Probability Part 2

Conditional Probability
• The probability of an event given that
another event has occurred is called a
conditional probability.

• The conditional probability of A given B has

already occurred denoted by 𝑃 𝐴 𝐵).

• A conditional probability is computed as

2
follows:

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 Markley Oil Collins Mining

Conditional Probability 10
5
8
–2
0 -
–20 -

Experimental Probability
Outcome

(10,8) 0.20

(10, –2) 0.08

(5, 8) 0.16

(5, –2) 0.26

(0, 8)

(0, –2)
0.10

0.12 3
(–20, 8) 0.02

(–20, –2)
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password-protected website or school-approved learning management system for classroom use.
 • The multiplication law provides a way
to compute the probability of the
intersection of two events.
• The law is written as:

OR
Multiplication
Law

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 Joint
Probabilities

Joint Probability
Collins mining
Collins mining
not Profitable
Table
Markley Oil Profitable (C) (CC) Total
Profitable (M) .36 .34 .70 • Joint probabilities appear in
the body of the table
Not
Profitable .12 .18 .30 • Marginal probabilities appear
(MC) in the margins of the table.
Total .48 .52 1.00

Marginal
5
Probabilities

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 Independent Events
• If the probability of event A is not changed by the existence
of event B, we would say that events A and B and are
independent.
• Two events A and B are independent if:

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 • The multiplication law also can be used as a test
to see if two events are independent.
• The law is written as:

Multiplication
Law for
Independent
Events

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 Suppose that we have two events, A
and B, with P(A) = .50, P(B) = .60,
and P(A∩B) .40.
Quiz a. Find P(A|B).
b. Find P(B| A).
Time c. Are A and B independent? Why or
why not?
Quiz Time
Assume that we have two events, A and B, that are mutually exclusive. Assume
further that we know P(A) = .30 and P(B) =.40.
a. What is P(A∩B)?
b. What is P(A|B)?
c. A student in statistics argues that the concepts of mutually exclusive events
and independent events are really the same, and that if events are mutually
exclusive they must be independent. Do you agree with this statement? Use the
probability information in this problem to justify your answer.
d. What general conclusion would you make about mutually exclusive and
independent events given the results of this problem?
Students taking the Graduate Management Admissions Test (GMAT) were asked about their undergraduate
major and intent to pursue their MBA as a full-time or part-time student. A summary of their responses
follows.

a. Develop a joint probability table for these data and use the table to answer the remaining questions.
b. Which undergraduate major produces the most potential MBA students?
c. If a student intends to attend classes full-time in pursuit of an MBA degree, what is the probability
that the student was an undergraduate engineering major?
d. If a student was an undergraduate business major, what is the probability that the student intends to
attend classes full-time in pursuit of an MBA degree?
e. Let A denote the event that the student intends to attend classes full-time in pursuit of an MBA
degree, and let B denote the event that the student was an undergraduate business major. Are events A
and B independent? Justify your answer.
a. Undergraduate Major
Business Engineeri Other Totals
ng
Intended Enrollment Status Full-Time 0.270 0.151 0.192 0.613
Part-Time 0.115 0.123 0.149 0.387
Totals 0.385 0.274 0.341 1.000

b. P(Business) = 0.385, P(Engineering) = 0.274, and P(Other) = 0.341, so Business is the

undergraduate major that produces the most potential MBA students.
c. P (eng | full time) = .151/.613 = .246
d. P(full time | busi) = .270/.385 = .701
e. For independence, we must have that P(A intersection B) = P(A) *P(B)
from the joint probability table in part (a) of this problem, we have
P(A)=0.613
P(B) = 0.385
So 𝑃(𝐴)𝑃(𝐵)=(.613)(.385)=.236
But P(A int B) = .270
the events are not independent.
Bayes’ Theorem
• Often, we begin probability analysis with initial or prior probabilities.
• Then, from a sample, special report, or a product test we obtain some
additional information.
• Given this information, we calculate revised or posterior probabilities.
• Bayes’ theorem provides the means for revising the prior probabilities.

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 Bayes’ Theorem
consider a manufacturing firm that receives shipments of parts from
two different suppliers. Let A1 denote the event that a part is from
supplier 1 and A2 denote the event that a part is from supplier 2.
Currently, 65% of the parts purchased by the company are from
supplier 1 and the remaining 35% are from supplier 2.

P(A ) = .65 and P(A ) = .35

1 2

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 New Information
P(G |A1)= .98 P(B | A1) = .02
P(G |A2) = .95 P(B | A2) = .05

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 Tree
Diagram

P(A1, G) = P(A1 ∩ G) = P(A1)P(G | A1)

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password-protected website or school-approved learning management system for classroom use.
 Probability
Tree
Diagram

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Question
Suppose now that the parts from the two suppliers are used in the firm’s
manufacturing process and that a machine breaks down because it attempts to
process a bad part. Given the information that the part is bad, what is the
probability that it came from supplier 1 and what is the probability that it came
from supplier 2?
P(A1 | B) and P(A2 | B).

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password-protected website or school-approved learning management system for classroom use.
 P(A1 | B) = .4262 and P(A2 | B) = .5738

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Bayes Theorem
• To find the posterior probability that event Ai will occur given that event B has
occurred, we apply Bayes’ theorem.

• Bayes’ theorem is applicable when the events for which we want to compute
posterior probabilities are mutually exclusive and their union is the entire
sample space.

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password-protected website or school-approved learning management system for classroom use.
 Bayes’ Theorem: Tabular Approach
Step 1:
Prepare the following three columns:
Column 1 - The mutually exclusive events for which posterior probabilities are
desired.
Column 2 - The prior probabilities for the events.
Column 3 - The conditional probabilities of the new information given each event.
Step 2: Prepare the fourth column
Column 4: Compute the joint probabilities for each event and the new information B
by using the multiplication law. Multiply the probabilities in column 2 by the
corresponding conditional probabilities in column 3.

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 Bayes’ Theorem: Tabular
Approach

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 Quiz Time

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 Quiz Time

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End of Chapter 4

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