G. L.

BAJAJ INSTITUTE OF TECHNOLOGY AND MANAGEMENT

DEPARTMENT OF MANAGEMENT STUDIES

BUSINESS STATISTICS & ANALYTICS (BSA)

Dr. Gopal Pathak
Unit-IV (Probability Theory and Distribution)
Probability: Probability is a concept which numerically measures the degree of uncertainty and therefore, of

certainty of the occurrence of events. If an event A can happen in m ways and fail in n ways, all these ways

being equally likely to occur, then the

Number of favourable cases m

Probability of happening of A =
Total numberof mutually exclusive and equally likely cases m + n

n
and the Probability of not happening of A = .
m+n

If the probability of the happening = p and the probability of not happening = q then p + q = 1.

Important Definitions:

(i) Exhaustive Events or Sample Space: The set of all possible outcomes of a single performance of an

experiment is exhaustive events or sample space. Each outcome is called a sample point.

E.g. in case of tossing a coin once, S = (H , T ) is the sample space. Two outcomes Head and Tail constitute

an exhaustive event because no other outcome is possible.

(ii) Mutually Exclusive events: Two events are known as mutually exclusive, when the occurrence of

one of them excludes the occurrence of the other.

e.g. on tossing of a coin, either we get head or tail, but not both.

(iii) Equally Likely Events: Two events are said to be “equally likely”, if one of them cannot be

expected in preference to the other.

E.g. if we draw a card from well-shuffled pack, we may get any card, then the 52 different cases are
 equally likely.

(iv) Independent Event: Two events may be independent, when the actual happening of one does not

influence in any way the probability of the happening of the other.

e.g. the event of getting head on first coin and the event of getting tail on the second coin in a

simultaneous throw of two coins are independent.

(v) Conditional Probability: The probability of happening an event A , such that event B has already

happened, is called the conditional probability of happening of A on the condition that B has already

happened. It is usually denoted by P( A / B ).

Experimental Probability: Experimental probability is calculated by performing an activity, such as on tossing

a coin the number of heads turning up and the number of trials are noted.

Number of Heads turning up

Experimental Probability =
Number of trials

Q. Find the probability of throwing (a) 5 (b) an even number with an ordinary six faced die.

Sol. (a) There are 6 possible ways in which the die can fall and there is only one way of throwing 5.

Number of favourable ways 1

Probability = = .
Total number of equally likely ways 6

(b) Total number of ways of throwing a die = 6 and Number of ways falling 2,4,6 = 3

3 1
Therefore, the required probability = = .
6 2

Q. Find the probability of throwing 9 with two dice.

Sol. Total number of possible ways of throwing two dice = 6 × 6 = 36

Number of ways getting 9 , i.e. (3 + 6), (4 + 5), (5 + 4), (6 + 3) = 4

4 1
Therefore, the required probability = = .
36 9
Q. From a pack of 52 cards , one is drawn at random. Find the probability of getting a king.

Sol. A king can be chosen in 4 ways but a card can be drawn in 52 ways.

4 1
Therefore, the required probability = = .
52 13

Addition Law of Probability:

If p1 , p2 , p3 ,..., pn be separate probabilities of mutually exclusive events, then the probability p that any of

these events will happen is given by

p = p1 + p2 + p3 + ... + pn

Not Mutually Exclusive Events: Consider the case where two events A and B are not mutually exclusive

then the probability of the event that either A or B or both occur is given by

P( A ∪ B) = P( A) + P( B) − P ( A ∩ B)

Q. A bag contains four white and two black balls and a second bag contains three of each colour. A bag is

selected at random, and a ball is then drawn at random from the bag chosen. What is the probability that the ball

drawn is white?

Sol. There are two mutually exclusive cases,

(i) when the first bag is chosen (ii) when the second bag is chosen.

1
Now the chance of choosing the first bag is and if this bag is chosen then the probability of drawing a white
2

4 1 4 1
ball is . Hence the probability of drawing a white ball from first bag = × =
6 2 6 3

1
Similarly, the chance of choosing the second bag is and if this bag is chosen then the probability of drawing
2

3 1 3 1
a white ball is . Hence the probability of drawing a white ball from the second bag = × =
6 2 6 4

Since the events are mutually exclusive, therefore by the addition law of probability,

1 1 7
the required probability = + = .
3 4 12
Q. Three machines, I, II and III manufacture respectively 0.4, 0.5 and 0.1 of the total production. The

percentage of defective items produced by I, II and III is 2, 4 and 1 percent respectively. For an item chosen at

random, what is the probability it is defective?

