Business Statistics

Course: BUSN 2429

Instructor: Bassem Hamid

“Introduction to Probabilities”
(Chapter 4)
1
 Business Statistics Map
Introduction + Probability + Inferential Statistics
Descriptive Statistics Probability Distributions

1. Introduction to Business Statistics 4. Introduction to Probabilities 8. Confidence Intervals

2. Displaying Descriptive Statistics 5. Discrete Probability Distribution 9. Hypothesis Test-One Sample Test
3. Calculating Descriptive Statistics 6. Continuous Probability Distribution 10. Hypothesis Test-Two Samples Test
7. Sampling & Sampling Distribution 14. Correlation and Single Regression Model

2
 Chapter Diagram-Road Map

Probability ???

is a numerical value ranging from 0 to 1

% Chance Relative Frequency

Why Probability ???

Probability forms the basis of the inferential statistics

3
Outlines

This chapter covers the following points:

• #1 Sample Space and Probability
• #2 Probabilities Classifications (3 Rules)
• #3 Basic Probability Properties (5 Rules)
• #4 Probability Rules for More Than One Event (7 Rules)
• #5 General Exercises

4
Objectives

After completing this chapter, you will be able to:

• #1 Distinguish between classical, empirical and subjective probability
• #2 Identify the basic properties of the probability
• #3 Calculate and interpret the intersection and union of events
• #4 Use the addition rule and the multiplication rule for probability
• #5 Interpret the meaning of conditional probability
• #6 Count the total number of possible outcomes using the fundamental
counting principle
• #7 Distinguish between permutation and combination

5
#1 Sample Space and Probability
• Probability: is a numerical value ranging from 0 to 1.
“The chance an event occurs”

Rolling a Die Tossing a Coin Drawing a Card from a Deck

6
• Experiment: is the process of measuring or observing an activity that leads
to uncertain outcomes for the purpose of collecting data.
• An Outcome: is the result of a single trial of a probability experiment
• Sample Space: is the set of all possible outcomes of a probability experiment
• An Event: consists of a set of outcomes of a probability experiment

Perform/Run an Experiment (Activity) Uncertain Outcomes Why?

(Example: Toss one coin) (Example: Head or Tail) Collect Data

Experiment Sample Space

Toss one coin Head, Tail An Outcome
Roll a die 1, 2, 3, 4, 5, 6 An Event
Draw a Card 52 Cards in the deck (Even Numbers)

7
Example: Find the sample space for drawing one card from an ordinary deck
card.
Since there are 4 suits ( Hearts, Clubs, Diamonds and Spades) and 13 cards for
each suit (Ace through King), there are 52 outcomes in the sample space.

An Outcome Sample Space

1 2 3 4 5 6 7 8 9 10 11 12 13

An Event
8
#2 Probability Classifications
• #2.1 Classical Probability
• #2.2 Empirical Probability
• #2.3 Subjective Probability

9
#2.1 Classical Probability
• Classical Probability does not involve conducting an experiment to collect
data (the number of possible outcomes of the event of interest and sample
space are known)
o Do not perform the experiment to determine the outcome/event’s probability
o Use the sample space to determine the probability that an outcome/event will occur
o Assume that all outcomes in the sample space are equally likely to occur.
• The Formula for Classical Probability P(A) is

Number of possible outcomes that constitute Event A

P(A) =
Total number of possible outcomes in the sample space

10
#2.1 Classical Probability
• Classical Probability does not involve conducting an experiment to collect
data (the number of possible outcomes of the event of interest and sample
space are known)
o Do not perform the experiment to determine the outcome/event’s probability Why?
Perform/Run an Experiment (Activity) Uncertain Outcomes
o Use the sample space to determine the probability that Head
(Example: an outcome/event
or Tail) will occur
Collect Data
(Example: Toss one coin)
o Assume that all outcomes in the sample space are equally likely to occur.
• The Formula for Classical Probability P(A) is

Number of possible outcomes that constitute Event A

P(A) =
Total number of possible outcomes in the sample space

11
#2.1 Classical Probability
• Classical Probability does not involve conducting an experiment to collect
data (the number of possible outcomes of the event of interest and sample
space are known)
o Do not perform the experiment to determine the outcome/event’s probability
o Use the sample space to determine the probability that an outcome/event will occur
o Assume that all outcomes in the sample space are equally likely to occur.
• The Formula for Classical Probability P(A) is

Number of possible outcomes that constitute Event A

P(A) =
Total number of possible outcomes in the sample space

12
Example: For a card drawn from an ordinary deck, find the probability of getting
a king.
Since there are 52 cards in the deck and there are 4 kings, P(king) = 4/52 = 0.07
Event
Sample Space

Number of possible outcomes that constitute Event A

P(A) =
Total number of possible outcomes in the sample space

13
 Your Turn #1

What is the probability of randomly selecting a spade from a standard 52-card

deck.
Number of possible outcomes that constitute Event A
P(A) =
Total number of possible outcomes in the sample space

P(Spade) = 13 / 52 = 0.25

14
 Your Turn #1

What is the probability of randomly selecting a spade from a standard 52-card

deck.
Number of possible outcomes that constitute Event A
P(A) =
Total number of possible outcomes in the sample space

P(Spade) = 13 / 52 = 0.25

15
#2.2 Empirical Probability
• Empirical Probability: involves conducting an experiment to collect data
(observing the frequency with which an event/outcome occurs)
o Perform the experiment to determine the outcome/event’s frequency
o Use the frequency of each outcome/event to determine its probability (R. Frequency)
o The outcomes in the sample space are not equally likely to occur
• The formula for empirical probability is P(A)

Frequency in which Event A occurs

P(A) = Total number of observations

16
#2.2 Empirical Probability
• Empirical Probability: involves conducting an experiment to collect data
(observing the frequency with which an event/outcome occurs)
o Perform the experiment to determine the outcome/event’s frequency
o Use the frequency of each outcome/event to determine its probability (R. Frequency)
Perform/Run an Experiment (Activity) Uncertain Outcomes Why?
o The outcomes in the sample space are not equally likely to occur
(Example: Course Feedback) (Example: Satisfaction Levels) Collect Data
• The formula for empirical probability is P(A)
Response Frequency

Very Satisfied Frequency

25 in which Event A occurs
Satisfied 15
P(A) =
Neutral 8
Total number of observations
Not Satisfied 2

Total 50
17
#2.2 Empirical Probability
• Empirical Probability: involves conducting an experiment to collect data
(observing the frequency with which an event/outcome occurs)
o Perform the experiment to determine the outcome/event’s frequency
o Use the frequency of each outcome/event to determine its probability (R. Frequency)
o The outcomes in the sample space are not equally likely to occur
• The formula for empirical probability is P(A)

