Outcome 4.

2—
Identify probability
as a numerical
measure of the
likelihood of
occurrence and
distinguish between
the three methods
(classical, relative
frequency,
subjective)
commonly used for
assigning
probabilities.
Introduction to
Probability
BUQU 1230
Esther Tiessen
introduction to probability

Types of Probability
 Types of Probability
introduction to probability

Mathematically
determined
 Types of Probability
introduction to probability

Calculated based
on assumption
that all events in
sample space
are equally likely
 Types of Probability
introduction to probability

Estimation based
on data from past
experience
 Types of Probability
introduction to probability

Little information
available, so
estimation based
on belief about
chance of event
occurring
 Calculating Probability:
Example
A study of 751 business administration
graduates at the University of Toledo revealed
that 383 of the 751 were employed in their
major area of study in college. What is the
introduction to probability

probability that a new business graduate will

be employed in an area of his or her college
major?
 Calculating Probability:
Example
A study of 751 business administration
graduates at the University of Toledo revealed
that 383 of the 751 were employed in their
major area of study in college. What is the
introduction to probability

probability that a new business graduate will

be employed in an area of his or her college
major? number of favourable outcomes
probability of an event =
number of possible outcomes
383
P
751
.51
 Calculating Probability:
Example
A study of 751 business administration
graduates at the University of Toledo revealed
that 383 of the 751 were employed in their
major area of study in college. What is the
introduction to probability

probability that a new business graduate will

be employed in an area of his or her college
major? number of favourable outcomes
probability of an event =
number of possible outcomes
383
P=
751
= 0.51
 Calculating Probability:
Example
A study of 751 business administration
graduates at the University of Toledo revealed
that 383 of the 751 were employed in their
major area of study in college. What is the
introduction to probability

probability that a new business graduate will

be employed in an area of his or her college
major? number of favourable outcomes
probability of an event =
Empirical number of possible outcomes
probability (i.e., 383
P=
Estimation based 751
on data from past = 0.51
experience)
 Calculating Probability:
Example
A selected group of employees of Worldwide
Enterprises is to be surveyed about a new
pension plan. Of the 2000 employees, 120 are
supervisors, 50 are in maintenance, 1,460 are
introduction to probability

in production, 302 are management, and 68

are secretarial. What is the probability that a
randomly selected employee is either a
secretary or in maintenance?
 Calculating Probability:
Example
A selected group of employees of Worldwide
Enterprises is to be surveyed about a new
pension plan. Of the 2000 employees, 120 are
supervisors, 50 are in maintenance, 1,460 are
introduction to probability

in production, 302 are management, and 68

are secretarial. What is the probability that a
randomly selected employee is either a
secretary or in maintenance?
number of favourable outcomes
probability of an event =
number of possible outcomes
50  68 118
P 
2000 2000
.059
 Calculating Probability:
Example
A selected group of employees of Worldwide
Enterprises is to be surveyed about a new
pension plan. Of the 2000 employees, 120 are
supervisors, 50 are in maintenance, 1,460 are
introduction to probability

in production, 302 are management, and 68

are secretarial. What is the probability that a
randomly selected employee is either a
secretary or in maintenance?
number of favourable outcomes
probability of an event =
number of possible outcomes
50 + 68 118
P= =
2000 2000
= 0.059
 Calculating Probability:
Example
A selected group of employees of Worldwide
Enterprises is to be surveyed about a new
pension plan. Of the 2000 employees, 120 are
supervisors, 50 are in maintenance, 1,460 are
introduction to probability

in production, 302 are management, and 68

are secretarial. What is the probability that a
randomly selected employee is either a
secretary or in maintenance?
number of favourable outcomes
probability of an event =
number of possible outcomes
Classic probability
(i.e., Calculation based on 50 + 68 118
P= =
assumption that all events 2000 2000
in sample space are = 0.059
equally likely)
 Calculating Probability:
Comparing Examples
A study of 751 business A selected group of
administration graduates employees of Worldwide
at the University of Toledo Enterprises is to be
revealed that 383 of the surveyed about a new
introduction to probability

751 were employed in pension plan. Of the 2000

their major area of study employees, 120 are
in college. What is the supervisors, 50 are in
probability that a new maintenance, 1,460 are in
business graduate will be production, 302 are
employed in an area of his management, and 68 are
or her college major? secretarial. What is the
probability that a
randomly selected
employee is either a
secretary or in
 If question asked “what is the
Calculating Probability:
probability that a randomly
selected graduate for University of

Comparing Examples
Toledo is employed in his/her area
of study?”, then this would be
classical probability.

A study of 751 business A selected group of

administration graduates employees of Worldwide
at the University of Toledo Enterprises is to be
revealed that 383 of the surveyed about a new
introduction to probability

751 were employed in pension plan. Of the 2000

their major area of study employees, 120 are
in college. What is the supervisors, 50 are in
probability that a new maintenance, 1,460 are in
business graduate will be production, 302 are
employed in an area of his management, and 68 are
or her college major? secretarial. What is the
probability that a
randomly selected
employee is either a
secretary or in
 Calculating Probability:
If question asked “what is the
probability that a new employee is
either a secretary or in

Comparing Examples maintenance?”, then this would be

empirical probability.

