Chapter 4 Zica

CHAPTER 4
PROBABILITY
4.1 Introduction
Statistics is sometimes described as the art of making decisions in the face of

uncertainty. Consider the following business problems:
Business Problem Uncertainty
Cars How many cars to stock Material prices

Economic demand
Accounting How many graduates to Employees turnover

Train for NATech Exams workloads
Exam pass rate
In such situations the uncertain factors can be measured or quantified using

probability.
In this Chapter, we describe the notion of counting, an experiment and events.

Probability is then defined, including the addition and multiplication rules.
Counting
The simple process of counting still plays an important role in business and
economics. One still has to count 1, 2, 3, 4 . . . , for example, when taking
inventory, when determining the number of damaged cases in a shipment of beer
from Ndola, or when preparing a report showing how many times certain stock
market indexes went up during a month. The process of counting is simplified in
this section by means of special mathematical Techniques.
Multiplication of Choices
If a choice consists of two steps, the first of which can be made in m ways and
for each of these the second can be made in n ways, the whole choice can be
made in m.n ways.
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Example 1
If a firm has 3 warehouses and 5 retail outlets, in how many different ways can it ship an
item from one of the warehouses to one of the stores?
Since m  3 and n  5, there are 3(5) = 15 ways.
Example 2
If a travel agency offers trips to 10 different countries, either by air, rail or bus, in how
many different ways can such a trip be arranged?
Since m  10 and n  3, there are 10(3) = 30 ways.
By means of appropriate use of tree diagrams, it is easy to generate the foregoing rule so
that it will apply to choices involving more than two steps.
Example 3
Retail Outlets


Warehouses

 
1 

2
 

3 


 


Figure 1.0 Tree diagram for Example 1 
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Permutations and Combinations
The rule for multiplication of choices and its generalization is often applied when several
choices are made from one set and we are concerned with the order in which they are
made.
Example 4
In how many different ways can the judges choose the winner and the first runner-up
from among the 5 finalist in a student beauty contest?
Since the winner can be chosen in m  5 ways and the first runner up must be one of the
other n  4 finalist, there are 5(4) = 20 ways.
Example 5
In how many different ways can the 25 members of a church choose a president, a Vice
President, a Secretary, and a Treasurer?
Regardless of which position is elected first, second, third and fourth, there are 25(24)
(23)(22) = 303 600 ways.
In general, if r objects are selected from a set of n objects, any particular arrangement
(order) of these objects is called a permutation.
Example 6
Determine the number of possible permutation of two of the three letters A, B and C and
list them all.
Since m = 3 and n = 2, there are 3(2) = 6 permutations; they are
AB AC BC BA CA CB
The formula for the total number of permutations of r objects selected from n distinct
objectives is given by
n
Pr  n(n  1)(n  2). . . (n  r  1)  (1)
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Since products of consecutive integers occur in many problems relating to permutations
and other kinds of special arrangements or selections, it is convenient to introduce here
the factorial notation. In this notation, the product of all positive integer less than or
equal to the positive integer n is called “factorial” and is denoted by n !. Thus,
0!  1 by definition, and
1!  1
2 !  2.1  2
3 !  3.2.1  6
4 !  4.3.2.1  24
5!  5.4.3.2.1  120
and in general n ! n( n  1)(n  2) . . . 3.2.1.
In short form,
n!
n
Pr   ( 2)
(n  r )!
Example 7
Find the number of ways in which 2 of 5 can be selected.
For n = 5 and r = 2
5
P2  5(4)  20 from the formula (1)
5! 5! 5( 4)(3)(2)(1)
and
5
P2   
(5  2)! 3! (3)(2)(1)
= 20
Permutations with Similar Items
There will be occasions when the items to be arranged will not all be different. If this is
the case then the number of permutations will be reduced.
Example 8
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Find the number of distinct permutations that can be formed from all the letters of the
word SEE.
The arrangements become, where E are numbers as E1 and E2
SE1 E2 SE2 E1 E2SE1 E1SE2
E1E2S E2 E1S
The number of permutations are 3.2.1 = 6. The number of permutations is reduced to 3.

If the labels are dropped you can’t tell the difference between the boxed permutations.
The version of formula is now
n!
n1!  n2!  n3! . . . nr !
Where n1 of the items are of one kind, and n2 of the items are of another type and so
on up to r types. In our example, n1  1, n2  2 and n1  n2  n  3 giving
3! 3( 2)(1)
  3 ways
1!  2! (1)(2)(1)
Combination
There are many problems in which we want to know the number of ways in which r
objects can be selected from a set of n objects, but we do not want to include in our
count all the different orders in which the selection can be made. Note here order is not
important.
Example 9
In how many ways can a committee of three A, B and C be selected?
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The three persons A, B and C can be assigned to a three-person committee in 3! = 6
orders (ABC, ACB, BAC, BCA, CAB and CBA), but there is only one committee,
not six.
The formula for a combination of r objects from the given n objects is given by
n!  n
n
Cr  .    nCr are called binomial coefficients are becoming useful in the
r!(n  r )!  r
later section on binomial distribution.
Example 10
Find the number of ways in which a person can select 3 stocks from a list of 5 stocks (the
number of combinations of 5 things taken 3 at a time).
For n  5, and r  3, we have
5! 5! 5( 4)(3)(2)(1)
5
C3   
3!(5  3)! 3!2! (3)(2)(1)(2)(1)
 10
Example 11
In how many ways can a Principal choose 3 of 45 members to review a student grade
appeal?
For n  45 and r  3, we have
45! 45! 45( 44)(43)

45
C3   
3!( 45  3)! 3!42! 3(2)(1)
 14190
Example 12
  30 n!
Determine the value of  20  using the formula Cr  r!( n  r )!
n
 
99
 30 
   30
C28
 28 
30! 30!
 
28!(30  28)! 28! 2!
30( 29)
  15( 29)  435
( 2)(1)
Risk
Risk is concerned with the events whose probability of happening and frequency of
occurrence can be calculated using statistics and past experience. In a situation of risk,
we cannot be sure which of several possible outcomes will occur, but we can at least
place values on the different possible outcomes. As an example, an insurance company
will be dealing with a situation of risk when issuing a policy on damage to property. The
insurer cannot be certain whether or not a certain office building will be destroyed by
lightening or fire etc, but at least he knows how much will have to be paid to settle the
insurance claim if this happens.
A decision maker can be described as one of the following.
1) Risk seeker, one who takes risks to achieve the best outcome no matter how small
the chance of it occurring.
2) Risk neutral, one who only considers the most likely outcome.
3) Risk averse, one who makes a decision based on the worst possible outcomes, for
example an investor who, in spreading his investment over a portfolio of stocks
accepts a lower expected return in order to reduce the chances of a larger loss is
expressing an aversion to risk.
The main methods of dealing with risk is to estimate the probability and use statistics to
look at its overall incidence in order to
1) Ensure that the level of reward (in the long run) is commensurate with the risks
taken.
2) Reduce the overall incidences to a pre-set accept level (e.g the taking out
of insurance).
Probability
Historically, the oldest way of measuring uncertainties is the classical probability

concept. It was developed originally in connection with games of chance, and it lends
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itself most readily to bridging the gap between possibilities and probabilities. This
concept applies only when all possible outcomes are equally likely, in which case we can
say that.
If there are n equally likely possibilities, one of which must occur and s are regarded
as favourable, or as a “success”, then the probability of a “success” is given by the ratio
s
.
n
Example 13
What is the probability of drawing a 5 from a well shuffled deck of 52 playing cards?
Therefore s  4, “cards numbered five (5)” among the n = 52 cards, so we have
s 4 1
  .
n 52 13
Example 14
What is the probability of rolling a 5 with a balanced die?
s 1
Since s  1 and n  6, we have  .
n 6
The major shortcoming of the classical probability concept where possibilities must all be
equally likely is that there are many situation in which the possibilities that arise cannot
be regarded as equally likely. This might be the case, for example, if we are concerned
with the question whether there will be rain, or sunshine, to tell whether a person will
receive a promotion or to predict the success of a new business or the behaviour of the
stock market or the success of a new marriage.
This leads us to the relative frequency probability which is the probability of an event
(outcome) is the proportion of the time that events of the same kind will occur in the long
run.
If we say that the probability is 0.53 that a bus from Kitwe to Mufulira will arrive on
time, we mean that, buses arrive on time 53% of the time. Also, if the weather man
predicts that there is a 20% chance of rain (that is the probability that it will rain is 0.20).
It means that under the same whether conditions it will rain 20% of the time.
In accordance with frequency concept of probability, we estimate the probability of an

