Faculty Introduction

 Name/Qualification/Experience: Tohid Kachwala, B.E.(Mechanical),

MAM, PhD (Management), Industry 1984 - 1997, Teaching – Part Time:

1992 - 1997, Full Time: 1997 onwards (Teaching at NMIMS since 1992)

 Present Status: Professor of Operations & Data Sciences at SBM,

NMIMS University (8th Floor, SBM Faculty Area – Cabin Number: E851)

 Email: [email protected]

 Subjects: – Statistical Analysis (Trim I), Optimizing Models (Trim II),

Operations & Supply Chain Management (Trim III), Modeling for

Decision Making (Trim V)

 Probability &
Probability Distribution

Dr. T. T. Kachwala
Definition of Probability

The Probability of a given event is an expression of

likelihood of occurrence of an event in an Experiment.

Event is an outcome of an Experiment.

Experiment is an activity that generates the outcome.

Definition of Probability

In theory of Probability, we use the term “Random Experiment” because the

outcome is random.

Sample Space is a set corresponding to all the possible outcomes of an

experiment. For example S = (H,T) for a game of tossing a coin.

Event is a subset of Sample Space; for example event H in a game of tossing a

coin.

There are different type of Events one encounters in theory of Probability; for
example mutually exclusive events, independent events, dependent events,
equally likely events, & collectively exhaustive events.
Mutually Exclusive Events
Two events are said to be mutually exclusive or disjoint when both cannot
happen simultaneously in a single trial. In other words, the happening of
one precludes the happening of another and vice versa.
Examples; (i) if a single coin is tossed either head can be up or tail can be
up, both cannot be up at the same time, (ii) a person may be either alive or
dead at a point of time; he cannot be both alive as well as dead at the
same time, (iii) when a die is tossed any of the six faces may be up; the
different cases are thus mutually exclusive because no two faces can be
uppermost at the same time.
Symbolically, if A and B are mutually exclusive events, then P(AB) = 0.
Independent Events

Two or more events are said to be independent when the

outcome of one does not affect, and is not affected by the
other.
Examples; (i) if a coin were tossed twice, the result of the
second throw would in no way be affected by the result of the
first throw, (ii) the results obtained by throwing a die are
independent of the results obtained by drawing an ace from a
pack of cards.
Dependent Events

Dependent events are those in which the occurrence or non-

occurrence of one event in any one trial affects the probability of
other events in other trial.
Examples; (i) if a card is drawn from a pack of playing cards and is
not replaced, this will alter the probability that the second card
drawn is, say an ace. (ii) the probability of drawing a queen from a
pack of 52 cards is 4/52. But if the card drawn (queen) is not
replaced in the pack, the probability of drawing again a queen is
3/51 (Because, the pack now contains only 51 cards out of which
there are 3 queens).
Equally Likely Events

Events are said to be equally likely when one does not occur
more often than the others.

Example; if an unbiased coin or die is thrown, each face may

be expected to be observed approximately the same number
of times in the long run.
Collectively Exhaustive Events

Two events A and B are collectively exhaustive if between

them they cover all the possible outcomes of an experiment.

Example; in a game of tossing a coin, events head and tail are

collectively exhaustive.
Classical Theory of Probability

p = Number of favorable cases

Total number of equally likely cases

P (A) = p = a
n

P( ) =A q = 1 – p

P (A) + P ( ) =A1

p+q=1
 Relative Frequency Theory of Probability

a
n
P (A) = p =

It defines probability as the observed relative frequency of an

event in a very large number of trials.
 Axiomatic Theory of Probability

Axiom 1
P(S) = 1
p= 1 

The probability of a Sample Space = 1 i.e. the summation of the

probabilities of all the possible outcomes = 1

Axiom 2 – (Probability Scale)

0 ≤ P (A) ≤ 1

The probability of an event is any value between 0 & 1. If the value is

zero, it means the event is impossible. If the value is one, it means the
event is certain to occur. The values between 0 & 1 signify the various
levels of uncertainty. The larger the value the more certain the occurrence
of the event.
Addition Rule

Case 1 : (Mutually Exclusive Events)

P (A or B) = P (A) + P (B)

Case 2 : (When Two Events Are Not Mutually Exclusive)

P (A or B) = P (A) + P (B) - P (A and B)
Multiplication Rule

Case 1 – (Independent Events)

P (A and B) = P (A) x P (B)