2 0.8
Sol. The defective items produced by machine I = 0.4 × =
100 100

4 2
The defective items produced by machine II = 0.5 × =
100 100

1 0.1
The defective items produced by machine III = 0.1 × =
100 100

0.8 2 0.1 2.9

The total defective items produced by machine I,II,III = + + = = 0.029.
100 100 100 100

0.029
The required probability = = 0.029
1

Multiplication Law of Probability: If there are two independent events such that their respective probabilities

are known then the probability that both will happen is the product of the probabilities of their happening

respectively.

i.e. P( AB) = P( A) × P( B)

1
Q. The probability that machine A will be performing a usual function in 5 years’ time is , while the
4

1
probability that machine B will still be operating usefully at the end of the same period, is .
3

Find the probability in the following cases that in 5 years time.

(i) Both machines will be performing a usual function.

(ii) Neither will be operating.

(iii) Only machine B will be operating. (iv) At least one of the machines will be operating.

1 1 3 1 1 2
Sol. P ( A operating usefully ) = , so q ( A) = 1 − = , P( B operating usefully ) = , so q ( B) = 1 − =
4 4 4 3 3 3

1 1 1
(i) P( Both A and B will operate usefully ) = P( A) × P( B) =   ×   = .
 4   3  12
 3 2 1
(ii) P( Neither will be operating ) = q ( A) × q ( B) =   ×   = .
4 3 2

1  3 1
(iii) P(Only B will be operating ) = P( B) × q( A) =   ×   = .
3  4 4

1 1
(iv) P( At least one of the machines will be operating ) = 1 − P(none of them operates) = 1 − = .
2 2

Q. There are two groups of subjects one of which consists of 5 science and 3 engineering subjects and the other

consists of 3 science and 5 engineering subjects. An unbiased die is cast. If number 3 or number 5 turns up, a

subject is selected at random from the first group, otherwise the subject is selected at random from the second

group. Find the probability that an engineering subject is selected ultimately.

2 1
Sol. Probability of turning up 3 or 5 = =
6 3

3
Probability of selecting engineering subject from first group =
8

Now the probability of selecting engineering subject from the first group on turning up 3 or 5

1 3 1
=  ×  =
3 8 8

1 2
Probability of not turning up 3 or 5 = 1 − =
3 3

5
Probability of selecting engineering subject from second group =
8

Now the probability of selecting engineering subject from the second group on not turning up 3 or 5

 2 5 5
=  ×  =
 3   8  12

1 5 13
∴ Probability of the selection of engineering subject = + = .
8 12 24

Q. An urn A contains 2 white and 4 black balls. Another urn B contains 5 white and 7 black balls. A ball is

transferred from the urn A to the urn B , then a ball is drawn from urn B . Find the probability that it is white.
Sol. Urn A contains 2 white and 4 black balls.

Urn B contains 5 white and 7 black balls.

Now there are two cases of transferring a ball from A to B .

Case I-When a white ball is transferred from A to B

2 1
P(Transfer of a white ball) = =
2+4 3

After transfer of a white ball, urn B contains 6 white balls and 7 black balls.

P(Drawing a white ball from urn B after transfer)= P(Transfer of a white ball)x P(Drawing a white ball)

 1  6  2
=   =
 3  6 + 7  13

Case II-When a black ball is transferred from A to B

4 2
P(Transfer of a black ball) = =
2+4 3

After transfer of a black ball, urn B contains 5 white balls and 8 black balls.

P(Drawing a white ball from urn B after transfer)= P(Transfer of a black ball)x P(Drawing a white ball)

 2  5  10
=   =
 3  5 + 8  39

2 10 16
∴ Required Probability = + = .
13 39 39

Q. A bag contains 10 white and 15 black balls. Two balls are drawn in succession. What is the probability that

first is white and second is black?

