What are the uses of probability theory in business?
Answers
Meaning and Importance Probability is the study of random events. It is used in analyzing games of chance, genetics, weatherprediction, and a myriad of other everyday events. Statistics is the mathematics we use to collect, organize,and interpret numerical data.
Still, the real importance of probability in business decision making doesn’t even deal with statistics, numbers or math. It’s its story. It’s about how to look at events.
For example, most would look at an outcome made by three events and think, “Doing those three things again would give the same outcome.” Probability’s story says, “Don’t count on it.”
Pilot programs are great business examples. When they go well, they usually launch a bigger program. When they don’t, they don’t. Probability says, “Not so fast.”