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Probability

Okay, let's break this down step-by-step: * Let A = The stock market reaches 10,500 points * Let B = Tubeless Electronics goes up in value * P(A) = 40% = 0.4 (given) * P(B|A) = 70% = 0.7 (given if A occurs) * P(A and B) = P(A) * P(B|A) = 0.4 * 0.7 = 0.28 Therefore, the probability that both events occur is 28%.

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17 views

Probability

Okay, let's break this down step-by-step: * Let A = The stock market reaches 10,500 points * Let B = Tubeless Electronics goes up in value * P(A) = 40% = 0.4 (given) * P(B|A) = 70% = 0.7 (given if A occurs) * P(A and B) = P(A) * P(B|A) = 0.4 * 0.7 = 0.28 Therefore, the probability that both events occur is 28%.

Uploaded by

Abhishek Parmar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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PROBABILITY

Increasing Call Center Efficiency

A report published on June 12, 2007 CFI group indicates a lot of customers
were not satisfied with call centers on resolution of issues across sectors.

Source: https://www.pri.org/stories/2014-05-04/how-philippines-crushing-indian-call-center-business
Why? Any Solutions?
● No. 1 reason is accent. India to lose $30B due to this.

● Also, the number, timing and the type of questions of calls. These
affect/vary day to day.

● Randomness of above issues complicate management’s decisions.

● Usually, the (front-line) agents forward hard calls to experienced


agents. So, managers must decide how many experienced agents
to be available to respond calls.

● This decision requires two probabilities:


● Chance of call arriving in next few minutes.
● Chance that the agent who answers the call resolves the
problem.
Probability
● Probability refers to the study of randomness &
uncertainty.

● The classical definition of probability of an event A is


defined as
Number of favourable outcomes to A
P(A) =
Total number of possible outcomes

Assumptions: The sample space is finite and the


outcomes are equally likely.
Statistical Regularity

● TranslateMedia; February 6, 2015 reported that in India, cash


on delivery (COD) is used by 70% of the e-retail activities.

● Here, f = Number of e-retail activities using COD and n =


Total number of e-retail activities.
● The relative frequency of e-retail activities using COD =
● Compute this relative frequency for 50, 100,.. e-retail
activities.
● Plot the relative frequency against the number of e-retail
activities.
Statistical Regularity

● Probability to be seen as long-run relative frequency and


for n trials of a study.
● If f is the frequency of an event A, then probability of the
occurrence of the event A is the limiting value of f/n.
● For any finite value of the number of trials (or replications),
f/n is an estimate of the true (unknown) probability.
Some Concepts

● Experiments: Process that generates defined experimental


outcomes or Events (Sample Points).

● Sample Space: Collection of all possible experimental outcomes.


Visualizing Events

● Contingency Tables

● Tree Diagrams
Basic Rules of Probability
● Probability must lie between 0% and 100%.
● Total probability (of all possible outcomes) must be 100%(or
1).
● Probability of an event happening = 100% − Probability of
non-occurrence of outcomes.

Example: In a lottery, two tickets are drawn at random from the


following box

● What is the chance of getting 2 in the first draw?


● What is the chance of getting 5 in the first draw?
● What is the chance of getting 2 in the second draw and 5 in the
first?
Examples: Tree Diagram
Depends on whether we draw from the box
● With replacement: The ticket obtained in the first draw is replaced
back into the box before the second draw

● Without replacement: The ticket obtained in the first draw is NOT


replaced back into the box before the second draw.

and calculate the joint probability using Tree Diagram.

Important Notes:
● In the draw WITH replacement, the second draw DOES NOT depend
on the outcome of the first draw.
● In the draw WITHOUT replacement, the second draw DOES depend
on the outcome of the first draw.
Conditional Probability
● Conditional Probability is the probability of an event given that
another event has already occurred. The notation used here is:
Probability of event A given B has occurred: P(A|B).
P(A and B)
P(A|B) =
P(B)
Refer to the Ace example:

● P(Red Card given that it is an Ace) = ?


● P(Ace given that the drawn card is an Ace) =?
Independent Events

● Two events are said to be independent when occurrence of


one has no effect on the probability of the other and vice
versa. If two events A and B are independent then P (A|B)
= P (A).

● Many basic processes lead to independent events. E.g,


products being defective.
Which Are Independent?
● (a) New Zealand win the World Test Championship 2021 and
(b) New Zealand win the World T20 2021.
● (a) Your education and (b) Your income level

● Example: Suppose your company offers the employees two


different health insurance plans and two different dental plans.
Plan A of each type is less expensive but restricts the choice of
providers. Plan B is more expensive but has greater flexibility.
The table below provides a breakdown of 1000 employees by
the type of insurance plans they have chosen. An employee is
randomly selected.
Independent Events

● What is the probability that the employee has Plan B for health
insurance?
● What is the probability that the employee has Plan B for dental
insurance?
● What is the probability that the employee has Plan A for both dental
and health insurance?
● Given that the employee has Plan A for health insurance, what is the
probability that the employee has Plan B for dental insurance?
● Are the two events “Health Plan A” and “Dental Plan B” independent?
Mutually Exclusive Events
● Two events are mutually exclusive if they can not
occur at the same time. Which are mutually exclusive?
● Agriculture: A crop can either be drought-
resistant or flood resistant.
● HR: Suppose a company is considering hiring
only one person for a specialist job. The
company can either hire one regular employee
or a contractual employee, not both.
Mutually Exclusive Events
● Addition Rule: If two events A and B are mutually exclusive,
then
P(A or B)=P(A)+P(B)
Otherwise,
P(A or B)=P(A)+P(B) - P(A and B)
Example: Suppose a credit card company received an
application from Kishan to increase his credit limit from Rs.
65000 to Rs. 1 Lakh. The credit card analyst at the company
profiled Kishan based on his past history and income level and
inferred that credit limit increase applications of 30% of
customers having a profile similar to Kishan’s were rejected.
Only 10% of such customers’ applications were accepted. Rest
were provided with a Rs. 5000 increase in credit limit. What is
the probability that Kishan’s credit limit will be increased by the
bank?
Multiplication Rules
● Multiplication Rule: If two events A and B are independent,
then
P(A and B)=P(A)P(B)
Otherwise,
P(A and B)=P(A)P(B|A)

Question: Your stockbroker informs you that if the stock


market reaches the 10500 point level by January, there is a
70% probability that Tubeless Electronics will go up in value.
Your own feeling is that there is only a 40% chance of the
market reaching 10,500 by January. What is the probability
that both the stock market will reach 10,500 points, and the
price of Tubeless will go up in value?

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