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Chapter 06 - Probability Theory

Department of Decision Sciences
Faculty of Management Studies and Commerce
University of Sri Jayewardenepura
 CHAPTER – 6: Probability Theory

◼ Chapter Objectives:
◼ From this chapter, it is expected to;
• Introduce the basic Concepts and Terms used in Probability Theory.
• Define the Probability Approaches.
• Explain Probability Rules, Joint and Marginal Probability, Conditional Probability,
Multiplicative Rule, and Independence of Events to Solve the Probability Problems.
• Explain the concepts of Total Probability Law, Tree Diagrams and Bayes’ Theorem to solve
the Probability Problems.

◼ Learning outcomes:
◼ After learning the content of this chapter, the students should be able to;
 Explain basic Concepts, Terms and Probability Approaches used in probability theory
 Solve the Probability Problems using Probability Rules, Joint and Marginal Probability,
Conditional probability, Multiplicative Rule and Independence of Events.
2  Apply the concepts of Total Probability Law, Tree Diagram and Bayes’ Theorem to Solve the
Probability Problems.
What is meant by probability?

◼ A numerical measure of uncertainty

◼ Probability = 0 ; impossibility
◼ Probability = 1 ; certainty
◼ 0 < probability < 1; various grades of uncertainty

Examples…
Examples:

◼ There is a 30% chance that this job will not be finished in

time.
◼ There is every likelihood that the business will make a
profit next year.
◼ Nine times out of ten he arrives late for his appointments.
◼ There is no possibility of delivering the goods before
Tuesday.
4
Random Experiment
◼ Any repeatable process with outcomes.

◼ Outcomes can not be predicted with certainty.

Example 6.1
 Throwing a die
 Tossing of a coin
 Inspection of an item to determine whether it is
defective or non defective.
Sample Space and Sample Points
◼ Set of all possible outcomes of a random
experiment.
◼ Denoted by S.

Examples 6.2
◼ In a throwing of a die, the sample space is,
S = {1,2,3,4,5,6}
 6 possible outcomes.
 6 sample points
Sample Space and Sample Points ….
Additional Example
◼ in throwing of two dice the sample space is,
S = {(1, 1), (1, 2), (1, 3), (1, 4), (1, 5), (1, 6), (2,1),
(2, 2), (2, 3), (2, 4), (2, 5), (2, 6), (3, 1), (3, 2),
(3, 3), (3, 4), (3, 5), (3, 6), (4, 1), (4, 2), (4, 3),
(4, 4), (4, 5), (4, 6), (5, 1), (5, 2), (5, 3), (5, 4),
(5, 5), (5, 6), (6, 1), (6, 2), (6, 3), (6, 4), (6, 5),
(6, 6)}
 36 possible outcomes.
 36 sample points.
Event

◼ Any collection of outcomes of an experiment.

◼ Any subset of the sample space.

Example 6.3
Consider the above Example 6.2. If A = Getting a number less than 3
Then,
A = {1, 2}
Event….
Additional Example
◼ Consider throwing of two dice and A, B, C are
the three events defined as follows.
A = the sum of the numbers shown by two dice is odd.
B = the sum of the numbers of the two dice is 7.
C = Two dice has the same number.
Then,
A = {(1,2), (1,4), (1,6), (2,1)…(6,5)}
B = {(1,6), (2,5), (3,4), (4,3), (5,2), (6,1)}
C = {(1,1), (2,2), (3,3), (4,4), (5,5), (6,6)}
Rules of Event Operations
(a).Intersection of Events

◼ Another event.
◼ Contains all such elements that are common to all
‘m’ events.

A B

A  B = {x / x  A and x  B}

 A B
(b). union of two events A and B

◼ Another event.
◼ Contains all elements which belongs to ‘A’ or ‘B’
or both or to both.

A  B = {x / x  A or x  B} A B

A B
(c).difference of 2 events
◼ Another event denoted by ‘A B’
◼ Consists of elements of ‘A’ which does not
belong to ‘B’

A B = {x / x  A and x B} A B

A B
(d). complement of an event ‘A’

◼ Another event denoted by A1.

