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What is probability?

Probability means possibility. Probability is defined as a quantitative measure of uncertainty a numerical value that conveys the strength of our belief in the occurrence of an event.  That is, probability is the likelihood that an outcome such as whether a new product will be profitable or not, or whether a project will be completed within 15 weeks or not.

The probability of an event is always a number between 0 and 1 both 0 and 1 inclusive.  Although many people convert them to percentages. The statement that there is a 10% chance that oil prices will rise next quarter is another way of stating that the probability of a rise in oil prices is 0.1. The closer the probability is to 1, the more likely it is that the outcome will occur.

How to Calculate Probability?

When one has one has defined a situation then it is called event. In the real world when he tries it many times i.e., n times and observes how many times his event occurs then his try is called experiment. In an experiment, when he counts events favorable to his event then he can calculate probability as follows:

Example: A retail store owner observed 10 customers, after entering the store, who bought his any one of his products and found that 3 out of 10 customers baught at least a product. Now, retail store owner can calculate the probability.

 

Experiment: his observation

Repetition (Total number of outcomes): 10 times

Event: buy at least one product.

Number of Favorable outcomes: 3 times

Probability (Buy) = 3/10 = 0.3

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Types of Probability

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