P (A, B and C) = P (A) x P (B) x P (C)

Multiplication Rule
Case 2 (Dependent Events)
P (A and B) = P (A) x P (B/A)
Assuming event ‘A’ is followed by event ‘B’

P (A and B) = P (B) x P (A/B)

Assuming event ‘B’ is followed by event ‘A’

P (ABC) = P (A) x P (B/A) x P (C/AB)

Assuming event ‘A’ is followed by event ‘B’ is
followed by event ‘C’.
Rule of At least One

If we are given ‘n’ independent events A1, A2, A3…..An with

respective probabilities of occurrence as p1, p2, p3….pn, then
the probability of occurrence of at least one of the n events
A1, A2, A3…….An can be determined as follows :
P (happening of at least one of the events)
= 1 – P (happening of none of the events)
Concept of Expectation

If p is the probability of the occurrences of an event in a single trial, then

the expected number of occurrences of that event in n trials is defined as
n*p.

Example; a coin is tossed 100 times. The number of times event head will
occur is 100 x ½ = 50. Thus the expectation may be regarded as the
likely number of successes to occur in n trials.
 Bayes Theorem - Introduction

One of the most interesting applications of the results of the probability

theory involves estimating unknown probabilities and making decisions
on the basis of new (sample) information.
Decision theory is another field of study, which is based on Bayes
theorem. This theorem consists of a method of calculating conditional
probabilities.
The so called ‘Bayesian’ approach to the problem addresses itself to the
question of determining the probability of some event A i given that
another event B has been observed, i.e. determining the value of
P(Ai/B).
 Bayes Theorem - Introduction

Let A1 and A2 be a set of events

which are mutually exclusive and
collectively exhaustive as
indicated in the Venn diagram (i)

Let B be a simple event such

that it intersects with both A1
and A2 as indicated in the Venn
diagram (ii)
Bayes Theorem - Calculation of Posterior (Revised)
probability P(Ai/B)

P(A1) and P(A2) are the prior probabilities (simple probabilities

prior to occurrence of event B).

P(B/A1) is the conditional probability of B given that A1 has

occurred.

P(B/A2) is the conditional probability of B given that A2 has

occurred.

Given the values of P(A1), P(A2), P(B/A1) and P(B/A2) the

following table on the next slide explains the calculations of
P(Ai / B) using Bayes Theorem.
Bayes Theorem - Calculation of Posterior (Revised)
probability P(Ai/B)

Event Prior Conditional Joint Posterior

Probability Probability Probability Probability

(1) (2) (3) (4) = (2) x (3) (5) = (4)  P (B)

A1 P (A1) P (B/A1) P (A1B) P (A1/B)
A2 P (A2) P (B/A2) P(A2B) P(A2/B)
1 P (B) 1
Probability Distributions

Distributions can be classified as observed distribution & theoretical or probability distribution.

Observed distribution are based on actual observation or experimentation.

Theoretical or probability distribution are based on some theoretical formula. They are of two
type : (i) Discrete probability distribution (Binomial distribution & Poisson distribution) & (ii)
Continuous probability distribution (Normal distribution).
Binomial Distribution

Binomial Distribution is applied in applications where there are only two

possible outcomes for example: Tossing a coin, Selection of Candidate,
Inspection of an item etc.

Binomial Distribution can be applied where data is given in terms of

number of items & probability of occurrence of an event (i.e. n & p are
given)
Binomial Distribution

The binomial distribution refers to a sequence of events, which posses the following properties:
1.An experiment is performed under the same conditions for a fixed number of trials, say, n.
2.In each trial, there are only two possible outcomes of the experiment “Success” or “Failure”. The sample space of possible outcomes on each
experimental trial is : S = (Failure, Success)
3.The probability of a success denoted by p remains constant from trial to trial, the probability of a failure denoted by q is equal to 1- p.
4.The trials are independent i.e. the outcomes of any trials do not affect the outcomes on subsequent trials.
Binomial Distribution
P (r) = nCr pr qn-r

P(r) denotes the probability of getting exactly r success

n
Cr is a combination operator i.e. n items selected r at a
time.

n!
n
Cr = (n  r )!*r!

p is the probability of success

q is the probability of failure = 1 – p
r is the number of success
Binomial Distribution

In binomial distribution,

P(r) = n Cr pr qn-r

If p = q, then

P(r) = n Cr pr pn-r

i.e., P(r) = n Cr pn

Example; tossing a coin, p = q = 0.5

Poisson Distribution

Poisson Distribution is a limiting form of Binomial distribution.