Frequency in which Event A occurs

P(A) = Total number of observations

18
Example: A researcher asked 25 people if they liked the taste of a new soft
drink. The responses were classified as follows:
Response Frequency
Yes 15
No 8
Undecided 2
Total 25
The probabilities now can be compared for various categories. Calculate the
probability (Relative Frequency) of selecting randomly a person who liked the
taste.
Frequency in which Event A occurs
P(A) = P(Yes) = 15/25 = 0.6
Total number of observations

19
 Your Turn #2

In a recent survey of 1,025 adult conducted by the poll-taking company Gallup asked
how much money they planned to spend on Christmas gifts. The results are shown
on the following table.
A. What is the probability that randomly selected person is planning to spend
between $250-$499 for Christmas
B. What is the probability that randomly selected person is planning to spend $250 or
more for Christmas?
Amount Frequency
$1000 or more 297
$500-$999 246
$250-$499 144
$100-$249 164
Less than $100 41
No option 133
Total 1,025 20
 Your Turn #2

In a recent survey of 1,025 adult conducted by the poll-taking company Gallup asked
how much money they planned to spend on Christmas gifts. The results are shown
on the following table.
A. What is the probability that randomly selected person is planning to spend
between $250-$499 for Christmas
B. What is the probability that randomly selected person is planning to spend $250 or
more for Christmas?
Amount Frequency
$1000 or more 297
$500-$999 246
$250-$499 144
A. P(250-499) = 144/1025 = 0.140
$100-$249 164
Less than $100 41 B. P(>250) = (144+246+297)/1025
No option 133 = 687/1025 = 0.670
Total 1,025 21
Classical Probability vs. Empirical Probability

22
#2.3 Subjective Probability
• Subjective Probability is used when the classical and empirical probability
are not available. It is relied on the experience and judgement.
• Example:
oA director of marketing estimates that there is a 20% probability that her
company’s biggest competitor will reduce its price in the next month.
oA market analyst believes that there is a 50% probability that Apple will
announce a new version of the iPhone next month

23
 Your Turn #3

Indicate whether classical, empirical or subjective probability should be used to

determine each of the following:
A. The probability that the baseball player Josh Hamilton will hit a home run during
his next at bat.
B. The probability of drawing a jack from a deck of cards
C. The probability that I will shoot lower than a 90 during my round of golf
D. The probability of wining your state’s lottery
E. The probability that the price of gasoline will exceed $4.00 per gallon next
summer
F. The probability that I will finish writing my next textbook before my deadline

24
A. The probability that the baseball player Josh Hamilton will hit a home run during
his next at bat. Empirical, because we have historical data for the number of home
runs Josh Hamilton normally hits
B. The probability of drawing a jack from a deck of cards. Classical, because we
know the number of cards and the number of jacks in the deck
C. The probability that I will shoot lower than a 90 during my round of golf. If I have
the data from my last several rounds of golf, this would be empirical; otherwise,
subjective
D. The probability of wining your state’s lottery. Classical, because we can calculate
the probability based on the lottery rules
E. The probability that the price of gasoline will exceed $4.00 per gallon next
summer. Subjective, because I would not be collecting data for this experiment
F. The probability that I will finish writing my next textbook before my deadline.
Subjective, because I would not be collecting data for this experiment

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#3 Basic Probability Properties
• #3.1 Probability Rule#1
• #3.2 Probability Rule#2
• #3.3 Probability Rule#3
• #3.4 Probability Rule#4
• #3.5 Probability Rule#5

26
#3.1, 3.2, 3.3, 3.4 Probability Rule 1, 2, 3, 4
• Probability Rule#1
o If P(A) = 1, then with certainty, Event A must occur
o Example: When is single die is rolled, the probabilities of observing 1, 2, 3, 4, 5 or 6 is 1
• Probability Rule#2
o If P(A) = 0, then with certainty, Event A will not occur
o Example: When a single die is rolled, find the probability of getting a “9”. Sine the sample space
is 1, 2, 3, 4, 5 and 6, it is impossible to get a “9”. Hence the probability is P(9) = 0/6 = 0
• Probability Rule#3
o The probability of any event must range from 0 to 1
o Example: ? -1 is not a probability and 120% is not a probability
• Probability Rule#4:
o The sum of the probability of all the outcomes in the sample space is 1
o Example: In the roll of a fair die, each outcome in the sample space a probability of 1/6. Hence,
the sum of the probability of the outcomes is as shown.

27
#3.5 Probability Rule 5
• Probability Rule#5 (Complementary Probability E) is the set of outcomes in
the sample space that are not included in the outcomes of event E.
o Complementary Probability Rule: The formula of the complement of E is denoted by E
bar.
▪ P(E) = 1-P(E) or P(E) + P(E) = 1
o Example: Find the complementary probability for each event P (4) = 1/6

▪ Rolling a die and getting a 4 (Getting a 1, 2, 3, 5 & 6) P (1, 2, 3, 5 & 6)

▪ The P (Getting a 4) = 1- P (Getting a 1, 2, 3, 5 & 6) = 5/6
▪ 1/6 = 1- 5/6 = P (4)

P (1, 2, 3,4, 5 & 6) = 1

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 Your Turn #4

Identify which of the following values are valid and not valid numbers for probability:
A. 0.19 Valid probability
B. -0.6 Not Valid Probability
C. 0 Valid probability
D. 51% Valid probability
E.1.08 Not Valid Probability
F. 124% Not Valid Probability
G. 2/3 Valid probability
H.1 Valid probability
I. -1/6 Not Valid Probability

29
 Your Turn #4

Identify which of the following values are valid and not valid numbers for probability:
A. 0.19 Valid probability
B. -0.6 Not Valid Probability
C. 0 Valid probability
D. 51% Valid probability
E.1.08 Not Valid Probability
F. 124% Not Valid Probability
G. 2/3 Valid probability
H.1 Valid probability
I. -1/6 Not Valid Probability

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 Your Turn #5

The following table shows the average change in salaries for full-time
permanent employees over a recent one-year period as determined by a survey
of 2,795 human resources professionals by Harris interactive:
Change in Salary Frequency Probability
(R. Frequency)
11% or more 58 0.02
4%-10% 351 0.13
1%-3% 720 0.26
No change 1,491 0.53
Decrease 175 0.06
Total 2,795 1.00

Use the complement rule to determine the probability that an

employee did not take a pay cut
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 Your Turn #5

