Chapter-7

What is Probability?
Probability is simply how likely something is to happen. Whenever we're unsure about the
outcome of an event, we can talk about the probabilities of certain outcomes—how likely
they are. For example, if there is a 20% chance of rain, the probability is 0.2. In business,
probability helps predict events like sales, customer behavior, or market trends, helping make
better decisions.
The Family of Uniform Probability Distributions
The Family of Uniform Probability Distributions includes distributions where all outcomes
are equally likely. This means every value within a range has the same chance of occurring.
For example, if a company randomly selects a number between 1 and 10 for a prize draw,
each number (1, 2, 3, …, 10) has an equal probability of being chosen.
What is The Family of Normal Probability Distributions?
The Family of Normal Probability Distributions includes patterns where data makes a bell-
shaped curve, centered around the middle. In business, this means most numbers are close to
the average, and only a few are much higher or lower. For example, if employee performance
follows a normal distribution, most workers will have scores near the middle, with only a few
scoring very high or very low
Characteristics
1.The normal distribution looks like a bell and has one peak in the middle. The average
(mean), middle value (median), and most common value (mode) are all the same and located
at the center. The total area under the curve is 1 Half of this area is on the right side of the
center, and the other half is on the left.
2.The curve is symmetrical, meaning if you cut it down the middle, both sides would look the
same. Each side has an area of 0.5.
3.The curve gradually gets closer to the X-axis but never touches it, extending infinitely in
both directions.
4.The position of the curve is determined by the mean (μ), and how spread out it is depends
on the standard deviation (σ).
What is The Standard Normal Probability Distribution?
The Standard Normal Probability Distribution is a special kind of normal distribution where
the average (mean) is 0 and the standard deviation is 1. This makes it easier to compare
different sets of data. For example, if test scores are adjusted (standardized), a score of 1
means the score is one step above the average. This helps businesses see how far a value is
from the average in a simple way.
The Empirical Rule
It states that if a random variable is normally distributed, then:
1. Approximately 68% of the observations will lie within plus and minus 1 standard deviation
of the mean.
2. About 95% of the observations will lie within plus and minus 2 standard deviations of the
mean.
3. Practically all, or 99.7% of the observations, will lie within plus and minus 3 standard
deviations of the mean.

Chapter-8
What is Sample?
A sample in is a small part of a larger group. It helps us understand the whole group without
checking everyone. For example, if a company wants to know how happy customers are, they
might ask 100 customers instead of all 10,000. This small group (sample) should be similar to
the larger group.
Why do you make a sample?4 types
We use samples in business statistics to save time and money while studying a large group.
Instead of surveying everyone, we survey a smaller group that represents the whole. For
example, to understand customer satisfaction, a company might use a simple random sample
by randomly selecting customers to survey.

