Probability is the likelihood that a given outcome will occur

Probability is the likelihood that a given outcome will occurProbability is the likelihood that a given outcome will occur. Probability is a useful tool in analyzing many aspects of business. Different experiments can be done to observe the possible outcomes and the measurement of the observations can be used to make business decisions. For example if an insurance company would like to determine the probability or likelihood that customer service representatives will be more productive when given more breaks, an experiment can be done to measure their performance on days when they are given more breaks and days when they are only given the required break periods. The probable outcomes are better performance, or not better performance. A measurement can be made of the probable outcomes and the insurance company can then make a decision as to whether or not it would be cost productive to provide extra times for breaks.
It is advantageous for a business to utilize probability to make business decisions. Forming probability experiments and using the statistical outcomes of these experiments can provide useful data. In the customer service example observing the probable outcome of giving employees more breaks is an experiment aimed to measure performance, experiments using probable outcomes can also be aimed to measure sales, probability of errors, and countless other managerial decisions.
The customer service probability experience utilizes the classic method which uses logic to assign probability. (Bowerman, et al, 2012, pg. 155) The probability of better performance, or not better are logical probabilities. Subjective probability uses experience, expertise, or intuition to assess probability. (Bowerman, et al, 2012, p. 156) A probability based on personal opinion is a subjective probability. Using subjective probability may not be advantageous for a basis of a business decision. A subjective probability experiment can have a set amount of probable outcomes as does the classic method, but the outcomes only parameter is an individual’s subjective opinion.
References:
Bowerman, B.L., O’Connell, R.T., Murphree, E.S., & Orris, J.B. (2012). Essentials of Business Statistics (4th
ed.). New York, NY: McGraw-Hill/Irwin.

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