event by observing what fraction of the time similar events have occurred in the past.
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Example 15
If the records show that (over a period of time) 25 of 125 buses from Lusaka to Kitwe
arrive on time, what is the probability that any bus from Lusaka to Kitwe will arrive on
time?
25
Since in the past  0.20 of the arrivals are on time, we use this fraction as an
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estimate of the probability.
Example 16
If 85 of 2000 first year student who enter School of Business dropped out before the end
of their first year, what is the probability that a freshman entering this college will drop
out before the end of his first year?
85
Since in the past  0.0425 of the first year dropped out before the end of their first
2000
year, we use this figure as an estimate of the probability.
The last method of calculating probability is the personal or subjective evaluation.
Hence subjective probability. Such probabilities express the strength of one’s belief
with regard to the uncertainties that are involved, and they apply especially when there is
little or no direct evidence, so that there really is no choice but to consider information,
‘educated guesses,” and perhaps intuition and other subjective factors.
Event
An event is a subset A of the sample space S. A is a set of possible outcomes. In our

example A = {1} or A = {2, 3} etc.
The event S itself is the sure or certain event since an element of S must occur, and the
empty set  , which is called the impossible event because an element of  cannot occur.
By using set operations on events in S, we can obtain other events in S. For example, if
A and B are events, the
1) A  B is the event “either A or B or both”

A  B is called the union of A and B.
2) A  B is the event “both A and B”.

A  B is called the intersection of A and B.
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3) A is the event “not A”.
A is called the complement of A
4) A  B is the event “A but not in B.”
If the events A and B are disjoint, we write A  B =  and we say that the two events A
and B are mutually exclusive. This means that they cannot both occur.
Random Experiments
We are all familiar with the importance of experiments in Science and Engineering.
Experimentation is useful to us because we can assume that if we perform certain
experiments under very ready same conditions, we will arrive at the results that are
essentially the same. Here we discuss random experiments where we don’t have control.
Example 1
Suppose we roll a fair die. The collection of all the possible outcomes ‘S’ is called the
sample space and the individual outcome points the sample points. Here S = {1, 2, 3, 4,
5, 6}.
Some Important Theorems On Probability
1) For any event A,
0  P ( A)  1
i.e, a probability is between 0 and 1 inclusive.
2) For  the empty set

P ( )  0
i.e. , the impossible event has probability zero.
3) If A is the complement of A, then P ( A)  1  P ( A)
4) If A and B are any two events, then P ( A  B )  P ( A) P ( B )  P ( A  B ). This

is called the addition rule for any two events.
5) For any events A and B, P( A)  P ( A  B ) P( A  B) .
6) If A and B are mutually exclusive events then P( A  B )  P ( A)  P ( B) . This is

called addition rule for two mutually exclusive events.
7) Conditional Probability
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Let A and B be two events such that P( A)  0. Denote P ( B / A) the
probability of B given that A has taken place. Since A is known to have taken
place, it becomes the new sample space replacing the original S. From this we
have the definition:
P( A  B)
P( B / A)   (1) or
P( A)
P( A  B)  P( A) P( B / A)  ( 2)
8) Independent Event
If P ( B / A)  P ( B ), i.e, the probability of B occurring is not affected by the fact

that A has occurred, then we say that A and B are independent events. This is
equivalent to P( A  B)  P( A) P( B)  (3)
Note that if this equation holds, then A and B are independent. Equation (3) is
called the multiplication rule.
Example 1
Suppose you are going to throw two fair dice. What is the probability of getting a 4 on
each die?
The first task is to write down the sample space, S. Each die has six equally likely
outcomes, and each outcome of the first die can be paired with each of the second die.
The sample space is shown in Figure 4.1. The total number of outcomes is 36, and only
one is favourables to a 4 on the first die and a 4 on the second. The 36 outcomes are
s
equally likely, so by , we have
n
1
P(4 on 1st and 4 on 2nd) =
36
1 2 3 4 5 6
1 (1, 1) (1. 2) (1, 3) (1, 4) (1, 5) (1, 6)
2 (2, 1) (2, 2) (2, 3) (2, 4) (2, 5) (2, 6)
3 (3, 1) (3, 2) (3, 3) (3, 4) (3, 50 (3, 6)
4 (4, 1) (4, 2) (4, 3) (4, 4) (4, 5) (4, 6)
5 (5, 1) (5, 2) (5, 3) (5, 4) (5, 5) (5, 6)
6 (6, 1) (6, 2) (6, 3) (6, 4) (6, 5) (6, 6)
Figure 4.1
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Alternatively, using the multiplication rule, since the two events are independent,
P( 4 on 1st die and 4 on 2nd die) = P(4 on 1st die) P(4 on 2nd die).
There are six faces on a die and on a fair die each is equally likely to come up when you
throw the die.
1
P ( 4 on die  .
6
1 1 1
Therefore P( 4 on 1st die and 4 on 2nd die) = . 
6 6 36
The two methods yield the same results.
Example 2
Fairwell Electronics, all 150 employees were asked about their political affiliations. The
employees were grouped by type of work, as executive or production workers. The
results with row and column total are shown in Table 4.1. Suppose an employee is
selected at random from the 150 Fairwell employees. Let us use the following notation to
represent different events of choosing: E = executives, PW = Production worker, M =
Movement for Multiparty Democracy (MMD) , U = United Party for National
Development, (UPND), I = Independent.
Table 4.1 Employee Type and Political Affiliation
Employee Type MMD (M) UPND (U) Independent Row Total

Executive (E) 10 35 10 55
Production Worker (PW) 65 22 8 95
Column Total 75 57 18 150
a) Compute P(M) and P(E)
number of MMD 75
P( M )    0.5
number of employees 150
number of executive 55
P( E )    0.367
number of employees 150
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b) Compute P(M/E) i.e. probability of M given E.
For the conditional probability, we restrict our attention to the portion of the
sample space satisfying the condition of being an executive.
P( M  E ) number of executives who are MMD

P( M / E )  
P( E ) number of executives
10
  0.182
55
c) Are the event M and E independent?
One way to determine if the events M and E are independent is to see if P(M) =
P(M/E) or equivalently, if P(E) = P(E/M). Since P(M) = 0.05 and P(M/E) =
0.182, we see that event P( M )  P ( M / E ) . This means that the event M and E
are not independent. The probability of event M ‘depends on” whether or not
event E has occurred.
d) Compute P(M and E)
This probability is not conditional, so we must look at the entire sample space.
P ( M and E )  P ( M  E ).
Therefore.
number of executives are MMD

P ( M and E ) 
total number of employees
10
  0.067
150
Let’s recompute this probability using the rules of probability for dependent
events.
55 10 10
P ( M and E )  P ( E ) P ( M / E )  .   0.067
150 55 150
The results using the rules are consistent with those using the sample space.
e) Compute P(M or E)
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From part (d) we know that the event MMD and executive are not mutually
exclusive, because P ( M  E )  0. Therefore:
P ( M or E )  P ( M  E )  P ( M ) P ( E )  P ( M  E )
75 55 10 120
     0.8
150 150 150 150
Example 3
A firm is independently working on two separate jobs. There is a probability of only 0.4
that either of the jobs will be finished on time. Find the probability that:
a) both
b) neither
c) Just one
d) at least one of the jobs is finished on time.
Let A be the event that the job is finished on time and B the event that the job is
not finished on time.
Then P(A) = 0.4 and P(B) = 1 – P(A) = 1 – 0.4 = 0.6.
a) The two events are independent hence
P(both finished on time)
 P ( A  B )  P ( A).P ( B )
 0.4(0.4)
 0.16
b) P(neither job finished on time)
 P ( A  B )  P ( A) P ( B )
 0.6(06)
 .0.36
c) P(just one job finished on time)
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 P ( A  B ) P ( B  A)
 0.4(0.6)  0.4(0.6)
 0.24  0.24  0.88
d) P(at least one job finished on time)
P ( A  B ) P ( B  A)  P ( A  B )
 0.24  0.24  0.16  0.64, or
 1  P (neither job finished on time )

 1  0.36  0.64
Example 4
30% of employees in a company earn over K150 000 per week and 60% earn between
K100 000 and K150 000 per week. Find the probability that an employee selected at
random earns:
a) less that K100 000 per week.
b) under K100 000 or over K150 00 per week.
30
P (over K150 000)   0.30
100
60
P ( K100 000 to K150 000)   0.60
100
a) P(under K100 000)
 1  P (overK100 000)
 1   P ( K100 000 to K150 000)  P (over K150 000)
 1   0.60  0.30
 1  0.9
 0.1(10%)
b) P(under K100 000 or over K150 000)
 P (under K100 000)  P (over K150 000)