10
Sol. Probability of drawing one white ball = .
25

15
Probability of drawing one black ball without replacement = .
24

 10   15  1
∴ Required probability of drawing first white ball and second black ball =   ×   = .
 25   24  4
Conditional Probability: Let A and B be two events of a sample space S and let P( B) ≠ 0. Then conditional

probability of the event A, given B, has already occurred denoted by P( A / B), is defined by

P( A ∩ B)
P( A / B) = .
P( B)

Baye’s Theorem: If B1 , B2 , B3 ,..., Bn are mutually exclusive events with P(Bi ) ≠ 0, (i = 1,2,3,..., n) of a random

experiment then for any arbitrary event A of the sample space of the above experiment with P ( A) > 0, we have

P(Bi ) P A 
B
P i  = n  Bi 
 A
∑ P(Bi ) P A 
i =1  Bi 

P(B2 ) P A 
 B 
e.g. for n = 3 , P 2  =  B2 
 A  P (B ) P A  + P (B ) P A  + P (B ) P A 
 B    
 B2   B3 
1 2 3
 1

Note: P(B) is the probability of occurrence B . If we are told that event A has already occurred. On knowing

about the event A , P(B) is changed to P B ( A). With the help of Baye’s theorem we can calculate P(B A).
Q. An urn I contains 3 white and 4 red balls and an urn II contains 5 white and 6 red balls. One ball is drawn at

random from one of the urns and is found to be white. Find the probability that it was drawn from urn I.

Sol. Let U1 : the ball is drawn from urn I, U 2 : the ball is drawn from urn II and W : the ball is white.

Now we have to find PU1 

 W

P(U1 )PW 
U
∴ By Baye’s theorem, P 1  =  U1 
 W  P(U )PW  + P(U )PW 
1  U  2  U 
 1  2

1
Q Two urns are equally likely to be selected, ∴ P(U 1 ) = P(U 2 ) =
2

3
PW  = P(A white ball is drawn from urn I) =
 U1  7
 5
PW  = P(A white ball is drawn from urn II) =
 U 2 11

1 3
×
 U  2 7 33
∴ P 1
= = .
 W  1 × 3 + 1 × 5 68
2 7 2 11

Q. Three urns contain 6 red , 4 black; 4 red, 6 black; 5 red, 5 black balls respectively. One of the urns is selected

at random and a ball is drawn from it. If the ball drawn is red find the probability that it is drawn from the first

urn.

Sol. Let U1 : the ball is drawn from urn I, U 2 : the ball is drawn from urn II, U 3 : the ball is drawn from urn III

R : the ball is red.

Now we have to find PU1 

 R

P(U1 )P R 
∴ By Baye’s theorem, PU1  =  U1 
 R  P(U )P R  + P(U )P R  + P(U )P R 
1  U  2  U  3  U 
 1  2  3

1
Q Three urns are equally likely to be selected, ∴ P(U1 ) = P(U 2 ) = P(U 3 ) =
3

6
P R  = P(A red ball is drawn from urn I) =
 U1  10

4
P R  = P(A red ball is drawn from urn II) =
 U 2 10

5
P R  = P(A red ball is drawn from urn III) =
 U3  10

1 6
×
2
∴ PU1  = 3 10 = .
 R 1× 6 + 1× 4 + 1× 5 5
3 10 3 10 3 10
Q. In a bolt factory, machines A, B and C manufacture respectively 25%, 35% and 40% of the total of their

output 5, 4 and 2 percent are defective bolts. A bolt is drawn at random from the product and is found to be

defective. What is the probability that it was manufactured by machine B ?

Sol. A : bolt is manufactured by machine A ; B : bolt is manufactured by machine B

C : bolt is manufactured by machine C , Given that P ( A) = 0.25 , P ( B ) = 0.35 and P (C ) = 0.40

Probability of drawing a defective bolt manufactured by machine A is P D ( A) = 0.05

Probability of drawing a defective bolt manufactured by machine B is P D ( B ) = 0.04
Probability of drawing a defective bolt manufactured by machine C is P D ( C ) = 0.02
∴ By Baye’s theorem,

P ( B) P D ( )
( D)
P B = B = 0.41
0.35 × 0.04
( )
A ( )
P ( A) P D + P ( B ) P D + P ( C ) P D
B C ( )
0.25 × 0.05 + 0.35 × 0.04 + 0.40 × 0.02
DISTRIBUTION:

Binomial Distribution: Let there be n independent trials in an experiment and let the random variable

X denotes the number of successes in these trials. Let the probability of getting a success in a single trial be

1 . Then the probability distribution of the random variable X ,called

p and that of failure be q , so that p + q =

Binomial distribution is given by

n
P( X= r=
) Cr p r q n − r , =
r 0,1, 2,.., n

Properties of the Binomial Probability Distributions

1. n and p are two parameters of the binomial distribution. As soon as the values of n and p are known, the

binomial distribution is completely determined.

