Lecture 7: Introduction to Probability-II

Dr. A. Ramesh
Department of Management Studies

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 Problem

• A company data reveal that 155 employees worked one of four types of
positions.
• Shown here again is the raw values matrix (also called a contingency table)
with the frequency counts for each category and for subtotals and totals
containing a breakdown of these employees by type of position and by
sex.

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Contingency Table

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 Solution

• If an employee of the company is selected randomly, what is the

probability that the employee is female or a professional worker?

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 Problem

• Shown here are the raw values matrix and corresponding probability
matrix for the results of a national survey of 200 executives who were
asked to identify the geographic locale of their company and their
company’s industry type.
• The executives were only allowed to select one locale and one industry
type.

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 Questions

a. What is the probability that the respondent is from the Midwest (F)?

b. What is the probability that the respondent is from the communications

industry (C) or from the Northeast (D)?

c. What is the probability that the respondent is from the Southeast (E) or
from the finance industry (A)?

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 Mutually Exclusive Events
Type of Gender
Position Male Female Total
Managerial 8 3 11
Professional 31 13 44
Technical 52 17 69
Clerical 9 22 31
Total 100 55 155
P(T  C )  P(T )  P(C )
69 31
 
155 155
.645
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 Mutually Exclusive Events
Type of Gender
Position Male Female Total
Managerial 8 3 11
Professional 31 13 44
Technical 52 17 69
Clerical 9 22 31
Total 100 55 155
P( P  C )  P( P)  P(C )
44 31
 
155 155
.484
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 Law of Multiplication

P( X  Y )  P( X )  P( Y | X )  P( Y )  P( X | Y )

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 Problem

• A company has 140 employees, of which 30 are supervisors.

• Eighty of the employees are married, and 20% of the married employees
are supervisors.
• If a company employee is randomly selected, what is the probability that
the employee is married and is a supervisor?

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 Married
Y N Sub total
Supervisor Y 0.1143 30
N 110
Sub 80 60 140
total

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 80
P( M )   0. 5714
140
P( S| M )  0. 20
P ( M  S )  P ( M )  P ( S| M )
 ( 0. 5714 )( 0. 20 )  0.1143

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 Law of Multiplication

P( S )  1  P( S )
Probability Matrix  1  0. 2143  0. 7857
of Employees P( M  S )  P( S )  P( M  S )
Married  0. 7857  0. 4571  0. 3286
Supervisor Yes No Total P( M  S )  P( M )  P( M  S )
Yes .1143 .1000 .2143  0. 5714  0.1143  0. 4571
No .4571 .3286 .7857 P( M  S )  P( S )  P( M  S )
Total .5714 .4286 1.00  0. 2143  0.1143  0.1000
P( M )  1  P( M )
 1  0. 5714  0. 4286

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 Special Law of Multiplication for Independent Events

• General Law

P( X  Y )  P( X )  P(Y | X )  P(Y )  P( X | Y )

• Special Law
If events X and Y are independent,
P( X )  P( X | Y ), and P (Y )  P (Y | X ).
Consequently,
P( X  Y )  P( X )  P(Y )

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 Law of Conditional Probability

• The conditional probability of X given Y is the joint probability of X and Y

divided by the marginal probability of Y.

P( X  Y ) P( Y | X )  P( X )
P( X | Y )  
P( Y ) P( Y )

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 Conditional Probability
• A conditional probability is the probability of one event, given that
another event has occurred:
P(A and B) The conditional
P(A | B)  probability of A given
P(B) that B has occurred
P(A and B) The conditional
P(B | A) 
P(A) probability of B given
that A has occurred
Where P(A and B) = joint probability of A and B
P(A) = marginal probability of A
P(B) = marginal probability of B
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 Computing Conditional Probability

• Of the cars on a used car lot, 70% have air conditioning (AC)
and 40% have a CD player (CD). 20% of the cars have both.
• What is the probability that a car has a CD player, given that it
has AC ?
• We want to find P(CD | AC).
Computing Conditional Probability