 0.10  0.30
 0.40
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Exercise 1
1. Students have two independent tests. 20% of students pass test A and 70% pass
test B. Find the probability that a student selected at random passes:
a) Both tests
b) Only test A
c) Only one test.
2. A computer retailer conducts a survey of 250 computer purchasers and obtains the
information in the table below:
AGE
Less than 25 25 – 40 41 and over
Male 70 25 50
Female 45 40 20
If a customer is selected at random, find the following probabilities:
a) the customer is female and aged 25 – 40?
b) The customer is male.
c) If the selected customer is aged less than 25, what is the probability that
they are female?
d) Are the events female and aged 25 – 40 independent?
3. I select two cards from a packet of cards. What is the probability that they are
both kings?
4. I toss a fair coin and the throw a dice. What is the probability that I obtain a tail
and a five?
5. A bag contains 6 red counters and 5 blue counters. If one counter is taken at
random, replace, then another is taken, what is the probability that
a) both counters are red?
b) the first is red and the second is blue?
c) the two counters are of different colours?
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d) the two counters are of the same colours?
6. If 5 factories in a group of 25 factories in a certain community are violating

environmental regulations and 7 are randomly elected for inspection, what is the
probability that:
a) none of the violators will be selected for inspection?
b) all of the violators will be selected for inspection?
7. a) Explain what you understand by
i) Mutually exclusive events;
ii) Conditional probability;
iii) Independent events.
8. Two cards are drawn simultaneously from the same pack of 52 cards.
Find each of the following probabilities.
a) Both cards are picture cards.
b) Neither of the cards is a picture card.
c) Exactly one of the cards is a picture card.
4.2 Probability Distribution
Many probabilistic situations in business and commercial environments exhibit

the same underlying features. These frequently occurring situations can be
investigated by a fairly limited number of probability models, a few of which will
be discussed in this section.
Quantitative variables are either continuous or discrete as defined in Chapter 3. A

random variable is a variable which assumes different values depending on the
outcomes of an experiment.
A discrete random variable has a frequency distribution just like a continuous

random variable. A frequency distribution indicates the number of observations
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of a random variable (i..e the frequency) at each value of the random variable (X).
Consider the following example:
Example 5
Consider the rolling of a fair die 150 times as shown in the following table.
Face (x) 1 2 3 4 5 6
Number of times (f) 10 15 40 25 45 15
What we have is a frequency distribution. This table can be converted into a probability
distribution. Hence, a probability distribution is a table or graph or formula comprising
the possible outcome with its associated probability. Thus
Face (x) 1 2 3 4 5 6
P(x) 10 15 40 25 45 15
150 150 150 150 150 150
The probabilities in a probability distribution has the following properties:
i)  P( X )  1
ii) 0  P( X )   1
iii) E( X )   xP( x)
iv) Var ( X )   x 2 P ( x)   xP( x) 2
Properties (iii) and (iv) give us the expectation and variance of a random variable
respectively.
Example 6
What is our mathematical expectation if we win K75 000 if a balanced coin falls head
and lose K50 000 if it falls tails?
1
The amounts are x1  K 750 000 and x2   K 50 000 , the probabilities are P( x1 ) 
2
1
and P ( x2 )  and the mathematical expectation is
2
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E( X )   xP( X )
 x1P1  x2 P2
1 1
 75 000    (50 000) 
2
   2
 37 500  25 000  12 500
 K 12 500.
In the long run, he is expected to win K12 500.
Example 7
The probabilities are 0.25, 0.15, 0.22 and 0.38 that a speculator will be able to sell a
house within a year at a profit of K8 800 000, at a profit of K500 000, at a profit of K400
000, or at a loss of K600 000, respectively. What is the expected profit?
Substituting x1  800 000, x2  500 000, x3  K 400 000, x4  600 000,
P ( x1 )  0.25, P ( x2 )  0.15, P ( x3 )  0.22 and P( x4 )  0.38 int o E ( X )
  xP( x), we have
E ( X )  800 000 (0.25)  500 000(0.15)  400 000(0.22)  600 000(0.38)

 200 000  75 000  88 000  228 000
 K 135 000
Example 8
If the probabilities are 0.25, 0.35, 0.06 and 0.30 that a certain office will receive 0, 1, 2, 3,
or 4 complaints about theft on any one day. How many such complaints can be expected
per day?
The expected number is E ( X ) = 0(0.04) + 1(0.25) + 2(0.35) + 3(0.06) + 4(0.30) = 3.33
Example 9
On a particular day, a trader expects the sales of cabbages to follow the pattern.
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Sales 0 50 100 150
Probability 0.01 0.28 0.37 .34
Calculate:
i) the expected sales,
ii) the standard deviation.
i) The expected sales = 0(0.01) + 50(0.28) + 100 (0.37) + 150(0.34) = 102
P ( x)    xP ( x) 
2
ii) The standard deviation = var iance  x 2
Since  xP(x)  102 , from (1), we compute
x 2
p ( x )  0 2 (0.01)  (50) 2 (0.28)  (100) 2 (0.37)  (150) 2 (0.34)
 0  700  3 700  7 650
 12050
Therefore standard deviation = 12050  (102) 2  1646  40.57
The probabilities associated with values of the random variables can be computed
from a well-established equation.
The Standard Deviation: Measuring risk
Risk can be defined as the chance that an outcome other than expected will occur or it’s
the variability in the returns or outcomes from the investment. Standard deviation is used
to measure risk. This is because the amount of scatter or variability in the probability
distribution is measured by the standard deviation.
  s tan dard deviation  var iance
113
Another useful measure to risk is the coefficient of variation (CV), which is the standard
deviation divided by the expected return (mean value) that is
Risk
Coefficient of var iation  CV   100
return

  100

Example 10
Stocks A and B have the following probability distributions of future returns
Probability A(K’000) B(K’000)

0.03 10 15
0.20 20 25
0.50 12 18
0.27 35 30
0.10 5 4
a) Calculate the expected return for each stock.
b) Calculate the standard deviation of the returns for stock A and Stock B. Now
calculate the coefficient of variation for Stock A and Stock B. Which stock is
risky? Explain.
a) E(A) = Expected return from Stock A =  xP ( x )

= 10(0.03) + 20(0.20) + 15(0.50) + 35(0.17) + 5 (0.10)
= 0.3 + 7.500 + 5..950 + 0.5 = 18.25
= K18 250
E(B) = Expected return from Stock B =  xP( x )

= 15(0.03) + 25(0.20) + 18(0.50) + 30 (0.17) + 4 (0.10)
= 0.45 + 5 + 9 + 5.100 + 0.4 = 19. 95
= K19 950
114
b)   x 2
p( x)    ( xp( x)) 2
For A, we have
x P( x) x2 x 2 P ( x)
10 0.03 100 3
20 0.20 400 80
15 0.50 225 112.5
35 0.17 1225 208.25
5 0.10 25 2.5
x 2
P ( x )  406.25
  406.25  (18.25) 2  73.1875
  8.555
For B, we have
x P( x) x2 x 2 P ( x)
15 0.03 225 6.75
25 0.20 625 125
18 0.50 324 162
30 0.17 900 153
4 0.10 16 1.6
x 2
P ( x)  448.35
  448.35  (19.95) 2  50.347531875
  7.0956
115
 8555 7095.6
CVA   100   100; CVB   100
 18250 19950
CVA  46.9% ; CVB  36.5%
The coefficient of variation of stock B is less compared to that of Stock A. Hence one
would conclude that Stock B is less risky than Stock A.
Binomial Distribution
If P is the probability of a “success’ in an individual trial, then in n independent trials

the probability of x successes is given by the Binomial formula:
P ( x )  nC x P x (1  P ) n  x
where x = 0, 1, 2, . . . , n . The number of successes has a mean np and standard

deviation = np (1  p) .
The features of a binomial experiment are as follows:
1) The number of trials are fixed. We denote this by the number n as in the formula
above.
2) The n trials are independent and repeated under identical conditions.
3) Each trial has only two outcomes: success, denoted by S and failure denoted by F.
4) For each individual trial, the probability of success is the same. We denote the
probability of success by p and that of failure by q . Since each trial results in
either success or failure p  q  1 and q  1  p.
5) The main problem of a binomial experiment is to find the probability of x

success out of the n trials.
Alternatively, when we multiply out the power of a binomial bracket such as

