Page 227 - BA2 Integrated Workbook STUDENT 2018

Risk 2: Probability

Joint probabilities

So far only a very small number of alternatives have been considered in the
examples. In practice a greater number of alternative courses of action may exist,
uncertainty may be associated with more than one variable and the values of
variables may be interdependent, giving rise to many different outcomes.

Where we are considering the joint probability of two independent variables,
we multiply their probabilities together.

For example in a factory it was found that there was a 1% chance of a fault during
the manufacturing stage and a 3% chance of a fault during the painting stage.

If these faults are independent of each other, the chance that a final product will have
a fault in both the manufacture and the painting would be 0.01 × 0.03 = 0.0003, or
0.03%.

Illustrations and further practice

Go over illustration 6

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