Where is probability used in business

Dry: A Memoir Augusten Burroughs. Related Audiobooks Free with a 30 day trial from Scribd. Empath Up! Shree Roshani. Ashiqur Rahman Abir. Akshara K. O Kothamangalam, - Muhammad Asghar , Marketing at AlliCo. Muhammad Hashaam Shinystar , Manager. Smita Kumari. Sanjana Sharma. Saieesh Kanakula , tr cso at MphasiS. Shantaveeresh Hiremath.

Show More. Views Total views. Actions Shares. No notes for slide. Shahzad Babar Presented By: M. Hashaam Roll No. It is my pleasure to acknowledge the guidance and support of my subject Teacher: Shahzad Babar for their guidance. It is classified in three ways. It is the science of uncertainty or chance, or likelihood.

A probability value ranges between 0 and 1 inclusive and represents the likelihood that a particular event will happen. A probability value of 0 means there is no chance that an will happen and a value of 1 means there is percent chance that the event will happen.

Understanding probability is helpful for decision-making. Conducting an experiment or sample test provides an outcome that can be used to compute the chance of events occurring in the future. An experiment is the observation of some activity or the act of taking some measurement. Whereas, an outcome is a particular result of an experiment. The collection of one or more outcomes of an experiment is known as an event. For example, a market testing of a sample of new breakfast cereal, new drink, new shoes, new magazine, etc.

The probability of certain events is already known or the resulting probabilities are definitive. The empirical probability, also known as relative frequency, or experimental probability.

For example: 1 of business graduates were employed in the past. It is an educated guess. The graph for a typical probability distribution resembles a bell curve, where the least likely events fall closest to the extreme ends of the range and the most likely events occur closer to the midpoint of the extremes. A major application for probability distributions lies in anticipating future sales incomes.

Companies of all sizes rely on sales forecasts to predict revenues, so the probability distribution of how many units the firm expects to sell in a given period can help it anticipate revenues for that period. The distribution also allows a company to see the worst and best possible outcomes and plan for both. The worst outcome could be units sold in a month, while the best result could be 1, units sold in that month. Probability distributions can help companies avoid negative outcomes just as they help predict positive results.

Statistical analysis can also be useful in analyzing outcomes of ventures that involve substantial risks. The distribution shows which outcomes are most likely in a risky proposition and whether the rewards for taking specific actions compensate for those risks. Probability distributions are highly useful in producing tools to evaluate various business scenarios.

If you know that you close one sale for every three appointments you have, then you know on average you will make a sale every day if you book three appointments. If you didn't know your closing ratio, you could only guess at how many appointments you need, and you would be unable to generate a reliable sales forecast. Market research is an invaluable way to leverage each of these strategies. Suppose, for example, you are launching a new product and are trying to determine the best sales channels to use and what price to charge.

A single person's response won't give you much data with which to work. With market research, you can identify unknown variables that may affect purchases, like the color of the packaging. If half of the respondents say they would be more likely to buy the product online and the other half are more likely to buy it in a retail store, then offering both options should increase sales. If 20 percent of respondents are willing to pay double the price at product launch, then that may be a good option for the first several weeks.

You could reduce the price or offer discount codes to those who didn't complete the initial purchase. Market research, including surveys, is just one way companies can identify probabilities and make decisions on solid data. Simply asking customers or prospects for their opinions before making your decision will reduce your risk of making the wrong move.