The following table shows the average change in salaries for full-time
permanent employees over a recent one-year period as determined by a survey
of 2,795 human resources professionals by Harris interactive:
Change in Salary Frequency Probability
(R. Frequency)
11% or more 58 0.02 This group did not get a pay cut

4%-10% 351 0.13 P(E) = 1-P(E)

1%-3% 720 0.26 P (Did Not Get a Pay Cut) =
No change 1,491 0.53 1 – 0.06 = 0.94
Decrease 175 0.06 This group got a pay cut
Total 2,795 1.00

Use the complement rule to determine the probability that an

employee did not take a pay cut
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#4 Probability Rules for More Than One Event
• #4.1 Introduction
• #4.2 Addition Rule#1
• #4.3 Addition Rule#2
• #4.4 Multiplication Rule#1
• #4.5 Multiplication Rule#2
• #4.6 Mutually Exclusive and Independent Events
• #4.7 Fundamental Counting Rule
• #4.8 Permutation Rule
• #4.9 Combination Rule

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#4.1 Introduction
• Many situations involve two or more events that intersect with one another
• A contingency table can be used to show the number of occurrences of events
that are classified according to two categorical variables 4
4
Contingency table for two events from a Total value
deck of 52 cards: 52
Event A = card is an Ace
Event A’ = card is not an Ace
Event B = card is a Red card
Event B’ = card is a Black card
Contingency table can be used to calculate 26
simple (classical) probabilities of two
different events 26 Total value
52

34
 The Intersection of Events

• The intersection of Events A and B

represents the number of instances
in which Events A and B occur at
the same time

52
35
 The Union of Events

• The union of Events A and B

represents the number of instances
where either Event A or B occur or
both events occur together

36
 Your Turn #6

The following table shows the number of customers at Walmart who purchased
a digital camera with and without extended warranties. The contingency table
also identifies the age group of the customers.
Age Group Warranty No Warranty Total
Less than 40 5 34 39
40 or Older 6 15 21
Total 11 49 60

What is the probability that randomly selected customer

a. Chose to purchase the warranty?
b. Was less than 40 years old?
c. Was 40 years or older and chose not to purchase a warranty?
d. Was less than 40 or chose not to purchase a warranty? 37
• The following table shows the number of customers at Walmart who
purchased a digital camera with and without extended warranties. The
contingency table also identifies the age group of the customers.
Age Group Warranty No Warranty Total
Less than 40 5 34 39
40 or Older 6 15 21
Total 11 49 60

What is the probability that randomly selected customer

a. Chose to purchase the warranty?. P(warranty) = 11/60 = 0.183
b. Was less than 40 years old?. P(<40) = 39/60 = 0.65
c. Was 40 years or older and chose not to purchase a warranty?.
P(≥40 and no warranty) = 15/60 = 0.25
d. Was less than 40 or chose not to purchase a warranty?. P(<40
or no warranty) = 5/60 +34/60+15/60 = 54/60 = 0.9
= 49/60 + 39/60 – 34/60 = 54/60 = 0.9
38
• The following table shows the number of customers at Walmart who
purchased a digital camera with and without extended warranties. The
contingency table also identifies the age group of the customers.
Age Group Warranty No Warranty Total
Less than 40 5 34 39
40 or Older 6 15 21
Total 11 49 60
11
What is the probability that randomly selected customer
a. Chose to purchase the warranty?. P(warranty) = 11/60 = 0.183 Total value
11
b. Was less than 40 years old?. P(<40) = 39/60 = 0.65 60
c. Was 40 years or older and chose not to purchase a warranty?.
P(≥40 and no warranty) = 15/60 = 0.25
d. Was less than 40 or chose not to purchase a warranty?. P(<40
or no warranty) = 5/60 +34/60+15/60 = 54/60 = 0.9
= 49/60 + 39/60 – 34/60 = 54/60 = 0.9
39
• The following table shows the number of customers at Walmart who
purchased a digital camera with and without extended warranties. The
contingency table also identifies the age group of the customers.
Age Group Warranty No Warranty Total
Less than 40 5 34 39
40 or Older 6 15 21
Total 11 49 60

What is the probability that randomly selected customer

a. Chose to purchase the warranty?. P(warranty) = 11/60 = 0.183 39
b. Was less than 40 years old?. P(<40) = 39/60 = 0.65 39
Total value
c. Was 40 years or older and chose not to purchase a warranty?. 60
P(≥40 and no warranty) = 15/60 = 0.25
d. Was less than 40 or chose not to purchase a warranty?. P(<40
or no warranty) = 5/60 +34/60+15/60 = 54/60 = 0.9
= 49/60 + 39/60 – 34/60 = 54/60 = 0.9
40
• The following table shows the number of customers at Walmart who
purchased a digital camera with and without extended warranties. The
contingency table also identifies the age group of the customers.
Age Group Warranty No Warranty Total
Less than 40 5 34 39
40 or Older 6 15 21
Total 11 49 60

What is the probability that randomly selected customer

a. Chose to purchase the warranty?. P(warranty) = 11/60 = 0.183
b. Was less than 40 years old?. P(<40) = 39/60 = 0.65 15
15
c. Was 40 years or older and chose not to purchase a warranty?.
P(≥40 and no warranty) = 15/60 = 0.25 60
d. Was less than 40 or chose not to purchase a warranty?. P(<40
or no warranty) = 5/60 +34/60+15/60 = 54/60 = 0.9
= 49/60 + 39/60 – 34/60 = 54/60 = 0.9
41
• The following table shows the number of customers at Walmart who
purchased a digital camera with and without extended warranties. The
contingency table also identifies the age group of the customers.
Age Group Warranty No Warranty Total
Less than 40 5 34 39
40 or Older 6 15 21
Total 11 49 60

What is the probability that randomly selected customer

a. Chose to purchase the warranty?. P(warranty) = 11/60 = 0.183
b. Was less than 40 years old?. P(<40) = 39/60 = 0.65
c. Was 40 years or older and chose not to purchase a warranty?.
P(≥40 and no warranty) = 15/60 = 0.25 39 49 34 39
34
d. Was less than 40 or chose not to purchase a warranty?. P(<40
P(˂40 or no warranty) = 5/60 +34/60+15/60 = 54/60 = 0.9
49
= 49/60 + 39/60 – 34/60 = 54/60 = 0.9 60
42
 Introduction to Additional Rule 1 & 2

• Mutually Exclusive Events: Two events are mutually 4 6

exclusive events if they can not occur at the same time, or they
have no outcomes in common.
o e.g., Getting 4 and 6 when is single card is drawn form a deck are
mutually exclusive events (The two events can not occur at the same
time)

4
• Not Mutually Exclusive Events: Two events are not
mutually exclusive events if they can occur at the same time.
o e.g., Getting 4 and getting a spade on a single draw are not mutually
exclusive events (The two events can occur at the same time)

43
#4.2 Addition Rule 1
• Addition Rule#1: If two events A and B are mutually exclusive,
the probability (The Union of Events) that A or B will occur is
P(A or B) = P(A) + P(B)
• Example: The following table shows the grade distribution of one of my
statistics classes along with the genders of the students.
Grade Distribution for My Statistics Class by Gender
Grade/Gender Female Male Total Event A and Event B are considered as
A 6 3 9 mutually exclusive as student can not
B 4 8 12 obtain Grade A and Grade B in the same
C 0 4 4 time.
Total 10 15 25

What is the probability of having Event A (Grade A) or Event B (Grade B) ?