◼ Which consists all the elements of ‘S’ that are
not elements of ‘A’.
A1

A
Example 6.4
S = {1, 2, 3, 4, 5, 6} A = {1,3,5} B = {2,4,6}
C = {1,2,6}

Find
i. A  B
ii. A  B
iii. A B
iv. A
Collectively Exhaustive Events

◼ . A1, A2........An are events of sample space ‘S’

◼ if A1  A2  ...  An = S

A1 ., A2 .... An are collectively exhaustive events

Collectively exhaustive events…
Example 6.5

S = {1, 2, 3, 4, 5, 6}
A = {1, 3, 5}
B = {2, 4, 6}
C = {1, 2, 6}

A  B = S ; A and B are collectively exhaustive

A  C = {1,2,3,5,6}  S ; A and C are not collectively

exhaustive
Mutually exclusive events
(disjoint events)

◼ A1, A2........An are events of sample space ‘S’

◼ If 2 or more of above events can not occur

simultaneously (Ex: A1, A2) in a single trial of an
experiment,

Then, A1, A2 are mutually exclusive events.

A1  A2 = 
Mutually exclusive events…
Example 6.6
(i)
S = {1, 2, 3, 4, 5, 6}
A = {2,4,6}
B = {1,3,4}
C = {3,5}

A B   ; A and B are not mutually exclusive events

AC = ; A and C are mutually exclusive events

Mutually exclusive events…
Additional Example
For the lengths of time that completed job have
taken in a factory, the events ‘on time’ and ‘over 2
days late’ would be mutually exclusive, since if a job
was completed on time it could not possibly be over
two days late as well.
Equally Likely Events
◼ A1, A2........An are events of a random
experiment.

◼ If A1, A2 have the same chance to occur,

A1 and A2 are equally likely events.

Example
Throwing an unbiased die.
- all the six faces are equally likely to come.
Combinations

A combination is a selection of objects in any order.

The number of combinations of n objects taken r at a time
will be denoted by
n!
n
Cr =
r!(n − r )!
Combinations…
Examples 6.8
◼ Use the calculator to find the values of the followings.
 Probability

0 1
Different Approaches to Probability

◼ Classical approach

◼ Relative frequency approach

◼ Subjective approach
 Classical Approach
◼ Consider a random experiment result in ‘n’
mutually exclusive & equally likely outcomes.

◼ Let ‘m’ be the No. of favorable occurrences of

event A.

◼ Pr(A) – Probability of occurrence of event A

Number of favourable cases n( A) m

Pr(A) = = =
Total number of equally likely cases n( S ) n
Classical Approach…
◼ Classical probabilities - prior probabilities

◼ Limited only for experiments whose outcomes

are equally likely.
Classical Approach…
Example 6.9
A coin is tossed twice. What is the probability of getting
i. Two heads?
ii. Two tails?
iii. A head and a tail?
Relative Frequency Approach
◼ Consider a random experiment.

◼ Event A occurs ‘m’ times in ‘n’ repetitions of a

random experiment
m
◼ n - Relative frequency of event ‘A’
m
Pr(A) = Lim
n →
n
Relative Frequency Approach…
◼ Theoretically can be obtained

m
◼ In practice; Pr(A) = ; for large ‘n’
n
◼ Relative frequency probability is known as;
 Posterior probability
 Empirical probability
Relative Frequency Approach…
Example 6.10
A computer shop tracks the daily sales of laptops computers in
the last 25 days. The resulting data is:

Laptops sold 0 1 2 3 4 or more

Number of days 2 10 5 6 2

What is the probability that shop will sell:

i. exactly one laptop on any given day?

ii. less than two laptops on any given day?

iii. more than three laptops on any given day?
Subjective Approach
◼ Probability is assigned to an event by an
individual based on whatever evidence is
available.

◼ These probabilities are based on the knowledge,

past experience, beliefs of the person.

◼ Two people faced with the same evidence could

easily come up with different subjective
probabilities for the same event.
Probability Rules

◼ Rule 01
If  is the empty set; Pr() = 0

◼ Rule 02
If A1 is the complement of an event
Pr( A ) = 1 − Pr( A)
1
Probability rules…
◼ Rule 03
If A and B are any two events
Pr( A \ B ) = Pr( A) − Pr( A  B )

Pr( A  B1 ) = Pr( A) − Pr( A  B)

◼ Rule 04 (addition low of probability)

If A and B are any two events,
Pr( A  B) = Pr( A) + Pr( B) − Pr( A  B)
Probability Rules
Example 6.11
The results of an examination conducted in two parts I and II
for 200 candidates were recorded as follows.
80 have passed in part I; and 60 have passed in part II; and
72 have failed in both part I and Part II. If out of these one
candidate is selected at random, find the following
probabilities using probability rules;
Probability that the candidate has;
a. Passed in both part I and II,
b. Failed only in part I, and
c. Failed only in one of the parts.
Exercises