2. The mean of the binomial distribution is np .

3. The standard deviation and the variance of the binomial distribution are (npq ) and (npq ) respectively.

Since q < 1 , therefore np > npq . Thus, the mean of the binomial distribution is always greater than its

variance.

1
4. If p= q= , then the binomial distribution is a symmetrical distribution.
2

5. For p ≠ q, the binomial distribution is a skewed distribution.

6. Binomial distribution is a discrete probability distribution.

Q. A coin is tossed 4 times. If X is the number of heads observed, find the probability distribution of X .

Sol. When a coin is tossed, we have S = { H , T }

1 1
∴ Prob (getting heads) = and Prob (not getting heads) =
2 2

1 1
Here, p = and q =
2 2

Let X be the random variable, denoting the number of heads. In 4 trials, we may get 0 or 1 or 2 or 3 or 4 heads.

So X may assumes the values r = 0,1, 2,3, 4

 0 4 0 4 0 4
4 0 4−0 1 1
4 4! 1 1 4!  1   1  1
∴ P( X =0) =C0 p q =C0     =     =     =
2 2 0!(4 − 0)!  2   2  0!4!  2   2  16

1 3 1 3
1 1 4!  1   1  4! 1 4 × 3! 1 1
P( X =1) =4C1 p1q 4−1 =4C1     =     = × = × =
 2   2  1!(4 − 1)!  2   2  1!3! 16 1!3! 16 4

2 2
4 2 4− 2 4 1 1 3
P( X= 2)
= C2 p q = C2    =
2 2 8

3 1
4 3 4 −3 4 1 1 1
P( X= 3)= C3 p q = C3    =
2 2 4

4 0
4 4 4− 4 4 1 1 1
P( X= 4)
= C4 p q = C4    =
 2   2  16

 0 1 2 3 4 
So, the required probability distribution is given by  1 1 3 1 1

 
 16 4 8 4 16 

= P (0) + P(1) + P (2) = 0.3487 + 0.3874 + 0.1937 = 0.9298

Q. The mean and variance of a binomial distribution are 2.5 and 1.875 respectively. Obtain the binomial

probability distribution.

Sol. Since the mean and variance of the binomial distribution are np and npq respectively.

Thus, np 2.5
= = and npq 1.875

npq 1.875
∴ = =0.75 ⇒ q =0.75 and p =1 − q =1 − 0.75 =0.25
= i.e p 0.25
= & q 0.75
np 2.5

2.5
Q np= 2.5 ⇒ n × 0.25= 2.5 ⇒ n= = 10 i.e. n = 10
0.25

Now with
= n 10,
= p 0.25 &
= q 0.75 , the binomial probability distribution is

10
P( X= r=
) n
Cr p r q n −=
r
Cr (0.25) r (0.75)10− r , =
r 0,1, 2,..,10 where r is the number of success.

Q. Comment on the following statement-

“For a binomial distribution, mean = 8 and variance = 10.”

Sol. We know that the variance of the binomial distribution is always less than its mean. But in the given

statement variance => 8 . Thus, the statement is incorrect because, for a binomial distribution if we
10 mean =

npq 10
consider mean = 8 and variance
= np = 10 then
= npq = = 1.25 ⇒ q = 1.25 > 1
np 8

Since q is the probability of failure which can not exceed 1, the given statement is not correct.

Poisson Probability Distribution: In a random experiment, let p be the probability of occurrence of an event

and let n trials be made in such a way that

(i) p is very small i.e., p → 0

(ii) n is very large i.e., n → ∞

(iii) np is a finite constant equal to m i.e. m = np

Then the probability of occurrence of this event r times is given by Poisson distribution as

e− m mr
P(r ) = where e 2.7183,
= = r 0,1, 2,3,..., n
r!

