Question

Probability tells us the chance or likelihood that a particular event will occur. Whether or not we realize it, every day we use probability to make decisions. For instance, when deciding whether to take an umbrella, we check the weather forecast to see the probability that it will rain. In this instance, probability tells us the likelihood that it will rain; however, the decision about taking an umbrella is based on an individual’s willingness to risk getting rained on. Some people will take an umbrella, when the probability of rain is at least 40%, while others will wait until the probability is at least 60%.

What is an example in business, where you have used probability to make a decision?

Answer 1

In India there are many festivals out of which Diwali is celebrated all over the country. If I want to make a decision about production of food items like laddoos or chakli etc. I will start it before the period of Diwali. The reason behind this is, the probability that people will purchase my food items in this season is very high. Usually if the probability of demand of these food items is 0.4 to 0.5, while in Diwali festival the probability increases to more than 0.8.

Same can be done with selling of decoration articals like diyas, lamps etc. Also in summer season sale of mangoes is having higher probability.