Here are four types of samples and why you might make them:
Food Sample: A small taste of food, like at a grocery store. This helps people decide if they
want to buy the full product.
Product Sample: A small version of a product, like a trial-size shampoo. This lets customers
try it out before buying the full size.
Survey Sample: A small group of people chosen to answer questions in a survey. This helps
researchers understand what a larger group thinks without asking everyone.
Data Sample: a data sample is a small part of a larger group used to understand the whole
group. For example, surveying 50 customers out of 500 for feedback.
What is Sampling Method?
A sampling method is a way to select a small group from a larger population to study. This
helps save time and money. For example, if a company wants to know customer opinions,
they might survey 100 customers instead of all 10,000.
There are four main types of samples:
Simple Random Sample: Everyone has an equal chance of being chosen.
Stratified Sample: The group is divided into subgroups, and samples are taken from each.
Cluster Sample: The group is divided into clusters, and entire clusters are sampled.
Systematic Sample: Every ninth member of the group is chosen.
 What is Sample mean as a random variable?
The sample mean is like an average that can change based on different groups you pick from
a larger set. For example, if you ask 5 customers how much they spent and they say $10, $20,
$30, $40, and $50, you add these amounts and divide by 5 to get the average, which is $30.
This average can be different if you ask another group of customers.
What is Standard Error of the Mean?
The Standard Error of the Mean (SEM) tells you how close your sample mean (average) is
likely to be to the true population mean. This measures how spread out the numbers in your
sample are. This is the number of observations in your sample. Divide the standard deviation
by the square root of the sample size.
For example, if you surveyed 25 customers and found that the standard deviation of their
responses is $10, you would calculate the SEM like this:
SEM=Sample SizeStandard Deviation=10/√25=10/5=2
What is Sampling Distribution of the Sample Mean?
The sampling distribution of the sample mean is like a collection of averages from many
groups. Imagine you ask different groups of 5 customers about their spending. Each group’s
average spending is a sample mean. When you put all these averages together, you get a
pattern. This pattern helps you understand how the averages change and gives a good idea of
the true average spending of all customers.
What is The Central Limit Theorem?
The Central Limit Theorem means that if you take big enough samples from any group, the
averages of those samples will look like a bell curve, even if the original data isn’t. For
example, if you ask 30 customers about their spending and do this many times, the average
spending of each group will form a bell-shaped pattern. This helps you understand the overall
spending habits.
 Standard error of the mean
The Standard Error of the Mean (SEM) tells you how close your sample mean (average) is
likely to be to the true population mean. This measures how spread out the numbers in your
sample are. This is the number of observations in your sample. Divide the standard deviation
by the square root of the sample size.
For example, if you surveyed 25 customers and found that the standard deviation of their
responses is $10, you would calculate the SEM like this: SEM=Sample Size
Standard Deviation=10/√25=10/5=2

Chapter-9
What is point estimation?
Point estimation is when you use data from a small group to guess a value for a larger group.
For example, if you want to know how much all customers spend on average, you can look at
50 customers and find their average spending. This average is your best guess (point
estimate) of what all customers spend on average.
What is Confidence Intervals for a Population Mean?
A confidence interval is a range that tells us where the true average of a population likely
falls. It shows how confident we are about our estimate.
For example, if you survey 50 customers and find their average spending is $30, a 95%
confidence interval might be $28 to $32. This means you can be 95% sure that the true
average spending is between $28 and $32.
What is Population Standard Deviation, Known σ?
Population standard deviation shows how much the values in a whole group differ from the
average value. For example, if you know the ages of all employees in a company, the
population standard deviation tells you how much these ages differ from the average age. If
most ages are close to the average, the standard deviation is low. If the ages are very different
from each other, the standard deviation is high.
Population Standard Deviation, σ Unknown
When we don’t know the exact spread of values (like ages) in a whole group (population), we
use a smaller group’s (sample’s) spread to estimate it.
For example, if you don’t know the ages of all employees in a company, you can look at the
ages of a few employees to get an idea of the overall age spread.
What is Degrees of Freedom?
Degrees of freedom are the number of choices you have in a calculation.
For example, if you have 5 numbers and already know their average, you can freely choose 4
of those numbers to be anything. But the 5th number has no choice; it must be a specific
value to keep the average the same. So, you have 4 degrees of freedom, meaning 4 numbers
can change.
What is Confidence Interval for a Proportion?
A confidence interval for a proportion tells us the range where the true percentage is likely to
be.
For example, if a survey shows 60% of customers like a product, the confidence interval
might be from 55% to 65%. This means we're pretty sure the real percentage of customers
who like the product is somewhere between 55% and 65%, even if we didn’t ask everyone.

What is Choosing an Appropriate Sample Size?

Choosing an appropriate sample size means deciding how many people or things to include in
your study. A good sample size helps make sure your results represent the whole group. For
example, if you want to know what customers think, asking 100 people gives better results
than asking just 10. A larger sample gives more accurate answers and fewer mistakes in the
results.