(a  b) n we say that we are expanding the term and the result is called a binomial
expansion.
(a  b)1  a  b
(a  b) 2  a 2  2ab b 2
(a  b)3  a 3  3a 2b  3ab 2  b3
(a  b) 4  a 4  4a 3b  6a 2b 2  4ab3  b 4
(a  b)5  a 5  5a 4b  10a 3b 2  10a 2b3  5ab 4  b5
116
Let us now make some observations regarding the above expressions of (a  b) n
looking at the results, we see four things:
1. the “sum” of the powers is constant on each line for example ( a  b) 4 total power
on each term is 4.
2. the power of a is decreasing from left to right for example a 4 a 3 a 2 a1 .
3. the power of b is increasing from left to right for example b1 b 2 b3 b 4
4. The numbers form a triangle.
The triangle formed is know as Pascal’s Triangle, which can be used to obtain the
binomial coefficients. The numbers are arranged as follows:
n =0 l
n =1 1 1
n =2 1 2 l
n =3 l 3 3 l
n =4 1 4 6 4 1
n =5 1 5 10 10 5 1
n =6 1 6 15 20 15 6 1
n =7 1 7 21 35 35 21 7 1
n =8 1 8 28 56 70 56 28 8 1
etc.
Starting with this triangle and then using the rules given in (1), (2) and (3) above, we can
write down any expansion of (a  b) n .
117
Example 11
Expand (3a 4b)3
We start with the line of Pascal’s triangle for n  3 which gives us
1 3 3 1
we get
1(3a )3  3(3a ) 2 ( 4b)  3(3a )(4b)b  1(4b)3

 27 a 3  108a 2b  144ab 2  64b 3
Example 12
Expand (2a  3b)5
We start with the line of Pascal’s triangle for n  5 which gives us
1 5 10 10 5 1
We get:
1(2a )5  5( 2a ) 4 ( 3b)  10(2a )3 (3b) 2  10(2a ) 2 (3b)3  5( 2a )(3b) 4  (3b)5

 32a 5  240a 4b  720a 3b 2 1080a 2b 3  810ab 4  243b 5
The Binomial Expansion. The Binomial Theorem
A power of a binomial can also be expanded by means of the Binomial Theorem.
na n 1b n(n  1)a n  2b 2 n(n  1)(n  2)a n  3b 3

( a  b)  a 
n n
   .. .
1! 2! 3!
118
Example 13
Use the Binomial Theorem to expand (3a  4b)3
3(3a ) 2 (b) 3( 2)(3a )(4b) 2 3( 2)(1)(4b) 3

(3a  4b)3  (3a )3   
1! 2! 3!
 27a 3  108a 2b  144ab 2  64b 3
which agrees with the answer in Example 11. You will notice that in the last term
3( 2)(1)
cancels out.
3!
Example 14
Use the Binomial Theorem to expand (2a  3b)5
5(2a ) 4 ( 3b) 5( 4)(2a )3 ( 3b) 2 5(4)(2)(2a ) 2 ( 3b)3

( 2a  3b)5  (2a )5   
1! 2! 3!
5(4)(3)(2)(2a )(3b) 4 5( 4)(3)(2)(1)(3b)5

 
4! 5!
 32a 5  240a 4b  720a 3b 2  1080a 2b 3  810ab4  243b5 .
5( 4)(3)(2)(1)
You will notice that this time cancels out.
5!
The Binomial Theorem in Terms of Combinations
The Binomial Theorem can also be expressed in terms of combinations.
( a  b ) n  nC o a n  C1a n 1b 
n n
C2 a n  2b 2  nC3a n  3b3  . . .
119
Example 15
Use the Binomial Theorem to expand (3a 4b)3 .
(3a  4b)3  3Co (3a ) 3  3C 1(3a )3 ( 4b)  3C2 (3a )(4b) 2  3C3 ( 4b)3
 (3a ) 3  3(3a ) 2 ( 4b)  3(3a )(4b) 2  ( 4b)3
 27 a 3  108a 2b  144ab 2  64b 3
Which agrees with the answers obtained in example 11 and 13.
Example 16
Use the Binomial Theorem to expand (2a  3b)5
( 2a  3b) 5 5Co ( 2a ) 5  53C 1( 2a ) 4 ( 3b)  5C2 ( 2a ) 3 ( 3b) 2  5C3 ( 2a ) 2  ( 3b)3  5C4 ( 2a )(3b) 4  ( 3b
 32a 5  240a 4b  720a 3b 2  1080a 2b 3  810ab 4  243b 5
Example 17
If n  3 and p  0.4, use Binomial formula to find:
a) P(2),
b) P(0),
c) P(1)
a) P (2) 3C2 (0.4) 2 (11  0.4)3  2
3!
 (0.4) 2 (0.6)1
2!1!
Therefore P(2) = 0.288
b) P (0)  3C0 (0.4) 0 (1  0.4)3
120
3!
 (0.4) 0 (1  0.6)3
0! 3!
P (0)  0.216
c) P (1)  3C1 (0.4) 0 (1  0.4) 2

3!
 (0.4)(1  0.6)1
0! 2!
P (1)  0.432
Alternatively
If n  3, p  0.4, q  0.6
Using the binomial expansion
(0.4  0.6) 3  (0.4) 3  3(0.4) 2 (0.6)  3(0.4) 2 (0.6) 2  (0.6) 3

 0.64  0.288  0.432  0.216
P (3) P ( 2) P (1) P (0)
Note: At this stage it is very advisable to check that the sum of the individual
probabilities (the whole probability) is 1.
Example 18
Construct a Binomial distribution when n = 4 and p = 0.2
P (0)  4C0 (0.2) 0 (0.8) 4  0.4096
P (1) 4C1 (0.2)1 (0.8)3  0.4096
P ( 2) 4C2 (0.2) 2 (0.8) 2  0.1536
P(3)  4C3 (0.2)3 (0.8)1  0.4096
P (4) 4C4 (0.2) 4 (0.8)0  0.0016
Example 19
From past experience it is known that approximately 70% of applicants pass an initial
assessment test. In a group of six applications find the probability that:
121
a) all applicants pass the test,
b) only four applicants pass,
c) more than four applicants pass.
We have n = 6, p = 0.70.
a) P (6)  6C6 (0.70) 6 (0.30) 0

6!
 (0.1176490)
6!0!
 0.118 (11 .8%)
b) P (4) 6C4 (0.70) 4 (0.30) 2

6!
 (0.2401)(0.09)
04! 2!
 15(0.2401)0.09)
 0.324 (32.4%)
c) P(more than four) = P(5 or 6) = P(5) + P(6)
nowP (5)  6C5 (0.70)5 (0.30)

 6(0.70)5 (0.30)  0.303
and P (6)  6C6 (0.70) 6 (0.30) 0  0.118

Therefore P(more than four)
= 0.303 + 0.118
= 0.421 (42.1%)
Example 20
One fifth of all accounts are found to contain errors. In a batch of 6 accounts, find the
probability that the number of accounts containing errors is:
a) less than three
b) more than three
122
Find the mean and standard deviation of the accounts containing errors.
1
We have n  6, P   0.20
5
a) P(less than three) = P(0) + P(1) + P(2)
Now P (0)  6Co (0.20) 0 (0.80) 6  0.2621
P (1) 6C1 (0.20)1 (0.80)5  0.3932, and
P( 2) 6C2 (0.20) 2 (0.80) 4  0.2458
Therefore P(less than three) = 0.2621 + 0.3932 + 0.2458 = 0.9011
b) P(more than three) = P(4) + P(5) + P(6)
= 1 – P(less or equal to three)
= 1  [ P (0)  P (1)  P (2)  P (3)]
Now P (3)  6C3 (0.20)3 (0.80)3  0.0819
Therefore P(more than three ) = 1 – [0.2621 + 0.3932 + 0.2458 + 0.0819]
= 1 – 0.983 = 0.017
Alternatively,
P ( 4)  6C4 (0.20) 4 (0.80) 2  0.0154
P (5) 6C5 (0.20)5 (0.80)1  0.0015
P (6)  6C6 (0.20) 6 (0.80) 0  0.0001
123
Therefore (more than three) = 0.0154 + 0.0015 + 0.0001
= 0.017.
1
Mean = np  6   1.2
 5
 1  4 
Standard deviation = np(1  p )  6  
 5  5 
 0.96  0.9798
Poisson Distribution
To be able to use the binomial distribution, one must be able to count the number of
successes and the number of failures. In some situations however, it is not really sensible
to speak of successes and failures. For instance the number of telephone calls received at
a switch board in a unit interval, say may be of interest, but the number of time they are
‘received’ is almost meaningless. In such situations the binomial probability distribution
is no longer appropriate.
Fortunately another probability distribution the Poisson is available. This models a

