PROBABILITY AND ITS TERMS

Learn probability, because probability and decision making are closely related. Probability is a numerical measurement of the likelihood of an event’s occurrence or otherwise.

Most times, managers do not have accurate information of the decision they wat to make; because things are not certain. For example, will increase in staff salaries eventually improve productivity? Will an increase in advertisement, automatically mean increase in sales volume? All these scenarios have a measure of uncertainties; we cannot say for sure what the outcome will be.

Probability will help to determine the likelihood of each of these events occurring.

LEARN THE TERMS IN PROBABILITY

Population: Is the entirety of the group under study. The term refer to all the possible things that can happen or occur in an experiment. We also call population ‘sample space’ or ‘universe’. It can be finite or infinite. For example, you want to know how Nigerian students feel about the current ASUU strike; the population will be all current students of Nigeria Universities.

Sample: It is the part of the population that is being studied. The conclusion on the sample is ultimately conclusion on the population. In practice, it is difficult if not impossible, to study every possible member of a population, as a result, we select a sample. From the example given above, it is obvious that; it is unreasonable to think we can get all Nigeria students to participate in the study. To help, we get a sample of students from selected Nigeria universities. The outcome of the study based on this selection, represent the outcome of the population.

Event: An event is the part of the population whose occurrence is of interest. We also call it ‘outcome’. We can define it in terms of one or more elements of sample space; all the elements of the sample space or none of the elements. With our previous example, an example of events in that example can be A and B; where A represent students who like or support the strike and B represent students who do not support the strike.

Types of Events in Probability

1. Equally likely events: Here two or more events are equally likely events when they have the same probability of occurrence. For example, a pregnant woman has equally likely chance of giving birth to a baby boy or baby girl.
2. Mutually exclusive events: Here the events do not have any sample space in common. As such, the occurrence of one event in any one trial excludes the occurrence of the others. Here is an example; when you toss a die, you can only have one of 1 to 6, once 1 comes up, all others cannot.
3. Independent events: Events are independent if the occurrence of one does not affect the probability of the other’s occurrence. For example, being an MBA student of Lagos Business school; does not affect the chance of being a staff of the same school.
4. Conditional Probability: In this instance, the possibility of an event happening is given that another event has already occurred. When events are not independent, then they are dependent. For example, to be an MBA student of Lagos business school, you must pass the entrance exam. Therefore, the probability to be a student of LBS is dependent on passing the entrance exam.

As managers, we need to learn probability.