1. If P (A) = 0.37, P(B) = 0.22, and P(AUB) = 0.43,

find the probability that
I. neither A nor B will occur
II. both A and B will occur
III. Only A will occur
Exercises
2. A box contains 5 red, 4 black and 6 white balls.
i.If a ball is drawn at random, find the probability that the ball is,
a. White
b. Black

ii. If three balls are drawn at random, find the probabilities that,
a. All are white
b. Two are black and one red
c. At least one is white
d. One of each colour
Joint Probability

◼ Probability of joint occurrence of two or more

events.
Example 6.12
Suppose all employees of a company were asked whether they are in favour or
against for hiring a consultant paying a higher salary. Following table gives a
two-way classification of responses of these 100 employees.

In Favour (I) Against (A)

Male (M) 15 45
Female (F) 4 36

If an employee is chosen at random find,

i. Pr(M  I)
ii. Pr(M  A)
iii. Pr(F  I)
iv. Pr(F  A)
Marginal Probability
◼ Probability of one event, ignoring any information about
the other event.

◼ These probabilities show the proportion of observations

that possess any single specific characteristic.

Example 6.13
Consider the Example 6.12 and find the following probabilities.
i. Pr(M)
ii. Pr(A)
Conditional Probability
◼ Let A be any event, where Pr(A)>0.

◼ The probability that an event B occurs subject to

the condition that A has already occurred

◼ Which is denoted by Pr(B / A)

Pr( A  B)
Pr(B / A) =
Pr( A)
Conditional Probability….

Example 6.14
Consider the Example 6.12 and find the following probabilities.
i. Pr(M/I)
ii. Pr(A/F)
Multiplication Rule of Probability
◼ .
Pr( A  B)
Pr(B | A) =
Pr( A)

◼ . Pr( A | B) = Pr( A  B)
Pr(B)
Independence of Two Events

◼ When events A and B have no influence on one

another, then the events A and B are
independent.
Independence of Two Events…
If A and B are independent events,

◼ .Pr( B / A) = Pr( B)

◼ .Pr( A / B ) = Pr( A)

◼ .
Independence of Two Events…
Example 6.15
(i) If P(A) = 0.6, P(B) = 0.3 and P(A U B) = 0.72,

(a). P(A|B)
(b). P(A' U B)
(c). P(A' | B')

State whether A and B are independent.

◼Example 6.16: In an examination 40% of the students are failed in Mathematics, 25%
of the students are failed in Economics and 15% are failed in both Mathematics &
Economics. A student is selected at random.
(i) What is the probability that the student has failed in Mathematics, if it is known that
he has failed Economics?
(ii) What is the probability he has failed only in Mathematics?
(iii) What is the probability he has failed in one of the subjects?
◼Example 6.17: An article made up of three parts A, B & C
manufactured by a company. The probabilities of those components
being defective are respectively 0.03, 0.02 and 0.05. What is the
probability that assemble article will be defective.
◼ Exercises
1. Let A and B be the two possible outcomes of an experiment and
suppose
P(A) = 0.4, P(B) = p, and P(AUB) = 0.8.
Find p such that A and b are independent.
2. In the quality control department, every inspected item is marked as either
good (G) or bad (B). The quality control engineers also determine if the on-
line inspectors accepted the item (A) or rejected it (R). In order to see whether
a trainee is doing an acceptable job as a product inspector, the trainee is told
to inspect a shipment of 1000 items. Supervisor then carefully inspects the
items. Suppose that the supervisor determines that 800 of the items are good
and 200 are defective. If the trainee rejects 40 of the good items and accept 6
of the defective items, find the following probabilities

i. P(G) ii. P(B) iii. P(R/G) iv. P(R/B) v. P(G/R) vi. P(G/A) vii. P(A) viii.
P(R)
Exercises…

3. A manager has two assistants, and he bases his decisions on

information, supplied independently by each of them. The
probability that he makes a mistake in his thinking is 0.05.
The probability that an assistant gives wrong information is
0.2. Assuming that the mistakes made by the manger are
independent of the information given by the assistants, find
the probability that he reaches a wrong decision.
4. A mathematical problem is given to four students A, B, C, and
D whose chance of solving it are 1/3, 2/5, 1/2, and 2/3
respectively. If all of them try independently, find the
probability that the problem will be solved.
Total Probability Law
◼ Let A1, A2, A3, …An are mutually exclusive and
exhaustive events.
A1 A2 Ai