situation where there is an interest in the number of times and rate at which events occur.
If events occur at random at an average rate of  per unit time then the probability of x
event is given by Poisson formula
e   x
P( x)  where x  0, 1, 2, . . . mean   and s tan dard deviation  .
x!
Example 21
  3, find the Poisson probabilities P(0), P(1), P(2), P(3) and P(4).
e   x
P( x)  , x  0, 1, 2, 3, 4.
x!
e 3 30
P (0 )   e  3  0.0498
0!
124
e 3 (3)1
P(1)   3e  3  0.1494
1!
e 3 (3) 2 9
P ( 2)   e  3  0.2241
2! 2
e 3 (3)3 27  3
P (3)   e  0.2241
3! 6
e 3 (3) 4 81e 3
P (4)    0.1681
4! 24
Example 22
Show that the Poisson formula give a good approximation of the Binomial probabilities
when n = 200 and p = 0.02.
We have n  200, P  0.02, so   nP  200(0.2)  4
Using the Binomial formula we have:
P(0)  200C0 (0.02) 0 (0.98) 200  0.0176
P(1)  200C1 (0.02)1 (0.98)199  0.0718
P (2)  200C2 (0.02) 2 (0.98)198  0.1458
P (3)  200C3 (0.02)3 (0.98)197  0.1964 etc
Now using the Poisson formula, we have
40 e 4
P ( 0)   0.0183
0!
41 e 4
P (1)   0.0732
1!
125
42 e 4
P ( 2)   0.1465
2!
43 e 4
P (3)   0.1952
3!
Since n is large and p small, the Binomial and poisson probabilities are in close
agreements. They agree to two or three decimal places.
Example 23
An assembly line produces approximately 3% defective items. In a batch of 150 items,

find the probability of obtaining:
a) only two defective
b) less than two defectives
c) at least two defective
We have n = 150 and p = 0.03. Since n is large and p is small we can use Poisson
distribution to approximate these Binomial probabilities. Now   np  150(0.03)  4.5
.
e 4.5 ( 4.5) 2
a) P ( 2)   0.1125
2!
b) p (less than 2)  p (0)  p (1).
e 4.5  4.5
o
Now P 0    0.0111
0!
e 4.5  4.5
And P 1   0.04999
1!
Therefore P less than 2   0.0111  0.04999  0.0611
126
c) P at least two defective   1  P none
 1  P 0
 1  0.0111  0.9889
Example 24
On average, 5 boys are absent from school each day. Find:
i) The probability that, on a day selected at random, exactly 5 boys are absent.
ii) The expected number of days on which there will exactly be 5 boys absent if the
school is open for 400 days each day.
i) We have   5
55 e 5
P  5 boys    0.1755
5!
ii)   np from (i) P  5 boys   0.1755. Then expected number of boys is

 70
Exercise 2
1) Use the Pascal’s triangle to expand the following expressions:
i) ( a  b) 5 ii ) (a  7) 7 iii) (3a  5b) 4
iv) ( 25  t )5 v) (2 x 3  y 2 ) 6
2) Use the Binomial Theorem to expand
i) (2c  3d )5 ii) ( 4r  5 s ) 4 iii) (1  x ) 3
127
4
 3 c2 
iv) (5a  2b ) 3 5
v)   
c 2 
3) If n  6, and p  0.4, use the Binomial formula to obtain the following

probabilities:
a) P 0 b) P 2 c) P  less than 4 
d) P  at least 4  e) P 4 f) P  at most 4 
4) If   3.5, use the poisson formula to obtain the following probabilities:
a) P 0 b) P  at most 2  c) P less than 2
d) P  more than 2 
5) An assembly line produces approximately 5% defective items. In a sample of

seven items, find the probability of obtaining:
a) No defectives b) only one defective
c) More than one defective d) at least one defective
6) Based on information from the Post, it is estimated that 85% of cars on the dual
carriage highway are going faster than the speed limit. A random sample of five
cars is observed. What is the probability that:
a) none of the cars is speeding?

b) at least one is speeding?
7) If 25 per cent of the packages produced by an automatic machine are defective,

find the probability that out of four packages chosen at random:
a) one is defective, b) three are defective
c) at most three are defective
128
8) A supermarket uses several cash registers to check out the orders of its customers
but has assigned one cash register to an express lane, which serves customers who
have purchased only less than or equal to ten articles. The probability that a
customer in this store will use the express lane is 0.25. Find the probability that
among six randomly selected customers there are zero, one, two, three, four, five
or six who will use the express lane.
9) If the probability is 0.45 that any one person will dislike the taste of a new
toothpaste, what is the probability that at least 3 of 20 randomly selected persons
will dislike it?
10) If a bank received on the average 5 bad cheques per day, what is the probability
that it will receive 3 bad cheques a given day?
11) The number of patients who are received per hour in the emergency room of a
hospital is a random variable having the poisson distribution with 2.5. Use the
poisson distribution to compute the following probabilities that in any given hour
the emergency room will receive:
a) no patients b) at least one patient
c) two patients d) four patients
12) Items produced from a machine are known to be 2% defective. If the items are
boxed into lots of 500, what is the probability of finding that a single box has 3 or
more defective?
Normal Distribution
Many business and accounting applications involve continuous or near enough

continuous variables. It is a distribution of “natural phenomena”, such as:
 Weight measurements
 Time measurements
 Interest rates
 Financial ratios
 Income levels
 Exchange rates.
The main characteristics of the distribution are:
a) It is symmetrical, with mean, median and mode equal. Symmetry implies that
50% of the area under the curve is below this point and 50% is above this point.
129
b) It is unimodel, i.e., the normal distribution peaks at a single value.
c) It approaches the horizontal axis on either side of the mean. In other words, the
normal distribution is asymptotic to the x – axis.
Consider a Normal distribution with mean =  and standard deviation =  as shown

below.
 x
z
The area shaded can be obtained from tables of the Normal distribution by finding the
standardized unit.
x
Z 

Note: the total area under the Normal Curve = 1.
Example 1
Given a Normal distribution with mean = 20 and standard deviation = 3.5, find the areas
under this Normal Curve.
a) above 30 b) below 23 c) above 12

d) between 15 and 28.
a)   20,   3 .5
  20 x  23
30  20 10
Z    2.86
3 .5 3 .5
130
From the Normal tables, we are given the area between 0 and 2.86. That is
0.4979.
The shaded area = 0.5000 – 0.4979 = 0.0021

b)
  20 x  23
23  20 3
Z    0.86
3.5 3.5
The Normal tables give the area from 0 to 0.86 = 0.3061.
The shaded area = 0.5000 + 0.3061 = 0.8061.

c)
12   20
12  20  8
Z    2.29
3. 5 3.5
The Normal tables give the area from 0 to 2.29. Because of the symmetric nature
of the distribution about o, this is the same as the area from 0 to –2.29. That is
0.4890.
The shaded area = 0.5000 + 0.4890 = 0.9890
131
d)
15   20 28
15  20  5 28  20 8
Z   1.43 Z   2.29
3.5 3.5 3. 5 3.5
The Normal tables give the area from 0 to –1.43 and 0 to 2.29. The shaded area is
0.4296 + 0.4890 = 0.9186.
Example 2
The wages of blue-collar workers in a large company are Normally distributed with a
mean of K104, 500 per week and a standard deviation of K14, 250 per week. Find the
probability of a worker, selected at random, earning:
a) over K123, 500 per week,
b) between K95, 000 and K133, 000.
a)
  104 500 123 500
132
123 500  104 500
Z   1.33
14 250
The required probability  0.5000  0.4062

