Shri Vaishnav Vidyapeeth Vishwavidyalaya

Institute of Management ,Indore

Session 2021 – 2023
Semester Assignment (MBA 1st semester )
Group Presentation
Subject : - Operation Research
Topic :- Probability calculation

Group Members :- Guided by :-

Shivangi Asthana Dr Vinayak Vishwakarma
Monika Malviya
Deeksha Pingle
Aditya Jhade
Rahul Singh Khinchi
 What is probability?
• Probability is the way of expressing knowledge of belief that an
event will occur on chance
• The idea of probabilityis based on observation. Probability
describes what happens over many trials
• Probability provides the basis for all statistical inference by
allowing the experimenter to assess the chance of various
outcomes. It is fundamental in analyzing decision-making
problems involving incomplete information. Both Operation
research tools simulation and decision theory s depend heavily on
probability theory
• Probability is the measure of how likely it is the some event will occur,
a number expressing the ratio of favorable cases possible

For example the chance of a coin landing on heads is 50% this is

because a coin has two sides so there is a 50% chance that the coin will
land on heads and 50% that a coin will land on tails.

Probability (Pr) of an event = Number of times the event occurs

Number of times the situation is repeated
 Probability –general rules

• Probability is a number between 0 and 1

• The sum of the Probabilities of all possible outcomes in a sample space is 1
• The probability that an event does not occur is 1 minus the probability that
it does occur also called complement of A
• Events are independent if the outcomes of one event does not influence the
outcome of any other event
• Events are mutually exclusive if they cannot occur together
• Addition rule : P(A or B) = P(A) + P(B) – P(A and B)
 Probability Line
• Sometimes you can measure a probability with a number like “ 10% chance
rain”, or you can use words such as impossible, unlikely , possible, even
chance, likely and certain.
• Example: it is unlikely to rain tomorrow
 Some common terms related to probability

• Experiment: Is a situation involving chance or probability that leads to

results called outcomes.
• Outcome: A possible result of a random experiment.
• Equally likely outcomes: All outcomes with equal probability.
 Types of events
• Simple Event : If an event has only one sample point in sample
space; it is called a simple-or elementary event. it has a single
outcome. If we consider a example of tossing a coin: we get one
outcome that is a head or a tail.
• Compound Event : If an event has more than One Sample point; it
is called compound event. it involves the probability of more than
one outcome. Another way to view compound events is as a
combination of two or more simple events. Consider the
probability of finding an even number less than 5. We have a
combination of two simple events: finding an even number, and
finding a number that is less than 5.
 Probability tree

• A probability tree is a picture indicating probabilities and some

conditional probabilities for combinations of two or more events
Theorems of probability
Additional theorem
• Addition theory id used to assess the probability that any of a set
of possible events will occur (e.g., A or B or C). The simplest form
is the addition law for mutually exclusive events (events that
cannot
occur simultaneously), which is Pr [A or B or C] = Pr[A] + Pr[B]
+ Pr[C]

When events are not mutually exclusive, joint probability (the

probability that both events might occur simultaneously) must be
subtracted from the sum of the probabilities that each individual
event will occur to avoid double counting of possibilities
Pr[A or B] = Pr[A] + Pr[B] - Pr[A and B]
Example : What is the probability of getting a 2 or a 5 when a die is rolled?

Solution:

Taking the individual probabilities of each number, getting a 2 is 1/6 and so

is getting a 5.

Applying the formula of compound probability,

Probability of getting a 2 or a 5,

P(2 or 5) = P(2) + P(5) – P(2 and 5)

==> 1/6 + 1/6 – 0

==> 2/6 = 1/3.

 Multiplication Theorem
• Multiplication laws are used to look at the probability that more than one of a
set of possible events will occur (e.g., both A and B). The simplest
multiplication law applies to situations where the events operate
independently, that is, they don’t have any effect on each other . An example
is the probability of drawing an ace of hearts.
Pr[A and B] = Pr[A] x Pr[B]
• Example : Say, a coin is tossed twice. What is the probability of getting two
consecutive tails ?
Probability of getting a tail in one toss = 1/2
The coin is tossed twice. So 1/2 * 1/2 = 1/4 is the answer.
Bayes' Theorem
• a theorem describing how the conditional probability of each of a
set of possible causes for a given observed outcome can be
computed from knowledge of the probability of each cause and
the conditional probability of the outcome of each cause.
You might be interested in finding out a patient’s probability of having liver
disease if they are an alcoholic. “Being an alcoholic” is the test (kind of like a
litmus test) for liver disease.

A could mean the event “Patient has liver disease.” Past data tells you that 10%
of patients entering your clinic have liver disease. P(A) = 0.10.
B could mean the litmus test that “Patient is an alcoholic.” Five percent of the
clinic’s patients are alcoholics. P(B) = 0.05.
You might also know that among those patients diagnosed with liver disease,
7% are alcoholics. This is your B|A: the probability that a patient is alcoholic,
given that they have liver disease, is 7%.

Bayes’ theorem tells you:

P(A|B) = (0.07 * 0.1)/0.05 = 0.14
 Applications of probability

• Applications of probability in analysis.

• Point processes, random sets, and other spatial models.
• Branching processes and other models of population growth.
• Genetics and other stochastic models in biology.
• Information theory and signal processing
• Communication networks
• Stochastic models in operations research.
 Probability theory is widely used in the area of studies such as
statistics, finance, gambling artificial intelligence, machine learning,
computer science, game theory, and philosophy.
THANK YOU