Properties of the Poisson Probability Distribution:

1. There is only one parameter of the Poisson distribution which is m . Thus, if m is known, the Poisson

probability distribution is completely known. If n & p are known, then m = np .

2. The mean of the Poisson distribution is m .

3. The variance of the Poisson distribution is also m . Thus, the mean and the variance of the Poisson

distribution are the same.

4. Poisson distribution is also a discrete probability distribution.

5. It is a limiting case of binomial probability distribution.

6. With the following three conditions, the binomial distribution tends to the Poisson distribution-

(i) p is small (ii) n is large (iii) np = m (a finite constant)

Q. It is given that 2% of electric bulbs manufactured by a company are defective. Using Poisson distribution,

find the probability that a sample of 200 bulbs will contain (i) no defective bulbs (ii) 2 defective bulbs (iii) at

the most three defective bulbs (iv) at least 3 defective bulbs. Given e −4 = 0.0183 .

2
Sol. Here p = = 0.02 and n = 200 ∴ m = np = 200 × 0.02 = 4 i.e. m = 4
100

Let x be the random variable denoting the number of defective bulbs in the sample, then by Poisson

distribution,

e − m m r e −4 4r
P( = ) P(r=
x r= ) =
r! r!

e −4 40 e −4 ×1 −4
(i) P(no defective bulbs)= P(=
r 0)
= P(0)
= = = e = 0.0183
0! 1

e −4 42 e −4 ×16
(ii) P(2 defective bulbs) =
P(r =
2) ==
P(2) = = 8e −4 =
8 × 0.0183 =
0.1464
2! 2

(iii)P(at most 3 defective bulbs) = P(r ≤ 3) = P(0) or P(1) or P(2) or P(3)

= P(0) + P(1) + P(2) + P (3)

32 −4 71 −4 71
=e −4 + 4e −4 + 8e −4 + e = e = × 0.0183 =0.4331
3 3 3

(iv) P(at least 3 defective bulbs) =P(r ≥ 3) =1 − P(r < 3) =1 − [ P (0) + P (1) + P (2) ]

=1 − e −4 + 4e −4 + 8e −4  =1 − 13 × e −4 =1 − 13 × 0.183 =0.762

Normal Probability Distribution: Normal distribution is a continuous distribution it can be derived from the

binomial distribution in the limiting case when n , the number of trials is very large and p , the probability of

1
success, is very close to . The general equation of the normal distribution
2
2
1  x−µ 
1 − 
σ 
f ( x) = e 2
σ 2π
Where variable x can assume all values from −∞ to + ∞ , µ and σ , called the parameters of the distribution,are

respectively the mean and standard deviation of the distribution and −∞ < µ < ∞, σ > 0 . x is called the normal

variate and f ( x) is called probability density function of the normal distribution.

The graph of the normal distribution is called the normal curve. It is bell shaped and symmetrical about the

mean µ . The two tails of the curve extend to +∞ to − ∞ towards the positive and negative directions of the

x − axis respectively and gradually approaches the x − axis.

Standard form of the Normal Distribution: If X is normal random variable with mean µ and standard

x−µ
deviation σ , then the random variable Z = has normal distribution with mean 0 and standard deviation 1.
σ

The random variable Z is called standardized or standard normal random variable.

The probability density function for the normal distribution in standard form is given by

1 − 12 z 2
f ( z) = e
2π
It is free from any parameter. This helps us to compute the area under normal probability curve by making use

of standard tables.

Properties of the Normal Distribution or Curve:

Some important properties of normal distribution or curve are as under:

1. The curve is symmetrical about the vertical axis through the mean, i.e., if we fold the curve along with

this vertical axis, the two halves of the curve would coincide.

2. As a result of symmetry, the mean, median and mode of the distribution are identical, i.e.

Mean
= Median
= Mode

3. Since there is only one maximum point on the curve, the normal curve is unimodel, i.e., it has only one

mode.

4. µ and σ respectively denote the mean and the S.D. of the distribution. These( µ and σ )are also known

as the two parameters of the distribution.

5. The curve is asymptotic to x - axis, i.e., it becomes closer and closer to x - axis but never actually

touches it.

4
6. The mean deviation = standard deviation.
5

7. The total area under the normal curve above the horizontal axis is 1.0 which is essential for a probability

distribution or a curve.