A study of 751 business A selected group of

administration graduates employees of Worldwide
at the University of Toledo Enterprises is to be
revealed that 383 of the surveyed about a new
introduction to probability

751 were employed in pension plan. Of the 2000

their major area of study employees, 120 are
in college. What is the supervisors, 50 are in
probability that a new maintenance, 1,460 are in
business graduate will be production, 302 are
employed in an area of his management, and 68 are
or her college major? secretarial. What is the
probability that a
randomly selected
employee is either a
secretary or in
 Calculating Probability:
Example
What is the probability that the Vancouver
Canucks will win the Stanley cup this season?
introduction to probability
 Calculating Probability:
Example
What is the probability that the Vancouver
Canucks will win the Stanley cup this season?
introduction to probability

Subjective probability
(i.e., Little information
available, so estimation
based on belief about
chance of event
?
occurring)
 To Try…
1. A study of 200 grocery stores revealed these incomes after taxes:

Income after Taxes Number of

Stores
Under $1 million 102
$1 million to $20 61
million
What is the probability a randomly selected store has under $1
million in$20 million
income or taxes?
after more What 37 type of probability is this?
2. The web site for a specialty clothing retailer receives 1,000 hits on
a particular day. From past experience, it has been determined
that every 1,000 hits results in 10 large sales of $500 and 100
small sales less than $500. Assuming that all hits have the same
probability of a sale, what is the probability of a large sale from
one of the new hits? What is the probability of a small sale? What
type of probabilities are these?
3. A market analyst states that within the next two years, the
probability that Blackberry will be sold to a competitor is 8.5% and
the probability that it will be sold to another company entering
the market is 3.2%. According to these probabilities, what is the
probability that BlackBerry will be sold in the next two years?
What type of probability is this?
  To Try…
1. A study of 200 grocery stores revealed these incomes after taxes:

Income after Taxes Number of

Stores
Under $1 million 102
$1 million to $20 61
million
What is the probability a randomly selected store has under $1
million in$20 million
income or taxes?
after more What 37 type of probability is this?
2. The web site for a specialty clothing retailer receives 1,000 hits on
number of favourable
a particular day. From past experience, it has been outcomes
determined
probability of an event =
that every 1,000 hits results in 10 large sales of $500 and 100
number of possible outcomes
small sales less than $500. Assuming that all hits have the same
probability of a sale, what is102the probability of a large sale from
one of the new hits? What P is the probability of a small sale? What
200
type of probabilities are these?
3. A market analyst states that .51within the next two years, the
probability that Blackberry
This is classical will be
probability: soldstore
each to a competitor
is equally is 8.5% and
likely
the probability
to be randomly thatselected.
it will be sold to another company entering
the market is 3.2%. According to these probabilities, what is the
probability that BlackBerry will be sold in the next two years?
 What type of probability is this?
 To Try…
number of favourable outcomes
1. A study ofprobability of an event
200 grocery stores= revealed these incomes after taxes:
number of possible outcomes
Income after Taxes 10 Number of
P(large sales)  .01
1000Stores
Under $1 million 100102
P(small sales)  .1
$1 million
These are empirical 1000
to $20 probabilities
61 based on past
million experience.
What is the probability a randomly selected store has under $1
million in$20 million
income or taxes?
after more What 37 type of probability is this?

2. The web site for a specialty clothing retailer receives 1,000 hits on
a particular day. From past experience, it has been determined
that every 1,000 hits results in 10 large sales of $500 and 100
small sales less than $500. Assuming that all hits have the same
probability of a sale, what is the probability of a large sale from
one of the new hits? What is the probability of a small sale? What
type of probabilities are these?
3. A market analyst states that within the next two years, the
probability that Blackberry will be sold to a competitor is 8.5% and
the probability that it will be sold to another company entering
the market is 3.2%. According to these probabilities, what is the
probability that BlackBerry will be sold in the next two years?
What type of probability is this?
 To Try…
1. A study of 200 grocery stores revealed these incomes after taxes:

Income after Taxes Number of

Stores
Under $1 million 102
$1 million to $20 61
million
What is the probability a randomly selected store has under $1
million in$20 million
income or taxes?
after more What 37 type of probability is this?
2. The web site for a specialty clothing retailer receives 1,000 hits on
a This
particular day. Fromprobabilty:
is subjective past experience,
otheritanalysts
has beenare
determined
likely
that every 1,000 hits results in 10 large sales of $500 and 100
to determine different probabilities for these events.
small sales less than $500. Assuming that all hits have the same
probability of a sale, what is the probability of a large sale from
one of the new hits? What is the probability of a small sale? What
type of probabilities are these?
3. A market analyst states that within the next two years, the
probability that Blackberry will be sold to a competitor is 8.5% and
the probability that it will be sold to another company entering
the market is 3.2%. According to these probabilities, what is the
probability that BlackBerry will be sold in the next two years?
What type of probability is this?