Quantitative Methods - Unit 2 Study Material (NMIMS MBA)
📄 Chapter Title: Probability Concepts
✍️ 1. Introduction to Probability
Imagine you are planning a Mumbai local train journey.
• You check the weather: Will it rain?
• You check train timings: Will it be on time?
All of this = Probability Thinking
"Uncertainty ka calculation karna hi toh Probability hai!"
⚖️ 2. What is Probability?
Definition:
Probability is a measure of how likely an event is to occur, ranging from 0 (impossible) to 1
(certain).
Real-World Analogy:
Tossing a coin: Head ya Tail? Probability is 0.5 (or 50%) for each.
ASCII Diagram:
Probability Scale:
0 --------- 0.5 --------- 1
Impossible Maybe Certain
Example:
If there's 90% chance of rain, umbrella lena smart hai!
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☑️ 3. Approaches to Probability
1. Classical Approach
• All outcomes are equally likely.
• Eg: Tossing a fair coin. P(Head) = 1/2
2. Empirical Approach
• Based on past data or experiments.
• Eg: Mumbai rains in August 25 days out of 31. So, P(Rain) = 25/31
3. Subjective Approach
• Based on intuition or belief.
• Eg: "I feel CSK will win tonight."
Chart:
+---------------------+
| Probability Approach|
+----------+----------+
| Classical| Empirical| Subjective
+----------+----------+
🧐 4. Key Terms
Term Meaning Hinglish Example
Experiment Action with uncertain outcome Tossing a coin
Outcome Result of experiment Head aaya
Event Collection of outcomes "Even number" in dice
Sample Space All possible outcomes {1, 2, 3, 4, 5, 6} for a dice roll
📊 5. Types of Events
1. Independent Events
• One doesn't affect the other.
• Eg: Tossing a coin & rolling a die.
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2. Dependent Events
• One affects the other.
• Eg: Drawing cards without replacement
3. Mutually Exclusive
• Can't happen together.
• Eg: Getting Head AND Tail on one coin toss.
ASCII:
Toss a Coin & Roll a Die:
[Head] --|
[Tail] --| --> [1,2,3,4,5,6]
(Independent)
🔢 6. Addition & Multiplication Theorems
➕ Addition Theorem
• For Mutually Exclusive:
• P(A or B) = P(A) + P(B)
• For Overlapping:
• P(A or B) = P(A) + P(B) - P(A and B)
✖️ Multiplication Theorem
• For Independent:
• P(A and B) = P(A) x P(B)
• For Dependent:
• P(A and B) = P(A) x P(B|A)
ASCII Flow:
Mutual Exclusive?
Yes -> Add
No -> Add - P(A and B)
Independent?
Yes -> Multiply P(A) x P(B)
No -> Multiply P(A) x P(B|A)
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🤔 7. Conditional Probability
Formula:
P(A|B) = P(A and B) / P(B)
Real Example:
Ek student ne test diya. Uske Physics pass hone ki probability kya hai given he passed Maths?
🧬 8. Contingency Table
0 Movies 1 Movie 2+ Movies Total
Male 15 10 5 30
Female 30 25 15 70
Total 45 35 20 100
Definitions:
• Marginal: Total row/column
• Joint: Inside table value (e.g., Male & 0 Movies)
• Conditional: Based on condition (e.g., P(Male | Watched 0 Movies))
⚛️ 9. Bayes Theorem
Formula:
P(A|B) = [P(B|A) * P(A)] / P(B)
Real Analogy:
Aapko lagta hai kisi student ne cheating ki. Phir aap CCTV dekhte ho jisme haath hilta dikhta
hai. Now your belief updates = Bayes!
Example:
3 Boxes:
• Box 1: 3 Red
• Box 2: 2 Green
• Random box chosen & Red ball drawn.
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What's the probability ball came from Box 1?
Flow:
P(Red|Box1) x P(Box1)
------------------------
Total P(Red)
📘 10. Practice Questions
🔹 Short Answer:
1. Define sample space with example.
2. Differentiate between Independent & Dependent Events.
3. What is Classical Probability?
🔹 Application Based:
1. You're an HR. 60% employees are on time. What is the probability that 2 randomly picked are both
late?
2. A machine breaks down with 0.1 probability daily. What's the probability it works 5 days straight?
🔹 Higher Order Thinking:
1. Why do people believe in Gambler's Fallacy?
2. How can bias affect empirical probabilities?
3. How can Bayes help in fraud detection?
📏 11. Bonus Activity:
Game: Dice Roll Frequency
Roll 2 dice 10,000 times (or simulate).
Which sum appears most?
Answer: 7 (Most combinations add up to 7)
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🔧 12. Study Strategy
Day Task
1 Watch 1 YouTube explainer (Bayes or Conditional)
2 Solve 5 sums from textbook
3 Create flashcards: Events, Sample Space, etc.
4 Practice case: movie watching contingency table
5 Discuss with a peer + Quiz self on formulas
