Reference no: EM131973576

Probability is the relative frequency with which an even occurs. Probability helps managers make rational decisions in situations involving uncertainty. There are 3 types of probability. Empirical probability is determined by observation. For example, the number of defects in 10,000 widgets was observed to be 25. So, P(defective)= 25/10,000. Subjective probability – subjective probability measures the likelihood of an event subjectively. Rationally derived from experience of the past, knowledge, and conditions of the present. A “personal belief”, allowing substantial variation in measures. Example: Based on past experience. I feel that the probability of candidate A winning the election is about 60%. Classical Probability requires enumerating all possible outcomes, counting the outcomes of interest, and computing probability of the outcome(s) of interest = number of the outcomes(s) of interest / the total number of outcomes. Example: If there are 40 even numbers and 60 odd numbers randomly distributed randomly in a box, the probability of drawing an even number, P (even) = 40/(40+60). The probability rules: probability outcome can take any value from 0 or 0% (impossible) to 1 or 100% (certainty). The probability of all outcomes is 100%. An event consists of 1 or more outcomes. The probability of an even not occurring is 1 minus the probability that it occurs. Select all VALID probabilities values. 50/49; 49/50; 1.01; -0.25; 1; 0%; 110%.