CH3PROBABILITY(商务统计,英文版)课程.pptVIP

BEO1106 - Week 3 BEO1106 - Week 3 Business StatisticsBEO 1106 * * WEEK 3 PROBABILITY Reference: Selvanathan et al. (2004), Chapter 4. PROBABILITY THEORY How to deal with uncertainty in a rational and consistent manner? Probability: A numerical measure of the likelihood or chance that a particular event or outcome will occur. Eg. If one token is to be picked from a bag containing 2 red tokens and 3 blue tokens, what is the chance of picking a red token? There are 5 tokens in the bag. 2 of them are red. The chance of picking a red is 2/5 = 0.4 HOW TO ASSIGN PROBABILITIES TO EVENTS? There are three possible approaches. Classical approach: uses logic or mathematics. A standard deck of 52 cards has four aces. What is the probability that the first card drawn is an ace? 4 aces in a pack of 52 cards. Probability the next card will be an ace is 4/ 52. If the first card drawn was an ace, what is the probability the second card drawn will also be an ace? There are 3 aces remaining within the 51 cards currently in the deck. Therefore, probability is 3/ 51. Relative frequency (statistical) approach: It makes use of relatively frequencies calculated from large sets of observations from experiments or surveys. 11 90 86 13 13 – () 14 14 – () 15 15 – () 16 16 – () 17 Number of batteries Lifetime (hours) Relative Frequency 0.055 0.450 0.430 0.065 Subjective approach: It makes use of personal intuition, previous experience or general feelings. It is used when neither the classical nor the relative frequency approach is applicable. Since subjective probabilities reflect personal degrees of belief, they are likely to be biased and inaccurate. E.g.: Consider the statement ‘this horse’s chance of winning in its race next Saturday is 85 percent’. It doesn’t mean that the horse has won 85 percent of the races that it has run, or that if this race was run 100 times this horse would win it 85 times. This statement is ‘meaningless’, except that it