The probability is P(A or B) = P(A) + P(B) = 9/25 + 12/25 = 21/25 44
#4.3 Addition Rule 2
• Addition Rule#2: If two events A and B are not mutually exclusive,
the probability (The Union of Events) that A or B will occur is
P(A or B) = P(A) + P(B) – P(A and B)
• Example: The following table shows the grade distribution of one of my
statistics classes along with the genders of the students.
Grade Distribution for My Statistics Class by Gender
Grade/Gender Female Male Total Event A and Event B are not considered
A 6 3 9 as mutually exclusive as student can
B 4 8 12 obtain an A and be a male in the same
C 0 4 4 time.
Total 10 15 25

What is the probability of having Event A (Grade A) or Event B (Male) ?

The probability is P(A or B) = P(A) + P(B) – P (A and B) = 9/25 + 15/25 – 3/25= 21/25
 Example: Addition Rule 1 & 2

• Consider the union of “Ace” or “Non-Ace”

P(Ace or Non-Ace) = P(Ace) + P(Non Ace)
4 48
= + = 1
52 52
Don’t count the two red aces twice!
Color
Type Red Black Total
Ace 2 2 4 Both events (Ace & Non Ace)
are mutually exclusive
Non-Ace 24 24 48
Total 26 26 52

46
 Example: Addition Rule 1 & 2

• Consider the union of “Ace” or “Red card”

P(Ace or Red) = P(Ace) + P(Red)− P(Ace and Red)

4 26 2 28
= + − = = 0.538
52 52 52 52
Don’t count the two red aces twice!
Color
Type Red Black Total
Ace 2 2 4 Both events (Ace & Red Card)
are not mutually exclusive
Non-Ace 24 24 48
Total 26 26 52

47
 Example: Addition Rule 1 & 2

A + B = A B

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

Don’t count common elements twice

Note: P(A and B) ≠ 0 if events A and B are NOT mutually exclusive

Note: P(A and B) = 0 if events A and B are mutually exclusive

48
 Example: Addition Rule 1 & 2

A + B = A B

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

Don’t count common elements twice

Note: P(A and B) ≠ 0 if events A and B are NOT mutually exclusive

Note: P(A and B) = 0 if events A and B are mutually exclusive

49
 Example: Addition Rule 1 & 2

A + B = A B

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

Don’t count common elements twice

Note: P(A and B) ≠ 0 if events A and B are NOT mutually exclusive

Note: P(A and B) = 0 if events A and B are mutually exclusive

50
 Addition Rule 1 vs. Addition Rule 2
• Addition Rule#1: If two events A and B are mutually exclusive, the probability
(The Union of Events) that A or B will occur is
P(A or B) = P(A) + P(B)
oP(A) The probability of event A occurs
oP(B) The probability of event B occurs
• Addition Rule#2: If two events A and B are not mutually exclusive, the probability
(The Union of Events) that A or B will occur is
P(A or B) = P(A) + P(B) – P(A and B)
oP(A) The probability of event A occurs
oP(B) The probability of event B occurs
oWhen P(A and B) = 0 → both events are mutually exclusive (Rule 1)
oWhen P(A and B) ≠ 0 → both events are not mutually exclusive (Rule 2)
51
 Your Turn #7

The following table shows the number of Bank of America customers who have overdue accounts.
The data are broken down by the credit card type and number of days overdue.
Day Overdue/Card Standard Gold Total
Type
30 days or less 165 90 255
31-60 days 96 121 217
61-90 days 42 49 91
More than 90 days 22 15 37
Total 325 275 600
What is the probability that randomly selected customer
A. Has a Standard card and is 31-60 days overdue
B. Has a Standard card or is 30 days or less overdue
C. Has a Gold card and is 61-90 days overdue
D. Is 31-60 days or is 30 days or less overdue
E. Is 31-60 days and is 61-90 days overdue 52
The following table shows the number of Bank of America customers who
have overdue accounts. The data are broken down by the credit card type and
number of days overdue.
Day Overdue/Card Type Standard Gold Total
30 days or less 165 90 255
31-60 days 96 121 217
61-90 days 42 49 91
More than 90 days 22 15 37
Total 325 275 600

What is the probability that randomly selected customer

A. Has a Standard card and is 31-60 days overdue
P (A and B) = Intersection
P (Standard and 31-60) = 96/600 = 0.16.

53
The following table shows the number of Bank of America customers who
have overdue accounts. The data are broken down by the credit card type and
number of days overdue.
Day Overdue/Card Type Standard Gold Total
30 days or less 165 90 255
31-60 days 96 121 217
61-90 days 42 49 91
More than 90 days 22 15 37
Total 325 275 600

What is the probability that randomly selected customer

A. Has a Standard card and is 31-60 days overdue
P (A and B) = Intersection
P (Standard and 31-60) = 96/600 = 0.16.

54
The following table shows the number of Bank of America customers who
have overdue accounts. The data are broken down by the credit card type and
number of days overdue.
Day Overdue/Card Type Standard Gold Total
30 days or less 165 90 255
31-60 days 96 121 217
61-90 days 42 49 91
More than 90 days 22 15 37
Total 325 275 600

What is the probability that randomly selected customer

B. Has a Standard card or is 30 days or less overdue
P (A or B) = P(A) + P(B) – P(A and B)
P(A and B) = Intersection
P (Standard or <30) = 325/600 + 255/600 – 165/600 = 415/600 = 0.692
(A and B are not mutually exclusive events)
55
The following table shows the number of Bank of America customers who
have overdue accounts. The data are broken down by the credit card type and
number of days overdue.
Day Overdue/Card Type Standard Gold Total
30 days or less 165 90 255
31-60 days 96 121 217
61-90 days 42 49 91
More than 90 days 22 15 37
Total 325 275 600