◼ For all Ai ≥ 0 B An

◼ Let B is any random event.

n
Pr(B) =  Pr( Ai ). Pr (B | Ai )
i =1
Total Probability Law…
Example 6.18
Three boxes B1, B2 and B3 contain light bulbs. B1 contains 15 bulbs of which 3 are
defective, B2 contain 8 bulbs of which 1 is defective and B3 contains 12 bulbs of which
2 are defective. A bulb is drowning at random from any one box. What is the
probability that the bulb is defective?
Total Probability Law…

Example 6.18 (ii)

Three machines A, B, and C produced 20%, 50%, and 30% of the total number of items of a
factory. The defective percentages of output of these machines are 4%, 2%, and 3%. If an item
is selected at random, find the probability that the item is defective.
Tree Diagrams
◼ This is for experiments with multiple stages.

◼ This graphically shows the sample space.

◼ Each branch – possible outcome.

Tree Diagrams…

Example 6.19
Consider the example 1 given under the total probability
law. In this example there are two stages in the
experiment, first, the selecting a box, then drawing a
bulb which is either Defective (D) or Non-Defective
(ND). Tree diagram for this problem is shown below.
Tree Diagrams…
Stage I Stage II
Tree Diagrams…
Example 6.20:
2 1
A coin, weighted so that Pr(H ) = andPr(T ) =
is
3 3
tossed. If the head appears, then a number is
selected at random from the numbers from 1 to 9; if
the tail appears, then a number is selected at
random from the numbers 1 to 5.

Find the probability that an even number is selected.

 Bayes’ Theorem
◼ Let A1, A2, A3, …An are mutually exclusive
events whose union is the sample space;
A1  A2  .....  An = S

◼ Let B is any random event ; Pr(B) ≠ 0

P( B | Ai ) P( Ai )
P( Ai | B) =
P( B)

P( B | Ai ) P( Ai )
Pr( Ai / B) =
P( A1 ) P( B | A1 ) + P( B | A2 ) P( A2 ) + .... + P( A | B) P( An )
Bayes’ Theorem…
◼ Example 6.21: Three boxes B1, B2 and B3 contain light
bulbs. B1 contains 15 bulbs of which 3 are defective, B2
contain 8 bulbs of which 1 is defective and B3 contains 12
bulbs of which 2 are defective. If a randomly selected bulb
is defective, determine the probability that it has been
chosen from the second box (B2).
Exercises
1. Managers for two new branches of a bank are to be selected from a group
of eight candidates: five are male and three are female. The personnel
manager, who will make the choices, considers all equally competent
candidates and decides to choose two at random from the group. What is
the probability that;
(i). one person of each sex is selected for the two branches?
(ii). both are female?
(iii). the manager of branch A is male and the manager of branch B is
female
(iv)Draw a tree diagram for the choices of each branch and use it to
verify your results for the previous questions.
Exercises
2. After the production of machine components, they are given a
quality grade of A, B or C. Quality grade A was given to 70% of
the components, B grade to 18% of the components and C grade
to 12% of the components. However, it was noticed that 2% of
the A grade components failed to function properly. Likewise,
10% of B grade components failed and 18% of C grade
components failed. If a randomly selected component failed to
function properly, determine the probability that it had received a
grade B.
Exercises

3. Two groups of candidates are competing for the

position of the board of Directors of a company. The
probabilities that the first and the second groups will win
are 0.6 and 0.4 respectively. If the first group wins, the
probability of introducing a new product is 0.4 and
corresponding probability if the second group wins is
0.75.

(i) What is the probability that the new product will be

introduced?
(ii) lf the product was introduced, what is the probability
that the first group won?
Exercises

4. The probability that a reader of a sports magazine is a male given that the reader is at
least 35 years old is 0.30. The probability that a reader is male, given that the reader
is under 35 years is 0.65. If 75% of the readers are under 35 years ;

i. Find the probability that a randomly chosen reader is a male.

ii. Find the probability that a randomly chosen reader is under 35 years, if it is given
that the reader is a female.
Summary
▪ Basic Concepts and Terms used in
probability theory
▪ Different approaches for probability
▪ Basic probability rules
▪ Joint and marginal probability
▪ Conditional probability
▪ Total probability Law
▪ Tree Diagram
▪ Bayes’ Theorem