 0.0938
b)
95 000   104 5000 133 000
95 000  104 500 133 000  104 500

Z Z  2.0
14 250 14 250
 0.67
The required probability = area shaded

 0.2486  0.4772
 0.7258
Example 3
133
The Bank has analyzed the number of transactions processed by each of its branches. A
typical branch will process 750 transactions a week. Experience has shown that there is a
standard deviation of 2.1. Transaction processing is approximately normally distributed.
a) Compute the probability of the number of branches who can be expected to

process more than 775 transactions per week.
b) What is the probability that the number of transactions expected to be processed

are between 705 and 795?
a)
  750 775
775  750
Z   1.19
21
The required probability is 0.5000 – 0.383 = 0.117. Hence, 11.7% of the

branches process more than 775 transactions per week.
b)
705   750 795
134
705  750 795  750
Z  2.14 Z  2.14
21 21
The required probability is 0.9676 or 96.8%.
Example 4
In an assessment of job performance the marks awarded are Normally distributed with a
mean of 65 and a standard deviation of 13.
a) In a group of 500 employees, how many would you expect to obtain over 85
marks?
b) From past performances it can be seen that approximately 25% of employees

obtain unsatisfactory gradings. What is the minimum ‘satisfactory grade?
a)
  65 85
85  65
Z   1.54
13
The required area = 1.5000 – 0.4382 = 0.0618. Therefore in a group of 500

employees: 500 (0.0618) = 30.9. Hence approximately 31 employees obtain over
85 marks.
b)
25%
135
  65
X is the minimum satisfactory grade. From tables
X  65
 0.66
13
X  65  8.58
X  56.42
Therefore the minimum grade = 56.
Exercise 3
1. Given a Normal distribution with mean = 70 and standard deviation = 20.
a) over 80 b) under 72 c) over 64
d) between 72 and 82 e) between 65 and 90
2. A population is Normal with   55 and   28 .
a) If one item is taken at random from this population, find the probability
that it is:
(i) greater than 70
(ii) less than 47
(iii) between 40 and 65.
b) Find the 90% confidence limits for this item.
3. The lengths of the fish received by a certain cannery have a mean of 5.62cm and a
standard deviation of 0.28cm.
(i) What percentage of all these fish is longer than 6.00cm?
(ii) What percentage of the fish is between 5.36 and 5.86cm long?
4. A baker knows that the daily demand for brown bread is a random variable with a
distribution, which can be approximated closely by a normal distribution with the
136
mean   54.5 and the standard deviation   5.8 . What is the probability that
the demand for brown bread will exceed 60 on any given day?
5. A bank manager has determined from experience that the time required for a
security guard to make his rounds in a bank building is a random variable have an
approximately normal distribution with   20.0 minutes and   3.6 minutes.
What are the probabilities that a security guard will complete his rounds of the
bank building in:
a) less than 13 minutes
b) 17 to 22 minutes
c) more than 22 minutes
6. A department store sales clerk knows that the number of sales she will make on a
business day is a random variable having approximately a normal distribution
with   30.9 and   5.1 . Find the probability that during a business day the
sales clerk will make:
a) more than 31 sales
b) fewer than 26 sales.
7. On the college soccer team, the mean weight of men is 65.6kg and a standard
deviation of 0.95kg.
a) What is the probability that a certain man weighs over 63kg?
b) Below what weight will 35% of the men weigh?
c) What is the probability that he weighs between 63kg and 66kg?
d) Above what weight will the heaviest 5% of the men be?
Normal Approximation To The Binomial
The Normal distribution can also be used as an approximation to the Binomial when n is
large and when p is not too small or large. Using:
  mean of normal  np
  s tan dard deviation of normal
 np 1  p 
137
Example 5
A fair coin is spun 15 times. Calculate the probability of the result giving exactly 8
heads.
The Binomial Distribution is a discrete distribution. It is the distribution of integers or

whole numbers. The Normal Distribution is a continuous distribution. It is the
distribution of an infinite number of values.
When we use the Normal Distribution as an approximation to the Binomial Distribution,

we have to use a correction factor of 0.5. For example:
x  3 is replaced by 2.5  x  3.5

x  4 is replaced by 3.5  x  4.5
1
Hence in our example,   np  15   7.5
 2
 1  7 
  np1  p   15    1.936
 2  2 
P  x  8   P  7 .5  x  8 .5 
 7 .5  7 .5 8 .5  7 .5 
 P Z  
 1.936 1.936 
7.5 8.5
 P  0  Z  0.52
 0.1985
138
Check: The binomial distribution would be:
8 7
1 1
P 8 heads  15C8    
 2  2
  6435  3.90625  10 3  7.8125  103 
 0.1964
139
EXAMINATION QUESTIONS
Multiple Choice Questions No. 1
1.1 In the normal curve of a distribution, what is the approximate area enclosed by
one standard deviation either side of the mean?
A. 68.27% B. 75.84% C. 95.45% D. 99.73%
(NATech, 1.2 Mathematics & Statistics, December 1998)
1.2 Robot machines used in welding car bodies, in an automated car factory, carry out
1 000 operations per vehicle. It is expected that 1 operation in 40 will fail
inspection. If more than 35 corrective operations are required on a single car
body, it is removed from the production lines. What is the proportion of car
bodies likely to be removed?
A. 5% B. 4.9% C. 2.5% D. 0.025%
1.3 A coin is spun eight times. What is the expression, which would give the
probability that the coin gives exactly two heads?
8 7 8 7 6
A.  0.5 6  0.5 2 B.  0.5 5  0.5 3
1 2 1 2  3
8 7  6 5 8 7  6 5 4
C.  0.5 4  0.5 4 D.  0.5 3  0.5 5
1 2  3  4 1 2  3  4  5
(NATech, 1.2 Mathematics and Statistics, December 1998)
140
1.4 A student is asked to do five questions from an exercise containing eight
questions. How many different selections are possible?
81
A. 56 B. 5 C. 336 D.
31
1.5 Each of four bags contains three coloured marbles, two red and one green. A
marble is drawn at random from each bag. What is the probability that four red
marbles are chosen?
1 4 1
A. B. C. D.
5 9 3
2
3
1.6 A box contains 10 electric bulbs, two of which are defective and the remainder
sound. What is the probability of selecting a sound bulb first and a defective bulb
second?
1 4 8 4
A. B. C. D.
5 5 45 25
1.7 A study of Excelsior Furniture Limited regarding the payment of invoices

revealed that, on average, an invoice was paid 20 days after it was received. The
standard deviation equated 5 days. What percentage of the invoice were paid
within 15 days of receipt?
A. 20% B. 34.13% C. 15.87% D. 84.13%
1.8 A pair of dice is tossed together. What is the probability that the sum of points on
the two dice is more than 8?
5 5 2 5
A. B. C. D.
36 18 9 9
1.9 A local city council puts 10, 000 light bulbs on the streets in a city. If lives of
bulbs follow a normal distribution with a mean of 60 days and a standard
deviation of 20 days, how many bulbs will have to be replaced after 20 days?
141
A. 228 B. 167 C. 477 D. 100
(NATech, 1.2 Mathematics and Statistic, June 2003)
1.10 Students take two independent tests. 30% of students pass test A and 60% pass
test B. What is the probability that a student selected at random passes only test
A?
A. 0.12 B. 0.3 C. 0.6 D. 0.18
(NATech, 1.2 Mathematics and Statistics, December 1999 Rescheduled)

Multiple Questions No. 2
1.1 What is the third term of the binomial expansion  0.5  0.5 5 ?
5 5 5 5
A. B. C. D.
32 16 8 4
(NATech, 1.2 Mathematics, December 1999 (Rescheduled))
1.2 Statistics show that, on average, 5 boys are absent from Lusaka Boys’ High
School each day. Which of the following is the expression, which gives the
probability that, on a day selected at random, exactly 7 boys are absent?
57 57
A. 75 7
B. C. e5  D.
7 7!
75
e5 
5!
(NATech, 1.2/B1 Mathematics, December 1999 (Rescheduled))
1.3 HIV/AIDS vaccine is administered to 35 subjects and found to be effective in 7

cases. What is the approximate probability that the vaccine will be effective?
7 7 28 35
A. B. C. D.
35 42 35 42
(NATech, 1.2 Mathematics and Statistics, Nov/Dec 2000)
1.4 Find the probability that an item drawn at random from the normal distribution
with mean 5 and standard deviation 3 will be between –1.24 and 1.37.
A. 0.2039 B. 0.9793 C. 0.385 D. 0.0204

(NATech, 1.2 Mathematics & Statistics, June 2002)
142
1.5 Expand  2 p  q  3
A. 2 p 3  6 p 2 q  6 pq 2  q 3 B. p 3  3 p 2 q  3 pq 2  q 3
C. 8 p 3  12 p 2 q  6 pq 2  q 3 D.  2 p  3  3 2 p  2 q  3 pq 2  q 3
(NATech, 1.2 Mathematics and Statistics, June 2002)
1.6 A normal distribution has a mean of 65 and a variance of 144. The probability of
a score of 80 or less is approximately:
A. 0.8944 B. 0.3944 C. 0.1056 D. 0.5398
1.7 The number of accidents occurring on average each year in a factory is 36. They
occur completely randomly. Using the normal approximation to the poisson
distribution, what is the probability that in 2002, there were more than 40
accidents?
A. 0.2266 B. 0.6622 C. 0.2626 D. 0.6226
1.8 In a group of 100 NATech students 30 are male, 55 are studying for the
Foundation Stage and 6 of the male students are not studying for the Foundation
Stage. A student chosen at random is female. What is the probability that she is
not studying for the Foundation Stage?
A. 0.70 B. 0.56 C. 0.20 D. 0.45