If in a Binomial Distribution, n is very large & p is very small,

such that the product ‘np’ is a constant (lambda), then Binomial
distribution reduces to Poisson distribution.
1.

Characteristic of Poisson Distribution

1. Probability that an event occurs is very small.

2. Probability that two or more events occur is so small, that we can assign a zero value.
3. Events are statistically independent, i.e. outcome of one does not affect the outcome of other event.
Normal Distribution

Normal Distribution is a Continuous Probability

Distribution.

Graphically it is represented in the form of a uniform

symmetrical bell shaped curve popularly referred as Normal
Curve.

Normal Curve is asymptotic and is defined by a theoretical

formula explained on the next slide.
 Normal Distribution

2
1 -x
y * e 2 2
 2π
x
y

μ X

Where y = the computed height of an ordinate at a distance of x from the mean.

σ = standard deviation of the given normal distribution.
π = the constant (3.1416)
e = the constant 2.71828 (the base of the system of natural logarithm).
x = (X – μ), i..e, x is the stated value of the variable expressed as a
deviation from the mean
 Normal Distribution
The following are the important properties of the normal curve and
the normal distribution:
1. The normal curve is symmetrical about the mean (Skewness = 0).
If the curve were folded along its vertical axis, the two halves would
coincide. The number of cases below the mean in a normal
distribution is equal to the number of cases above the mean, which
makes the mean and median coincide. The height of the curve for a
positive deviation of 3 units is the same as the height of the curve for
negative deviation of 3 units.
2. The height of the normal curve is at its maximum at the mean.
Hence the mean and mode of the normal distribution coincide. Thus
for a normal distribution mean, median and mode are all equal.
 Normal Distribution

3. There is one maximum point of the normal curve, which occurs at the
mean. The height of the curve declines as we go in either direction from the
mean. The curve approaches nearer and nearer to the base but it never
touches it. i.e. the curve is asymptotic to the base on either side. Hence its
range is unlimited or infinite in both directions.

4. Since there is only one maximum point, the normal curve is unimodal,
i.e. it has only one mode.
 Normal Distribution

σ= 2

σ=5

Larger the value of standard deviation ‘σ’ for same mean μ

more spread the normal distribution
Standard Normal Distributions

In application problems, we are concerned with the area

under the curve. To facilitate the procedure of obtaining
the area under the curve, we define the standard normal
curve by standardizing the random variable X.
Standardizing the Random Variable ‘X’

X-μ
z
σ

This transformation from X to z is named as z

transformation and has the effect of reducing X to units in
terms of standard deviation. The utility of this
transformation can be observed in the solved problems for
Normal Distribution.
Standard Normal Distributions

Once we obtain the Standard Normal Variable z, we can use a

Standard Normal Table to obtain the area between an ordinate
and centre.

The total area under the standard normal curve is equal to one.

Total Area = 1

μ
It also means that the summation of probabilities of all the
possible outcomes is equal to one.
Since the area is symmetric, the area on either side of the centre
is equal to 0.5

Area to the Left of Area to the Right of

the Centre = 0.5 the Centre = 0.5

The Standard Normal Table gives the value of ‘a’ for different
values of ‘z’ as explained in the next slide.
Standard Normal Table

