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Probability Concepts to Solve Business-Related Problems

As a manager, what are some benefits of applying probability concepts to solve business-related problems? Would business decisions suffer without probability concepts? Explain.

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Probability concepts are powerful tools in business scenarios. They allow managers to make statements about how likely an event might be and also take important decisions. We are aware that uncertainty haunts every aspect of life, and business is no exception. Here are several examples which will make this clear:

(a) Suppose it is known that a particular machine used in the manufacture of a part produces with a particular distribution of sizes. Say 85% of the parts are between 49 and 51 mm in diameter. By studying the distribution of sizes, the manufacturer, can then use this information to decide which orders to ...

Solution Summary

A complete solution is provided, with examples, to give a full view on the usefulness of probability concepts as business tools. 427 words.