CD No CD Total

AC 0.2 0.5 0.7

No 0.2 0.1 0.3

AC
Total 0.4 0.6 1.0

P(CD and AC) .2

P(CD | AC)    .2857
P(AC) .7

Given AC, we only consider the top row (70% of the cars). Of
these, 20% have a CD player. 20% of 70% is about 28.57%.
Computing Conditional Probability: Decision Trees

.2
.7
Given AC or P(AC and CD) = .2
no AC:
.5
P(AC and CD/) = .5
.7
All
Cars .2
.3
P(AC/ and CD) = .2

.1 P(AC/ and CD/) = .1

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 Independent Events

• If X and Y are independent events, the occurrence of Y does not affect the
probability of X occurring.
• If X and Y are independent events, the occurrence of X does not affect the
probability of Y occurring.

If X and Y are independent events

,
P( X | Y )  P( X ), and
P(Y | X )  P(Y ).
 Statistical Independence

 Two events are independent if and only if:

P(A | B)  P(A)

 Events A and B are independent when the

probability of one event is not affected by the
other event
 Independent Events Demonstration
Geographic Location
Northeast Southeast Midwest West
D E F G
Finance A .12 .05 .04 .07 .28

Manufacturing B .15 .03 .11 .06 .35

Communications C .14 .09 .06 .08 .37

.41 .17 .21 .21 1.00

Test the matrix for the 200 executive responses to determine

whether industry type is independent of geographic location.
Independent Events Demonstration Contd…

P( A  G) 0.07
P( A| G)    0.33 P( A)  0.28
P(G ) 0.21
P( A| G)  0.33  P( A)  0.28
 Independent Events

D E
A 8 12 20 8
P( A| D)  .2353
34
B 20 30 50
20
P ( A)  .2353
C 6 9 15 85
P( A| D)  P( A)  0.2353
34 51 85
 Revision of Probabilities: Bayes’ Rule

• An extension to the conditional law of probabilities

• Enables revision of original probabilities with new
information

P(Y | Xi ) P( Xi )
P( Xi| Y ) 
P(Y | X 1) P( X 1)  P(Y | X 2 ) P( X 2 )  P(Y | Xn ) P( Xn )
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 Problem
• A particular type of printer ribbon is produced by only
two companies, Alamo Ribbon Company and South
Jersey Products.
• Suppose Alamo produces 65% of the ribbons and
that South Jersey produces 35%.
• Eight percent of the ribbons produced by Alamo are
defective and 12% of the South Jersey ribbons are
defective
• A customer purchases a new ribbon. What is the
probability that Alamo produced the ribbon? What is
the probability that South Jersey produced the
ribbon?
 Revision of Probabilities
with Bayes' Rule: Ribbon Problem
P( Alamo)  0. 65
P( SouthJersey)  0. 35
P( d | Alamo)  0. 08
P( d | SouthJersey)  0.12
P( d | Alamo)  P( Alamo)
P( Alamo| d ) 
P( d | Alamo)  P( Alamo)  P( d | SouthJersey)  P( SouthJersey)
( 0. 08)( 0. 65)
  0. 553
( 0. 08)( 0. 65)  ( 0.12 )( 0. 35)
P( d | SouthJersey)  P( SouthJersey)
P( SouthJersey| d ) 
P( d | Alamo)  P( Alamo)  P( d | SouthJersey)  P( SouthJersey)
( 0.12 )( 0. 35)
  0. 447
( 0. 08)( 0. 65)  ( 0.12 )( 0. 35)
Revision of Probabilities with Bayes’ Rule: Ribbon Problem
 Revision of Probabilities
with Bayes' Rule: Ribbon Problem
Defective
0.08 0.052
Alamo
0.65
Acceptable + 0.094
0.92
Defective 0.042
0.12
South
Jersey
0.35 Acceptable
0.88
THANK YOU

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