0 z

Area between 0 and z

……Contd.
 Standard Normal Table

Z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09
0.0 0.0000 0.040 0.0080 0.0120 0.0160 0.0199 0.0239 0.0279 0.0319 0.0359
0.1 0.0398 0.0438 0.0478 0.0517 0.0557 0.0596 0.0636 0.0675 0.0714 0.0753
0.2 0.0793 0.0832 0.0871 0.0910 0.0948 0.0987 0.1026 0.1064 0.1103 0.1141
0.3 0.1179 0.1217 0.1255 0.1293 0.1331 0.1368 0.1406 0.1443 0.1480 0.1517
0.4 0.1554 0.1591 0.1628 0.1664 0.1700 0.1736 0.1772 0.1808 0.1844 0.1879
0.5 0.1915 0.1950 0.1985 0.3019 0.2054 0.2088 0.2123 0.2157 0.2190 0.224
0.6 0.2257 0.2291 0.2324 0.2357 0.2389 0.2422 0.2454 0.2486 0.2517 0.2549
0.7 0.2580 0.2611 0.2642 0.2673 0.2704 0.2734 0.2764 0.2794 0.2823 0.2852
0.8 0.2881 0.2910 0.2939 0.2967 0.2995 0.3023 0.3051 0.3078 0.3106 0.3133
0.9 0.3159 0.3186 0.3212 0.3238 0.3264 0.3289 0.3315 0.3340 0.3365 0.3389
1.0 0.3413 0.3438 0.3461 0.3485 0.3508 0.3531 0.3554 0.3577 0.3599 0.3621
1.1 0.3643 0.3665 0.3686 0.3708 0.3729 0.3749 0.3770 0.3790 0.3810 0.3830
1.2 0.3849 0.3869 0.3888 0.3907 0.3925 0.3944 0.3962 0.3980 0.3997 0.4015
1.3 0.4032 0.4049 0.4066 0.4082 0.4099 0.4115 0.4131 0.4147 0.4162 0.4177
1.4 0.4192 0.4207 0.4222 0.4236 0.4251 0.4265 0.4279 0.4292 0.4306 0.4319
1.5 0.4332 0.4345 0.4357 0.4370 0.4382 0.4394 0.4406 0.4418 0.4429 0.4441
 Standard Normal Table

Z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09
1.6 0.4452 0.4463 0.4474 0.4484 0.4495 0.4505 0.4515 0.4525 0.4535 0.4545.
1.7 0.4554 0.4564 0.4573 0.4582 0.4591 0.4599 0.4608 0.4616 0.4625 0.4633
1.8 0.4641 0.4649 0.4656 0.4664 0.4671 0.4678 0.4686 0.4693 0.4699 0.4706
1.9 0.4713 0.4719 0.4726 0.4732 0.4738 0.4744 0.4750 0.4756 0.4761 0.4767
2.0 0.4772 0.4778 0.4783 0.4788 0.4793 0.4798 0.4803 0.4808 0.4812 0.4817
2.1 0.4821 0.4826 0.4830 0.4834 0.4838 0.4842 0.4846 0.4850 0.4854 0.4857
2.2 0.4861 0.4864 04868 04871 0.4875 0.4878 0.4881 0.4884 0.4887 0.4890
2.3 0.4893 0.4896 0.4898 0.4901 0.4904 0.4906 0.4909 0.4911 0.4913 0.4916
2.4 0.4918 0.4920 0.4922 0.4925 0.4927 0.4929 0.4931 0.4932 0.4934 0.4936
2.5 0.4938 0.4940 0.4941 0.4943 0.4945 0.4946 0.4948 0.4949 0.4951 0.4952
2.6 0.4953 0.4955 0.4956 0.4957 0.4959 0.4960 0.4961 0.4962 0.4963 0.4964
2.7 0.4965 0.4966 0.4967 0.4968 0.4969 0.4970 0.4971 0.4972 0.4973 0.4974
2.8 0.4974 0.4975 0.4976 0.4977 0.4977 0.4978 0.4979 0.4979 0.4980 0.4981
2.9 0.4981 0.4982 0.4982 0.4984 0.4984 0.4984 0.4985 0.4985 0.4986 0.4986
3.0 0.4987 0.4987 0.4987 0.4988 0.4988 0.4989 0.4989 0.4989 0.4990 0.4990
 Standard Normal Table

The area under the normal curve is distributed as follows:

a) Mean ± 1σ, covers 68.26% area; 34.13% area will
lie on either side of the mean.

34.13% 34.13%

-3 S.D. -2 S.D. -1 S.D. 0 +1 S.D. +2 S.D. +3 S.D.

Mean
 Standard Normal Table

b) Mean ± 2σ, covers 95.44% area.

47.72% 47.72%

-3 S.D. -2 S.D. 0 +2 S.D. +3 S.D.

Mean
 Standard Normal Table

c) Mean ± 3σ, covers 99.74% area.

49.87% 49.87%

-3 S.D. 0 +3 S.D.

Mean
The area under the normal curve is
distributed as follows:
Normal Distribution as an approximation of
Binomial Distribution

Statisticians recommend that in estimation of Proportion of success, n be

large enough for both np and nq to be at least 5 when you use Normal
Distribution as a substitute for the Binomial Distribution.

The following is the suggested procedure:

1. Mean μ = n p

2. Standard Deviation   npq

3. Cumulative correction factor (Xmin – 0.5, Xmax + 0.5)

46