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Learning
Goals
Basic
principle
of
coun6ng
Combina6ons
Permuta6ons
An
Example
A
man
is
looking
to
make
3
investments.
He
wishes
to
invest
in
one
of
the
following
types
of
assets:
Government
Bonds,
Mutual
Funds,
Land
and
Precious
Metals.
He
has
narrowed
down
to
3
dierent
Government
Bonds,
3
dierent
Mutual
Funds
and
Gold,
Silver
and
Pla6num
under
Precious
Metals.
How
many
op6ons
does
he
have?
We
can
try
coun6ng
them!
It
is
not
an
impossible
task
but
it
is
good
to
know
that
there
is
a
simpler
yet
eec6ve
method
to
count
the
number
of
possible
combina6ons
of
these
assets
Applied
Sta+s+cs
and
Compu+ng
Lab
3
An Example (Contd)
Investments Combina6on
Precious Metals
Pla6num
Gold
Silver
3
dierent
assets
(Bonds,
Mutual
Funds
and
Metals)
3
dierent
types
in
each
asset
So
we
have
a
333
=
27
op6ons!
So
the
investor
can
invest
in
27
dierent
ways
5
Permuta6on
A
rm
has
resources
enough
to
invest
in
3
possible
opportuni6es.
There
are
4
possible
opportuni6es:
A,
B,
C
and
D
Each
of
these
opportuni6es
need
dierent
amounts
of
ini6al
investments.
Once
the
company
selects
the
rst
opportunity,
the
next
one
will
depend
on
how
much
resources
are
le\
a\er
paying
for
the
rst
one.
It
must
now
choose
ANY
3
out
of
these
in
such
a
manner
that
it
balances
out
its
resources.
How
many
possible
op6ons
does
the
rm
have?
These
are
only
a
few.
The
order
in
Let
us
list
a
few:
which
these
opportuni6es
are
A
B
C
selected
is
important
because
the
resources
have
to
be
distributed
A
C
B
accordingly.
We
call
each
of
these
B
C
A
arrangements
a
Permuta+on,
i.e.
(A,B,C)
is
one
permuta6on,
(C,A,B)
C
B
A
is
another.
Now,
the
ques6on
is
how
do
we
count
the
number
of
permuta6ons
without
lis6ng
them
all?
Applied
Sta+s+cs
and
Compu+ng
Lab
Number
of
Permuta6ons/Arrangements
Let
us
apply
the
principle
of
coun6ng:
The
rst
opportunity
can
be
any
of
the
4
The
second
any
of
the
remaining
3
The
third
one
of
the
remaining
2
So
we
have
432
=
24
op6ons!
In
general,
the
number
of
permuta6ons
of
n
objects
is
n (n 1) (n 2).......... 2 1 = n!
Suppose
that
there
are
20
opportuni6es
to
choose
from.
How
many
dierent
permuta6ons
of
3
do
we
have
now?
20! 20! = Using
the
same
principle
as
above
we
have:
20 19 18 = 17! (20 3)! In
general,
the
number
of
permuta6ons
of
size
r
from
a
total
of
n
objects
is
given
by:
n
n! Pr = (n r )!
7
Combina6on
Suppose
that
all
the
opportuni6es
were
equal
in
investment
and
return
amounts,
the
rm
then
would
not
dieren6ate
the
order
in
which
the
opportuni6es
were
selected
In
this
case
(A,B,C)
is
the
same
as
(C,A,B),
i.e.
(A,B,C)
,
(A,C,B),
(B,A,C), (B,C,A),(C,A,B)
&
(C,B,A)
are
all
the
same
to
the
rm
The
interest
is
in
{A,B,C}
This
is
called
a
Combina+on,
the
order
in
which
items
are
selected
does
not
majer,
we
are
simply
selec6ng
a
set
Our
only
op6ons
here
are:
A
A
A
B
Applied
Sta+s+cs
and
Compu+ng
Lab
B B C C
C
D
D
D
8
Number
of
Combina6ons
Let
us
say
we
need
to
select
r
item
from
n
The
number
of
permuta6ons
is:
n!
(n r )!
We
know
that
these
already
include
the
selec6on
and
that
the
selec6on
is
counted
more
than
once
A
selec6on
of
size
r
has
r!
dierent
permuta6ons
So
to
adjust
for
the
extra
coun6ng
we
divide
by
r!
Therefore,
the
number
of
possible
selec6ons
is
n! 1 (n r )! r !
This
is
denoted
by
n
Thank you