What is the probability that randomly selected customer

B. Has a Standard card or is 30 days or less overdue
P (A or B) = P(A) + P(B) – P(A and B)
P(A and B) = Intersection
P (Standard or <30) = 325/600 + 255/600 – 165/600 = 415/600 = 0.692
(A and B are not mutually exclusive events)
The following table shows the number of Bank of America customers who
have overdue accounts. The data are broken down by the credit card type and
number of days overdue.
Day Overdue/Card Type Standard Gold Total
30 days or less 165 90 255
31-60 days 96 121 217
61-90 days 42 49 91
More than 90 days 22 15 37
Total 325 275 600

What is the probability that randomly selected customer

C. Has a Gold card and is 61-90 days overdue
P (A and B) = Intersection
P (Gold and 61-90) = 49/600 = 0.082

57
The following table shows the number of Bank of America customers who
have overdue accounts. The data are broken down by the credit card type and
number of days overdue.
Day Overdue/Card Type Standard Gold Total
30 days or less 165 90 255
31-60 days 96 121 217
61-90 days 42 49 91
More than 90 days 22 15 37
Total 325 275 600

What is the probability that randomly selected customer

C. Has a Gold card and is 61-90 days overdue
P (A and B) = Intersection
P (Gold and 61-90) = 49/600 = 0.082

58
The following table shows the number of Bank of America customers who
have overdue accounts. The data are broken down by the credit card type and
number of days overdue.
Day Overdue/Card Type Standard Gold Total
30 days or less 165 90 255
31-60 days 96 121 217
61-90 days 42 49 91
More than 90 days 22 15 37
Total 325 275 600

What is the probability that randomly selected customer

D. Is 31-60 days or is 30 days or less overdue
P (A or B) = P(A) + P(B) – P(A and B)
P(31-60 or < 30) = 217/600 + 255/600 = 472/600 = 0.787 (P(A and B) = 0
(A and B are mutually exclusive events)

59
The following table shows the number of Bank of America customers who
have overdue accounts. The data are broken down by the credit card type and
number of days overdue.
Day Overdue/Card Type Standard Gold Total 255
30 days or less 165 90 255 255
Total value
31-60 days 96 121 217 600
61-90 days 42 49 91
217
More than 90 days 22 15 37
217
Total 325 275 600 Total value
600
What is the probability that randomly selected customer
D. Is 31-60 days or is 30 days or less overdue
P (A or B) = P(A) + P(B) – P(A and B)
P(31-60 or < 30) = 217/600 + 255/600 = 472/600 = 0.787 (P(A and B) = 0
(A and B are mutually exclusive events)

60
The following table shows the number of Bank of America customers who
have overdue accounts. The data are broken down by the credit card type and
number of days overdue.
Day Overdue/Card Type Standard Gold Total
30 days or less 165 90 255
31-60 days 96 121 217
61-90 days 42 49 91
More than 90 days 22 15 37
Total 325 275 600

What is the probability that randomly selected customer

E. Is 31-60 days and is 61-90 days overdue
P(31-60 and 61-90) = 0/600 = 0
(A and B are mutually exclusive events)

61
The following table shows the number of Bank of America customers who
have overdue accounts. The data are broken down by the credit card type and
number of days overdue.
Day Overdue/Card Type Standard Gold Total
30 days or less 165 90 255
31-60 days 96 121 217
61-90 days 42 49 91
More than 90 days 22 15 37
There is no intersection!
Total 325 275 600

What is the probability that randomly selected customer

E. Is 31-60 days and is 61-90 days overdue
P(31-60 and 61-90) = 0/600 = 0
(A and B are mutually exclusive events)

62
 Introduction to Multiplication Rule 1 & 2
• Independent Events. Two events A and B are independents events if the
fact that A occurs does not affect the probability of B occurring
o e.g., Drawing a card from a deck and getting a queen, replacing it, and drawing a
second card and getting a queen (Independent Events? as the outcome of the first
event does not affect the outcome of the second event)
Event A (1) Event B (2)
P(Queen) = 4/52 Replacing the Card P(Queen) = 4/52
• Dependent Events. Two events A and B are dependents events when the
outcome or occurrence of the first event affects the outcome or occurrence
of the second event in such a way that the probability is changed
o e.g., Drawing a card from a deck and getting a queen, not replacing it, and drawing a
second card and getting a queen (Dependent Events? as the outcome of the first
event affects the outcome of the second event)
Event A (1) Event B (2)
P(Queen) = 4/52 Not Replacing the Card P(Queen) = 3/52

63
#4.4 Multiplication Rule 1
• Multiplication Rule#1: When two events are independent, the probability of
both occurring is P(A and B) = P(A) × P(B)
o P(A) The probability of event A occurs
o P(B) The probability of event B occurs
• Example: Drawing a card from a deck and getting a queen, replacing it, and
drawing a second card and getting a queen
• Since the events are independent,
P(A and B) = P(A) × P(B) = 4/52 × 4/52 = 1/13 × 1/13 =1/169 = 0.00591
#4.5 Multiplication Rule 2
• Multiplication Rule#2: When two events are dependent, the probability of
both occurring is
P(A and B) = P(A) × P(B/A) or P(A and B) = P(B) × P(A/B)
oP(A) The probability of event A occurs & P(B) The probability of event B occurs
oP(B / A) The probability that event B occurs given the fact that A has already
occurred (Conditional Probability)
oP(A / B) The probability that event A occurs given the fact that B has already
occurred (Conditional Probability)
• Example: Drawing a card from a deck and getting a queen, not replacing it,
and drawing a second card and getting a queen
• Since the events are dependent,
P(A and B) = P(A) × P(B/A) = 4/52 × 3/51 = 1/13 ×1/17 = 0.0045
*This is not a division line! It is a conditional probability
 Multiplication Rule 1 vs. Multiplication Rule 2
• Multiplication Rule#1: When two events are independent, the probability of both
occurring is P(A and B) = P(A) × P(B) …….(1)
o P(A) The probability of event A occurs
o P(B) The probability of event B occurs
• Multiplication Rule#2: When two events are dependent, the probability of both
occurring is
P(A and B) = P(A) × P(B/A) or P(A and B) = P(B) × P(A/B) ……..(2)
o P(A) The probability of event A occurs & P(B) The probability of event B occurs
o P(B/A) The probability that event B occurs given the fact that A has already occurred (Conditional
Probability)
o P(A/B) The probability that event A occurs given the fact that B has already occurred (Conditional
Probability)
• When P(A/B) = P(A) → The event A and B are independent Why???
o (Let substitute the value of P(A/B) in (2) → P( A and B) = P(B) × P(A)
o This is (1)
• When P(A/B) ≠ P(A) → The event A and B are dependent Why???
o This is (2)