1.9 Four coins are tossed. What is the probability of getting precisely three heads?
2 3 1 1
A. B. C. D.
4 4 4 16
1.10 If IQ scores are normally distributed with a mean of 100 and a standard deviation
of 15, what proportions of people have IQs above 125?
143
A. 40% B. 0.4525 C. 0.048 D. 1.667
1.11 A box contains 400 bulbs of which 50 are red and 80 are blue. What is the
probability of drawing a ball that is neither red nor blue?
1 1 13 27
A. B. C. D.
8 5 40 40
1.22 A manufacturer claims that his mass produced goods are no more than 2%
substandard. A potential buyer agrees to place an order if a random sample of
100 of the units gives no more than 2 defective items upon thorough testing.
What is the probability of the order being place if the manufacturer’s claim is
valid?
A. 0.677 B. 0.5 C. 0.02 D. 0.133
SECTION B (1)
QUESTION ONE
a) The distribution of the sales is normal with a mean of 150 items per week, and a
variance of 100 items.
Required:
Find the probability that sales are less than 170 items in any week.
b) The probability that an item is defective is 0.02. How many defectives would you
expect to find in a batch of 4, 000 items?
c) i) What is the major difference between a combination and a permutation?
144
ii) In how many ways can number five question be selected out of a total number
of seven questions?
QUESTION TWO
a) The time required to completely move operations from Mongu to Lusaka will
vary with a mean of 300 days and a standard deviation of 9 days. Assuming that
the estimated durations are approximately normally distributed. Find the
probability that the project will take to relocate:
i) Less than 280 days

ii) More than 310 days
iii) Between 280 and 310 days.
b) In order to manage product quality, all material receipts from suppliers are
inspected by inspection and quality control department and returned to the
supplier once found to be defective. The number of orders randomly made in a
month varies.
i) Assume a monthly average rejection rate of four (4) orders, what is the
probability that exactly five (5) orders will be rejected in one particular
month? (To two decimal places)
ii) If the probability of rejecting an order is 30%, determine the probability

that at least three (3) out of eight (8) orders in a specific month made will
be rejected. (To two decimal places).
c) Over a long period of time a drug has been effective on 55% of cases in which it
has been prescribed. If 6 patients are treated by this drug, find the probability that
it will be effective for:
i) At least 5 patients;
ii) None of the patients;
iv) 1 or 3 patients.
QUESTION THREE
145
a) The weights of a certain item produced in large quantities over a long period of
time, is normally distributed with a mean of 8kg and a standard deviation of 0.02.
i) Any item whose weight lies outside the range 7.985 – 8.035 kg is taken to
be faulty. What is the probability of a faulty item?
ii) If it is required to reduce the weight 8.035kg by 2%, find the new mean
weight.
b) A firm produces 55 percent of items on production line A and 45 percent of the

items on production line B. In general, 3 percent of the products of line A and 5
percent of the products of line B are found to be defective. If an item is
subsequently returned as faulty, what is the probability that it was from line A?
c) In the manufacturing of clay pots, it was found that 8% were rejected. Calculate
the probability that a box of ten clay pots contained at most 2 rejects.
QUESTION FOUR
a) The probability that a NATech student will graduate is 0.4. Determine the
probability that out of 5 students chosen at random:
i) None will graduate.

ii) At least 1 will graduate.
iii) At most 2 will graduate.
b) A company coach carries passengers by road regularly between two cities. The
average journey time between the two cities is 190 minutes; the standard
deviation for journey taken is 20 minutes. Assume that the journey taken follows
a normal distribution.
i) Find the probability that a coach journey between the two cities will take
less than 160 minutes.
ii) If 150 journeys were made, how many journeys would take longer than
210 minutes?
v) The coach company claims that 95% of all its journey take less than 3
hours 35 minutes. This claim is incorrect. Calculate the true percentage
figure.
vi) The average number of errors on a page of a book is 1.2. Calculate the
probability that a page will have 0, 1, 2, 3, 4, 5, 6 or 7 errors. You may
assume that the probability of r successes in a possion distribution is given
by the formula:
146
r e  
P r  
r!
 stands for the average. Check the answers from a table of poisson
probabilities e 1.2  0.3012 .
(NATech, 1.2 Mathematics and Statistics, November/December 2001)
QUESTION FIVE
a) Two (2) machines produce the same type of product. The older machine produces
45% of the total output but five (5) in every hundred are normally defective. The
newer machine produces 55% of the total output and three (3) in every hundred
are defective.
Determine the probability that a defective product picked at random was produced
by the older machine.
(NATech, 1.2 Mathematics and Statistics, Nov/Dec 2000)
b) A banker claims that the life of a regular saving account opened with his bank
averages 18 months with a standard deviation of 645 months.
i) The probability that there will still be money in 22 months in a savings

account opened with the said bank by a depositor?
ii) The probability that the account will have been closed before two years?
(NATech, 1.2 Mathematics and Statistics, November/December 2000)
c) One quarter of all accounts are found to contain errors. In a batch of 8 accounts
find the probability that the number of accounts containing errors is
i) more than 2;
ii) less than 2.
(NATech, 1.2 Mathematics and Statistics, December 1999 (Rescheduled))
QUESTION SIX
a) An urn contains 10 red and 5 white balls. What is the probability of drawing 2
balls, one of each colour?
b) An assembly line produces approximately 2% defective items. In a batch of 140

items, find the probability of obtaining:
147
i) Only two defective;
ii) Less than two defective.
c) The number of errors made by a computer operator during 240 ten minute
intervals are given below.
No. of Errors 0 1 2 3 4 5 6 7 8 9 10 11
No.of
Intervals 4 18 35 47 47 38 25 14 7 3 1 1
i) Calculate to 3 significant figures, the arithmetic mean number of errors per

interval.
ii) Given that this distribution is possonian, calculate the poisson distribution
with the mean found in (i), above.
QUESTION SEVEN
a) Four normal (that is, fair) 6-sided dice are thrown simultaneously. Calculate the
probabilities of the result being 4 sixes, 3 sixes, 2 sixes, 1 six, or 0 six.
b) The wages of workers in a large Lusaka Company are normally distributed with a
mean of K110, 000 per week and a standard deviation of K15, 000 per week.
Find the probability of a worker selected at random, earning
i) Over K130, 000 per week;

ii) Between K100, 000 and K140, 000 per week.
c) 45% of voters are known to be African Congress Party (ACP). What is the
probability that out of a sample of 8 voters exactly 5 vote ACP?
QUESTION EIGHT
a) During a recent African Cup final match, the number of footballers being attended
to by first-aiders during a 10-minute interval is known to have a mean of 3. What
148
is the probability that 2 or more footballers arrive for attention during a 5-minute
interval?
b) The number of patients admitted to a local hospital each day with TB has a mean
of 2. On a particular day, what is the probability that:
i) no patients are admitted to the hospital?
ii) More than two patients are admitted to the hospital?
3
c) A man’s chance of winning a game is . If he plays five games, what are the
5
probabilities that he will win 0, 1, 2, 3, 4, 5 games respectively?
SECTION B (2)
QUESTION ONE
a) A company does not estimate gross sales for the coming year as a single value,
but forecasts, instead, the probabilities of various amounts of gross sales.
Suppose that this forecast shows the frequency distribution with a mean of K50,
000, 000 and a standard deviation of K3, 500, 000.
Calculate:
i) The probability that gross sales will be less than K40, 000, 000 according
to this forecast.
ii) The probability that gross sales will exceed K55 000 000.
iii) The expected value of gross sales for the coming year.
b) In a traffic study, observations were made on the number of mini buses passing a
particular point each minute over a period of five hours. It was found that, on the
average, one mini bus passed the point every minute. Calculate:
i) The probability that in any minute, the number of minibuses passing is 0,

