTION 7:

P=(10−1)!=9!=362,880 ways

COMBINATION

A combination is an arrangement of objects which does not involve the order of

selection. For example, an arrangements acb is not different from the arrangements
abc or cba because the same set of objects is involved.

The symbol for combination is nCr where n is the total number of objects and r is the
number of objects taken at a time in an arrangement. The formula is given by:

nCr= n!(n−r)!

EXAMPLE 8:

In how many ways can a committee consisting of 4 men and 3 women be chosen
from 6 men and 6 women?

SOLUTION 8:
(6C4)(6C3)=300 ways

EXAMPLE 9:

A student is to answer five out of eight questions in a quiz.

a) How many choices have he?

b) How many choices have he if he must answer the first two questions?

SOLUTION 9:

a.) 8C5 = 56 choices
b.) 6C3=20 choices

EXAMPLE 10:

In how many ways can 5 physics teachers be selected to attend a convention for free
from 8 men and 6 women applicants if the group should have:

a)3 men and 2 women?

b)3 or 2 men?

c) at least 3 women?

SOLUTION 10:

a) (8C3)(6C2)=840 ways
b) (8C3×6C2)+(8C2×6C3)=1,400 ways
c) (8C2×6C3)+(8C1×6C4)+(8C0×6C5)=686 ways