66
67
 Your Turn #8

The following table shows the number of adults (in thousands) in the United
States who were employed and unemployed in 2012 along with their marital
status.
Status Employed Unemployed Total
Married 95,886 6,480 102,366
Never Married 39,348 6,025 45,373
Total 135,234 12,505 147,739

Event A = Person unemployed

Event B = Person is married
Determine whether Event A and B are independent or dependent
68
 The following table shows the number of adults (in thousands) in the United
States who were employed and unemployed in 2012 along with their marital
status.
Event A

Status Employed Unemployed Total P(A/B) ≠ P(A) → Event A and B are dependent
Event B Married 95,886 6,480 102,366
P(A/B) = P(A) → Event A and B are independent
Never Married 39,348 6,025 45,373
Total 135,234 12,505 147,739

Event B = Person is married

Event A = Person unemployed
Determine whether Event A and B are independent or dependent
P (A and B) = P(B) × P (A/B) → P(A/B) = P(A and B) = ? P(A) = 12,505/147,739 = 0.085
P (A and B) = 6,480/147,739 = 0.044 P(B)
P(B) = 102,366/147,739 = 0.693
P(A/B) = 0.044/0.693 = 0.063
P(A/B) ≠ P(A) → Event A and B are dependent
69
 Your Turn #9

A. Draw two cards from a standard 52-card deck without replacing the first
card. What is the probability that the first card will be red queen and the second
card will be red card?
B. Draw two cards from a standard 52-card deck, replacing the first card after
you draw it. What is the probability that the first card will be a red queen and
the second card will be a red card?

70
• The A. Draw two cards from a standard 52-card deck without replacing (Dependent) the
first card. What is the probability that the first card will be red queen and the second card
will be red card?
o Define A = First card is a red queen
o Define B = Second card is red
o P(A) = 2/52 = 0.038, P(B/A) = 25/51 = 0.49,
o P(A and B) = P(A) . P(B/A) = (0.038) (0.490) = 0.0186
• B. Draw two cards from a standard 52-card deck, replacing (Independent) the first card
after you draw it. What is the probability that the first card will be a red queen and the
second card will be a red card?
o Define A = First card is a red queen
o Define B = Second card is red
o P(A) = 2/52 = 0.038, P(B) = 26/52 = 0.5,
o P(A and B) = P(A) . P(B) = (0.038)(0.5) = 0.019
o Note that P(B) = P (B/A) as both events A and B are independent

71
A Decision Tree could be used to display the marginal
probabilities (Simple found in the row or column) and
joint probabilities from a contingency table.

A decision tree is visual alternative to probability table

Please refer to Club Bistro Example Page 169 and 170

and Your Turn 10 in your textbook

72
 #4.6 Mutually Exclusive and Independent Events
• Events A and B are mutually exclusive as they CAN NOT occur at the same time. P(A and B) = 0
• Events C and D are mutually exclusive as they CAN NOT occur at the same time. P(C and D) = 0
• Two events can not be both independent and mutually exclusive! How?
▪ Independent events can occur at the same time AND Mutually exclusive can not occur at the same time??!!
▪ Events A and B are mutually exclusive (Customers can not be satisfied and unsatisfied at the same time). As
a result, these two events (A and B) can not be independent and therefore dependent on one another based on
the following logic.
▪ P(A) = 0.85. If Events A and B are independent, then P(A/B) should be equal to 0.85.
▪ Event B(1) has occurred and then the probability of event A(2) occurring can not be 0.85. Instead, it must
equal 0 because there is no chance that customer can be satisfied and unsatisfied at the same time.
▪ Therefore, these mutually exclusive events must be dependent because P(A/B) ≠ P(A)
Satisfaction/Food Meat (Event C) Fish (Event D) Total
Satisfied (Event A) 35% 50% 85% P(A/B) ≠ P(A) → Event A and B are dependent

Not Satisfied (Event B) 5% 10% 15% P(A/B) = P(A) → Event A and B are independent

Total 40% 60% 100%

• Note that we can not conclude that because events are not independent they will be
mutually exclusive
 #4.7 Fundamental Counting Rule
• The Counting Rule States that if there is K1 choices for the first event, K2 choices for the
second event,…and Kn choices for the nth event, then the total number of possible
outcomes is (K1).(K2).(Kn)
• Example: A paint manufacturer whishes to manufacture different paints. The categories
include
Event1 o Color Red, Blue, White, Black, Green, Brown, Yellow (K=7)
Event2 o Type Latex, Oil (K=2)
Event3 o Texture Flat, Semi gloss, High gloss (K=3)
Event4 o Use Outdoor, Indoor (K=2)
• A person can choose one color and one type and one texture and one use. Since there are 7
color choices, 2 types, 3 texture choices and 2 use choice, the total number of possible
different paints is Color =7 x Type=2 x Texture =3 x Use =2 = 84
#4.8 Permutation Probability Rule
• Permutations Are the numbers of different ways in which objects can be
arranged in order.
• Permutation Rule: It is written as
n!
n Px = = n(n − 1 )(n − 2 )(n − x + 1 )
(n − x)!

Where,
o n = The total number of the objects
o x = The number of the object to be selected
• * Exclamation Mark ( ! ) of n represents the Factorial Symbol
• The Example: Suppose that two letters are to be selected from A, B, C, D (4 letters) and arranged
in order. How many permutations are possible?
• The number of permutations, with n = 4 & x = 2 , is
Permutations Are the numbers of
n!
n Px = = n(n − 1 )(n − 2 )(n − x + 1 ) different ways in which objects can
(n − x)! be arranged in order.

• The permutations are

4! (4)(3)(2)(1)
4 P2 = = = 12
(4 − 2)! (2)(1)

AB (Not same as BA) AC AD

BA BC BD There are 12 permutations
CA CB CD Order is important
DA DB DC

76
#4.9 Combination Probability Rule
• Combination Are the number of different ways in which objects can be
arranged without regard to order.
• Combination Rule: It is written as
n! n(n − 1 )(n − 2 )(n − x + 1 )
n Cx = =
(n − x)! x! x!

