Probability Is Used in Business.

¶ … probability is used in business. Probability theory can be used in various business applications which include calculation of risks; evaluation of long time financial gains or loses on the bases of processed data series. In many respects business applications of probability theory are limited to evaluation of "probabilities of possible profits and profit amounts." Probability theory is a powerful tool used for setting interest rates for evaluation of insurance programs, etc.

When a specialist makes an insurance plan he has to calculate the cost of life insurance which is based on a reasonable expectation of a number of deaths from the total number of policy holders, evaluation of this probability is very important for further cost policies and possible revenue forecasts. The same calculations are done in different spheres of economy where the possibility of high risks is included, for example for stock market.

Probability analysis is also used in business decision making, when there is uncertainty in situation which requires analysis of data for making a serious decision. In many respects stock market analysis is done on the probability research; modeling of business processes is made on the base of probability processes and is often used for evaluation of efficiency of continuous services (conveyor production; car washing services, fast foods, or other services which assume presence of a line of customers).

Probability applications in business help to understand market behavior, season fluctuations of prices and economic risks. 2. Conduct a literature and internet search and in a paper of between 200 and 300 words, describe the relative usefulness of probability distributions on business today. In your discussion, explain how such statistical devices can aid the businessman in making sound business decisions. The use of probability and statistics methods in different areas of business is very important.

These numerical methods of data analysis can give the most detailed characteristics of data series, outlining the most problematic sides of businesses. Probability distributions describe all values of which random variable can take and the probability associated with each value. Such functions can be used for the analysis of a number of business processes: customer distribution in sales of specific products, season distribution of sales, daily distribution of client load on restaurant, supermarket or services center.

Even though that distribution of random economic values can have different types of distribution (Poisson, normal, etc.), distribution function allows to find a range of data for which probability of the event to occur is the highest, which allows to adjust business and working schedule to the distribution particularities.

Statistical devices such as probability distributions are used in analysis of employees' performance, sales analysis and marketing researches, as they allow to set the most optimal conditions for successful business performance and restructure business in accordance with probability distribution performance indicators, which allows to minimize business risks, shorten spendings and change business working atmosphere for better. 3. Conduct a literature and internet search and write a paper of between 200-300 words describing how business uses normal distribution. In your paper, discuss how a business person can benefit from using normal distribution.

Normal distribution has a number of applications in different areas of business. Math gives the following definition of normal distribution: "normal distribution (a bell-shaped curve) represents a theoretical frequency distribution of measurements. In a normal distribution, scores are concentrated near the mean and decrease in frequency as the distance from the mean increases." In business administration it's commonly agreed today that portfolio theory assumes that returns of a portfolio with diversified assets are in agreement with normal distribution law.

In such areas of management as operations management, observations show that process variations also follow normal distribution law, which explains distribution of a random.