1, 2, 3 and 4.
149
ii) The probability that at least one minibus passes the point in anyone
minute.
c) A student, asked to answer three compulsory questions from an examination

containing eight questions, ignores these instructions and answers four questions
selected at random. Find the probability that he has answered:
(i) All the three compulsory questions set;
(ii) Exactly two of the three compulsory questions set assuming that all
combinations were equally likely to be selected.
QUESTION TWO
1 3
a) A worker, on the average, spends of his/her time not working, and of
4 4
his/her time working. Five observations are made at random during a day at
which time it is noted whether the worker is working or not working. What is the
probability of making 0, 1, 2, 3, 4 and 5 observations when the worker is not
working?
b) A quality product undergoes a strength test (S) and a reliability test (R). 100
products examined yield the following results.
45 pass S and pass R
16 pass S and fail R
19 fail S and pass R
20 fail S and fail R
Find:
i) The probability of a component chosen at random passing the strength

test.
ii) The probability of a component, chosen at random, passing both the

strength test and the reliability test.
150
c) If X is normally distributed variable with a mean of 100 and a standard deviation
of 15, translate the following interval into an interval of Z scores.
70  X  130
QUESTION THREE
a) Dr. Mulenga works on eight days each calendar month at Easy Go Batteries (z)
Limited. The probability that he turns up for his appointments at Easy Go on time
is 0.75.
Use the binomial distribution to find the probability that Dr. Mulenga will turn up
for his appointments on time on 0, 1, 2, 3, 4, 5, 6, 7, 8 days in the same month.
b) An average of 3 cars arrive at Chirundu Border Post every minute. If this rate is
approximated by a poisson process, what is the probability that exactly 5 cars will
arrive in a 1-minute period?
c) On average, a bank cashier in the People’s Bank serves 1.5 customers per minute.
Find the probability that during a minute chosen at random, the bank cashier
would serve:
i) No customers;
ii) Exactly 3 customers.
QUESTION FOUR
a) Three fair cubical dice are thrown. Find the probability that:
i) The sum of the scores is 5; and
ii) None of the three dice shows a 6.
b) From past experience it is known that approximately 60% of applicants pass in

initial assessment test. In a group of five applicants, find the probability that:
i) All applicants pass the test;
ii) Only three applicants pass; and
151
iii) More than three applicants pass.
c) The heights of 250 boys at Kabwata High School are normally distributed with
mean 150cm and standard deviation 16cm.
i) Estimate the number of boys whose heights are between 162.8cm and
170cm.
ii) Estimate the number of boys whose heights are between 140cm and
145cm.
QUESTION FIVE
a) Two fair dice are thrown. What is the probability that:
i) The total score is 2; and
ii) The total score is 4?
b) A small machine shop has three sets of welding equipment. On average, during
an hourly period, one set is in use. Find the probability that:
i) No sets are in use; and
ii) All sets are in use and there is a demand for a fourth set.
c) If a large grass lawn contains on average 1 weed per 600cm 2, what will be the
poisson distribution of the number of weeds in an area of 400cm2?
QUESTION SIX
a) According to The Journal of Nutrition, the mean mid-arm muscle circumference

(MAMC) for males is a normally distributed random variable with a mean of
273mm and a standard deviation of 29.18mm. The MAMC for John Banda has
been measured at 341mm.
What is the probability that a male in the population will have a MAMC measure
greater than Banda’s 341 mm?
152
b) The mean number of babies born per day in Chambeshi Teaching Hospital is 5.5.
i) Find the probability that there will be 0, 1, 2, 3, 4, 5, … babies born in the

hospital on a day selected at random.
ii) Find the number of day in a period of six months (183 days) on which
there will be 0, 1, 2, 3, 4, 5, … babies born.
c) A Non-Governmental Organization (NGO), that provides counseling services to a

population of people who recently took an AIDS test, wishes to determine the
“power” of the test. To this end, it hires a Research Analyst to investigate the
frequency of “false positive” and “false negatives”. The analyst has observed that
there are four possible categories. These categories, and the corresponding
proportions are summarized in the table below.
Results of AIDS Test Person’s HIV Status

Has HIV Has No HIV
HIV Positive 0.89 0.02
HIV Negative 0.05 0.04
One person from this population will be contacted today. Compute the
probability that the person contacted:
i) Actually has HIV if it is known that he tested HIV positive; and
ii) Tested HIV positive if it is known that he actually has HIV.
153
—B— —F—
binomial, 99, 117, 118, 120, 123, 126, frequency probability, 102
141, 145, 154 —M—
Binomial Distribution, 117, 140 Mean, 126
Binomial Expansion, 120 —N—
—C— Normal Curve, 132
coefficient of variation, 115, 116, 117 Normal distribution, 132, 138, 140
Combination, 98 Normal Distribution, 131, 140
—E— —P—
Economic demand, 94 Pascal’s Triangle, 118
economics, 94 Permutations, 96, 97
event, 102, 103, 104, 107, 108, 126 Permutations and Combinations, 96
EXAMINATION QUESTIONS, 143
154
probability, 94, 100, 101, 102, 104, 105, —S—
106, 107, 108, 109, 110, 111, 112, standard deviation, 114, 115, 116, 117,
115, 117, 118, 123, 124, 126, 128, 124, 132, 134, 136, 137, 138, 139,
129, 130, 131, 134, 135, 136, 137, 140, 143, 144, 145, 146, 148, 149,
139, 140, 143, 144, 145, 146, 147, 150, 151, 152, 154, 155, 156
148, 149, 150, 151, 152, 153, 154, Standard deviation, 115, 126
155, 156 subjective probability, 102
Probability, 94, 101, 104, 111, 114, 115 subset, 103
PROBABILITY, 94 —V—
—R— variance, 112, 146, 147
Random Experiments, 103
155

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CHAPTER 4

Statistics is sometimes described as the art of making decisions in the face of

Business Problem Uncertainty

Cars How many cars to stock Material prices

Accounting How many graduates to Employees turnover

In such situations the uncertain factors can be measured or quantified using

In this Chapter, we describe the notion of counting, an experiment and events.

Since m  3 and n  5, there are 3(5) = 15 ways.

Since m  10 and n  3, there are 10(3) = 30 ways.

Since m = 3 and n = 2, there are 3(2) = 6 permutations; they are

and in general n ! n( n  1)(n  2) . . . 3.2.1.

Find the number of ways in which 2 of 5 can be selected.

Permutations with Similar Items

The arrangements become, where E are numbers as E1 and E2

SE1 E2 SE2 E1 E2SE1 E1SE2

The number of permutations are 3.2.1 = 6. The number of permutations is reduced to 3.

In how many ways can a committee of three A, B and C be selected?

later section on binomial distribution.

For n  5, and r  3, we have

For n  45 and r  3, we have

45! 45! 45( 44)(43)

A decision maker can be described as one of the following.

Historically, the oldest way of measuring uncertainties is the classical probability

Therefore s  4, “cards numbered five (5)” among the n = 52 cards, so we have

What is the probability of rolling a 5 with a balanced die?

In accordance with frequency concept of probability, we estimate the probability of an

An event is a subset A of the sample space S. A is a set of possible outcomes. In our

1) A  B is the event “either A or B or both”

2) A  B is the event “both A and B”.

4) A  B is the event “A but not in B.”

Some Important Theorems On Probability

1) For any event A,

2) For  the empty set

3) If A is the complement of A, then P ( A)  1  P ( A)

4) If A and B are any two events, then P ( A  B )  P ( A) P ( B )  P ( A  B ). This

5) For any events A and B, P( A)  P ( A  B ) P( A  B) .

6) If A and B are mutually exclusive events then P( A  B )  P ( A)  P ( B) . This is

If P ( B / A)  P ( B ), i.e, the probability of B occurring is not affected by the fact

Table 4.1 Employee Type and Political Affiliation

Employee Type MMD (M) UPND (U) Independent Row Total

a) Compute P(M) and P(E)

P( M  E ) number of executives who are MMD

c) Are the event M and E independent?

d) Compute P(M and E)

number of executives are MMD

d) at least one of the jobs is finished on time.

Then P(A) = 0.4 and P(B) = 1 – P(A) = 1 – 0.4 = 0.6.

a) The two events are independent hence

P(both finished on time)

b) P(neither job finished on time)

c) P(just one job finished on time)

d) P(at least one job finished on time)

 1  P (neither job finished on time )

a) less that K100 000 per week.

b) under K100 000 or over K150 00 per week.

a) P(under K100 000)

b) P(under K100 000 or over K150 000)

 P (under K100 000)  P (over K150 000)

If a customer is selected at random, find the following probabilities:

a) the customer is female and aged 25 – 40?

b) The customer is male.

d) Are the events female and aged 25 – 40 independent?