Where,
o n = The total number of objects
o x = the number of objects to be selected
• Example: Suppose that two letters are to be selected from A, B, C, D. How
many combinations are possible (order is not important)?
• Answer: The number of combinations is Combination Are the number of
different ways in which objects can be
n! n(n − 1 )(n − 2 )(n − x + 1 ) arranged without regard to order.
n Cx = =
(n − x)! x! x!
4! (4)(3)(2)(1)
4 C2 = = =6
(4 − 2)! 2! (2)(1)(2)(1)

AB (same as BA) BC (same as CB)

There are 6 combinations
AC (same as CA) BD (same as DB) Order is not important
AD (same as DA) CD (same as DC)

78
 Your Turn #10

• A. A restaurant has a menu with four appetizers, seven entrées, four desserts
and three drinks. If a meal consists of an appetizer, an entrée, a desert and a
drink, how many different meals can you order?
• B. The NBA teams with the 13 worst records at the end of the season
participate in a lottery to determine the order in which they will draft new
players for the next season. How many different arrangements exist for
drafting order for these 13 teams?
• C. A combination lock has a total of 40 numbers and will unlock with the
proper three-number sequence. How many possible combinations exist?
• D. I would like to select 3 paperback books from a list of 11 books to take on
vacation. How many different sets of three books can I choose?
79
• A. A restaurant has a menu with four appetizers, seven entrées, four desserts and
three drinks. If a meal consists of an appetizer, an entrée, a desert and a drink, how
many different meals can you order?. 4 x 7 x 4 x 3 =336 different meals (Counting
Rule)
• B. The NBA teams with the 13 worst records at the end of the season participate in
a lottery to determine the order in which they will draft new players for the next
season. How many different arrangements exist for drafting order for these 13
teams?. 13!=6,277,020,800 different ordered arrangement
• C. A combination lock has a total of 40 numbers and will unlock with the proper
three-number sequence. How many possible combinations exist?. 40P3 =40!/(40-3)!
= 40 x 39 x 38 = 59,280 (Permutation Rule; Order is important)
• D. I would like to select 3 paperback books from a list of 11 books to take on
vacation. How many different sets of three books can I choose?. 11C3 = 11!/(11-
3)!3! = (11 x 10 x 9)/3 x 2 x 1 = 165 (Combination Rule; Order is not important)

80
Excel/PHStat Application

81
 Excel/PHStat Application
Calculating Simple and Joint Probabilities

• Open Excel File

• Construct a contingency table
• Use the value field setting to convert the cell values into % of grand total
• See Excel Example (File: Satisfaction entree.xlsx). Page 170-173 Hard copy

82
 Excel/PHStat Application
Calculating Simple and Joint Probabilities

• Open Excel File

• Click on Add-ins
• Go to PHStat
• Select Descriptive Statistics/Probability and Probabilities Distributions/Simple
and Joint Probabilities

83
84
#5 General Exercises
• Problem #5.1
• Problem #5.2
• Problem #5.3
• Problem #5.4
• Problem #5.5
• Problem #5.6
• Problem #5.7
• Problem #5.8
• Problem #5.9
• Problem #5.10

85
Problem #5.1
• Indicate whether classical, empirical or subjective probability should be used
to determine each of the following:
o A. The probability that it will rain tomorrow.
o B. The probability that you will roll doubles when throwing two dice.
o C. The probability that I will pass tomorrow’s statistics exam.
Problem #5.1
• Indicate whether classical, empirical or subjective probability should be used
to determine each of the following:
o A. The probability that it will rain tomorrow. Empirical
o B. The probability that you will roll doubles when throwing two dice. Classical
o C. The probability that I will pass tomorrow’s statistics exam. Subjective
Problem #5.2
• A survey was conducted in which 150 households were asked how many
working televisions they owned. The results are as follows.
Number of Television Number of Households o A. What is the probability that a randomly
0 5 selected household has one television?
1 34 o B. What is the probability that a randomly
2 50 selected household has more than two
televisions?
3 29
4 12
o C. What is the probability that a randomly
selected household has fewer than four
5 12 televisions?
6 8 o D. Is this an example of classical,
Total 150 empirical or subjective probability?
Problem #5.2
• A survey was conducted in which 150 households were asked how many
working televisions they owned. The results are as follows.
Number of Television Number of Households o A. What is the probability that a randomly
0 5 selected household has one television? 34/150
= 0.227
1 34 o B. What is the probability that a randomly
2 50 selected household has more than two
televisions? 61/150 = 0.407
3 29
o C. What is the probability that a randomly
4 12 selected household has fewer than four
televisions? 118/150 = 0.787
5 12
o D. Is this an example of classical, empirical or
6 8 subjective probability? Empirical
Total 150 *Keep in mind that “frequency” refers to probability
Problem #5.3
• Consider an experiment with the following two events:
• A = A statistics test is scheduled for 8:00 AM
• B = Every student arrives to class on time for the test
oA. Are these two events mutually exclusive?
oB. Are these two events independent?
Problem #5.3
• Consider an experiment with the following two events:
• A = A statistics test is scheduled for 8:00 AM
• B = Every student arrives to class on time for the test
oA. Are these two events mutually exclusive? Events are mutually exclusive (A
and B can not occur at the same time or they have no outcomes in common).
oB. Are these two events independent? Events are dependent (the outcome or
occurrence of the first event affects the outcome or occurrence of the second
event). A scheduled test increases the likehood of prompt arrival.
Problem #5.4
• Consider the following experiment-a card is chosen randomly from 52-card
deck, observed and then replaced. After shuffling the deck, a second card is
drawn and observed. Consider the following two events:
o A = The first card is jack of diamonds
o B = The second card is the jack of diamonds
• A. Are these two events mutually exclusive?.
• B. Are these two events independent?
Problem #5.4
• Consider the following experiment-a card is chosen randomly from 52-card
deck, observed and then replaced. After shuffling the deck, a second card is
drawn and observed. Consider the following two events:
o A = The first card is jack of diamonds
o B = The second card is the jack of diamonds
• A. Are these two events mutually exclusive? Events are not mutually exclusive
(A and B can occur at the same time)
• B. Are these two events independent? Events are independent (the outcome or
occurrence of the first event does not affect the outcome or occurrence of the
second event).
Problem #5.5
• Consider the following experiment-a card is chosen randomly from a 52-card
deck, observed and not replaced. A second card is drawn and observed.
Consider the following events:
o A = The first card is the jack of diamond
o B = The second card is the jack of diamond
• A. Are these two events mutually exclusive?
• B. Are these two events independent?
Problem #5.5
• Consider the following experiment-a card is chosen randomly from a 52-card
deck, observed and not replaced. A second card is drawn and observed.
Consider the following events:
o A = The first card is the jack of diamond
o B = The second card is the jack of diamond
• A. Are these two events mutually exclusive?. Events are mutually exclusive (A
and B can not occur at the same time or they have no outcomes in common).
• B. Are these two events independent?. Events are dependent (the outcome or
occurrence of the first event affects the outcome or occurrence of the second
event)
Problem #5.6
• A local university has a student population that is 57% male. Sixty-four
percent of the students are undergraduates; 40% are both male and
undergraduates.
o A. What is the probability that a randomly selected students is both a female and
undergraduate?
o B. What is the probability that randomly selected students is either male or an
undergraduate
Problem #5.6
• A local university has a student population that is 57% male. Sixty-four
percent of the students are undergraduates; 40% are both male and
undergraduates.
o A. What is the probability that a randomly selected students is both a female and
undergraduate? P(A and B) = Intersection 24%
o B. What is the probability that randomly selected students is either male or an
undergraduate
Problem #5.6
• A local university has a student population that is 57% male. Sixty-four
percent of the students are undergraduates; 40% are both male and
undergraduates.
o A. What is the probability that a randomly selected students is both a female and
undergraduate?
o B. What is the probability that randomly selected students is either male or an
undergraduate? P(A or B) = P(A) + P(B) – P (A and B) 57% + 64% - 40% = 81%
Problem #5.7
• The following table shows the number of students who earned an A, B, C
grade in a business statistics class along with their year in their program.
A. What percentage of students in this class are juniors?
Grade Sophomore Junior Total B. What percentage of students in this class earned a B
grade?
A 14 30 44 C. What percentage of students in this class were sophomores
B 31 38 69 and earned a B grade?
D. What percentages of students in this class were juniors or
C 20 16 36 earned an A grade?
D 11 5 16 E. What percentage of students in this class earned a C grade,
given they were sophomores
Total 76 89 165 F. What percentage of students in this class were sophomores,
given they earned a C grade?
G. Do course grade and year in the program appear to be
independent or dependent? Define Event A as earning an A
grade and Event B as a student in his or her sophomore year.
A. What percentage of students in this class are juniors? (89/165) 100 = 53.9 %

