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Bayes Theorem PPT 1

The document discusses Bayes' theorem, including its definition, formula, and derivation. It provides two examples applying Bayes' theorem to calculate conditional probabilities.

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1K views9 pages

Bayes Theorem PPT 1

The document discusses Bayes' theorem, including its definition, formula, and derivation. It provides two examples applying Bayes' theorem to calculate conditional probabilities.

Uploaded by

23pgmba33104
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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SHRI VISHWAKARMA

SKILL UNIVERSITY

• Submitted to : Dr. Dalip Raina


• Submitted by: Sangeeta
• Course : MBA (General)
• Roll no. : 23PGMBA33123
BAYE'S THEOREM
INDEX

• Introduction
• Baye's theorem formula
• Statement
• Derivation of baye's theorem
• examples
INTRODUCTION
• Developed by reverend Thomas Bayes (1702-1761).
• Bayesian decision theory's purpose is to develop the solution of
problems which involves decision making under uncertainty.
• Shows the relation between one conditional probability and its inverse.
• It allows revision of the original (prior) probability with new information.
• The new estimate of original probabilities of outcomes in view
of additional information is called revised or posterior probabilities.
Definition and formula of
Bayes Theorem

• Bayes theorem describes the probability of


occurrence of an event related to any condition.
It is also considered for the case of conditional
probability.
Bayes Theorem Derivation

• Bayes Theorem can be derived for events and random variables separately using the definition of
conditional probability and density.
• From the definition of conditional probability, Bayes theorem can be derived for events as given below:
• P(A|B) = P(A ⋂ B)/ P(B), where P(B) ≠ 0
• P(B|A) = P(B ⋂ A)/ P(A), where P(A) ≠ 0
• Here, the joint probability P(A ⋂ B) of both events A and B being true such that,
• P(B ⋂ A) = P(A ⋂ B)
• P(A ⋂ B) = P(A | B) P(B) = P(B | A) P(A)
• P(A|B) = [P(B|A) P(A)]/ P(B), where P(B) ≠ 0
• This equation, known as Bayes theorem is the basis of statistical inference.
EXAMPLE 2 :A restaurant serves two special dishes, A and B to its customers consisting of 60%
men and 40% women. 80% of men order dish A and the rest B. 70% of women order B and the rest
A. In
what ratio of A to B should the restaurant prepare the two dishes ?
Solution. Let us define the following events :
A : The customer orders for dish ‘A’ ;
B : The customer orders for dish ‘B’
M : The customer is a man ;
W : The customer is a woman.
 We are given :
P (M) = 0·6, P(W) = 0·4 ; P(A | M) = 0·8, P(B | M) = 0·2 ; P(A | W) = 0·3, P(B | W) = 0·7
Since the dish ‘A’ is ordered by men or women, we can write ‘A’ as disjoint union :
A=(A) M) (A) W)
Hence, the probability that the customer orders the dish A is given by :
P(A) = P [ (A ) M )  ( A ) W)] = P(A ) M) + P(A ) W)
= P(M) . P(A | M) + P(W) P(A | W) = 0·6  0·8 + 0·4  0·3 = 0·48 + 0·12 = 0·6
Similarly, the probability that the customer orders for dish B is given by :
P(B) = P(M) . P(B | M) + P(W) . P (B | W) = 0·6  0·2 + 0·4  0·7 = 0·12 + 0·28 = 0·4
Hence, the restaurant should prepare the two dishes A and B in the ratio 0·6 : 0·4 i.e., 3 : 2.
• S.C. Gupta 'Business Statistics'

References : • J.K. Sharma 'Business Statistics'


• Google (Internet)

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