Custom Decision on Uncertainity essay paper sample
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Probability theory according to Bayes’ theorem it shows the relation between one conditional probability and its inverse. Simple mathematical formula is used for calculating conditional probabilities. A formulated hypothesis requires a collected data that justifies it. Bayes' Theorem relates the "direct" probability of a hypothesis.
Each term in Bayes' theorem has a conventional name: The key idea is that the probability of event A and event B depends not only on the relationship between A and B.P(A) is the prior probability or marginal probability of A.P(A|B) is the conditional probability of A, given B or the posterior probability because it is derived from or depends upon the specified value of B.P(B|A) is the conditional probability of B given A. It is also called the likelihood.P(B) is the prior or marginal probability of B, and acts as a normalizing constant.
Opening a business requires a lot of risks and considerations which are discovered more while planning or doing research. Some of the considerations include capital, the right venue to set it, labor, security and much more.
A cyber is what I had in mind and I did a research on its advantages (A)and disadvantages (D). With the data collection, I would come to a conclusion if it is the right business to put up. I found the were already a few cyber existing within the area and I decided to have a talk with some of them.
My research mostly concentrated on the area I wanted to set up the business. I talked to one of the business owners who informed me that he invested around 70,000/= in his cyber as he started it and within half an year he gained a profit of 50%. He made over 105,000/=. He therefore was able to return the money he invested on and a 50% profit of the invested money.
There are times that the business doesn’t pick up as expected.accourding to his speculation, there is a 25% of loss within an year. Whereby we are left with 75% of profit within the same year. I set up the variables to examine the probability of profit that one can earn and probability of loss according to my findings.
-Probability of profit within an year is 75% ;(Pp = 0.75)
-Probability of loss within an year is 25% (Pl=0.25)
I inquired form another business man how the response of the customers was. I wanted to know if they were interested in cyber services within the area. He gave an approximation of 80% of customers that took full advantage of the services that his cyber had to offer. Therefore leaving us with 20% that do not take interest in cyber services.
-Probability of Customers interested 80% (PCi= 0.80)
-Probability of Customers not interested 20% (PCo=0.02)
I was also interested in security within the area. Safety is the best precaution for any business. So my findings according to the business men were 30% of security available within the area which means we are left with 70% of insecurity. Some had to provide their own security by hiring watchmen and other extra precautions. This obviously alarmed me and which meant I had to take security measures into consideration.
-Probability of Security is 30% (PSi=0.30)
-Probability of Insecurity is 70% (PSo=0.70)
The above probabilities gave me the advantages and disadvantages of opening a cyber business. The advantage probabilities (P(A)=0.75+0.80+0.30=1.85). The disadvantage probabilities (P(D)=0.25+0.02+0.70=0.97)
Based on the above calculations, the advantages are more than those of disadvantages. Meaning by putting up a cyber I would experience some losses or disadvantages as I would call them but the advantages or profits would cover up the losses.