Grade Sophomore Junior Total

A 14 30 44
Total value
B 31 38 69
C 20 16 36
D 11 5 16
Total 76 89 165

100
B. What percentage of students in this class earned a B grade?
(69/165)100 = 41.8 %
Grade Sophomore Junior Total Total value
A 14 30 44
B 31 38 69
C 20 16 36
D 11 5 16
Total 76 89 165

101
C. What percentage of students in this class were sophomores and earned a B
grade? (31/165) 100 = 18.8 %
Grade Sophomore Junior Total
A 14 30 44
B 31 38 69
C 20 16 36
D 11 5 16
Total 76 89 165

102
D. What percentages of students in this class were juniors or earned an A grade?
(89/165 + 44/165 - 30/165) 100 = 62.4%
Grade Sophomore Junior Total
A 14 30 44
B 31 38 69
C 20 16 36
D 11 5 16
Total 76 89 165

103
E. What percentage of students in this class earned a C grade, given they were
sophomores (20/165)/(76/165) = 26.3% P(A and B) / P(A) = P(B/A)
Grade Sophomore Junior Total
A 14 30 44 P(B) = The probability of
B 31 38 69 having grade C
Event 2
C 20 16 36 P(A) = The probability of
D 11 5 16 being sophomores
Event 1
Total 76 89 165
P(A and B) = P(A) × P(B/A) → P(A and B) / P(A) = P(B / A)

Division Line
Conditional Probability

104
F. What percentage of students in this class were sophomores, given they earned a
C grade? (20/165)/(36/165) = 55.6% P(A and B) / P(A) = P(B/A)
Grade Sophomore Junior Total
A 14 30 44 P(B) = The probability of
B 31 38 69 being sophomores
Event 2
C 20 16 36 P(A) = The probability of
D 11 5 16 having grade C
Event 1
Total 76 89 165
Division Line
Conditional Probability

P(A and B) = P(A) × P(B / A) → P(A and B) / P(A) = P(B/A)

105
G. Do course grade and year in the program appear to be independent or
dependent? Define Event A as earning an A grade and Event B as a student in his
or her sophomore year. P(A/B) ≠ P(A) → Event A and B are dependent
P(A) = 44/165 = 0.267
P(A/B) = P(A) → Event A and B are independent
P(A | B) = P(A and B) / P(B)
P(A and B) = 14/165 = 0.085 & P(B) = 76/165 = 0.461
P(A | B) = 0.085/0.461 = 0.184
P(A | B) ≠ P(A) → A and B are dependent
Grade Sophomore Junior Total
A 14 30 44
B 31 38 69
C 20 16 36
D 11 5 16
Total 76 89 165
106
Problem #5.8
• I would like to customize a desktop computer online. I have to choose among
the following categories:
o Processor (5 choices)
o Hard drive (4 choices)
o Memory (3 choices)
o Monitor (4 choices)
o Keyboard (2 choices)
• How many unique computers can I configure with these choices?
Problem #5.8
• I would like to customize a desktop computer online. I have to choose among
the following categories:
o Processor (5 choices)
o Hard drive (4 choices)
o Memory (3 choices)
o Monitor (4 choices)
o Keyboard (2 choices)
• How many unique computers can I configure with these choices?
• The configuration # is (5) (4) (3) (4) (2) = 480
Problem #5.9
• In a race with eight swimmers, how many ways can the swimmers finish first,
second and third?
Problem #5.9
• In a race with eight swimmers, how many ways can the swimmers finish first,
second and third?
• 8P3 = 8!/(8-3)! = 336
Problem #5.10
• A panel of 12 jurors needs to be selected from a group of 50 people. How
many different juries can be selected?
Problem #5.10
• A panel of 12 jurors needs to be selected from a group of 50 people. How
many different juries can be selected?
• 50C12 = 121, 399, 651, 100
Summary

• Probability, Probabilities Experiment

• Probabilities Classifications (3 Rules)
o Classical Probability, Empirical Probability, and Subjective Probability
• Basic Probability Properties (5 Rules)
o (Rule 1, 2, 3, 4, 5)
• Probability Rules for More Than One Event (4 Rules)
o Addition Rule#1, 2 and Multiplication Rule#1, 2
• Other Probability Rules (3 Rules)
o Fundamental Counting Rule, Permutation Rule and Combination Rule

113
References

1. Bluman, A. G. (2009). Elementary statistics: A step by step approach

(6th ed). McGraw-Hill Higher Education.
2. Donnely, R. (2019). Business statistics (3rd ed). Pearson Education.

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