Question

Many businesses apply the understanding of uncertainty and probability theory in their decision practices in their business. Probability models can greatly help businesses to optimize their policies and make safe decisions. Although complex, these methods of probability can increase profitability and business success.

Please, develop and explain a situation in your work area where you would apply probability theory, or specify a probability distribution. Mention and explain the reason for his selection, and the advantages and disadvantages of the use of probability are in your example. Formulas and numbers are welcome and needed.

Answer 1

Many sectors apply the understandings of the uncertainty and probability in their business decision mode. Probability models can be greatly help the businesses in optimizing their policies and making safer decisions. Though complex, these probability or uncertainity methods can increase the profitability and success of a organization.

Investment

The optimization of a sector’s profit relies on how a business invests its resources. One important part of investing is known that the risks involved with the each type of investments. The one and only way a business can take these risks into its account when making the investment decisions is to use probability or uncertainity as a calculation method. After analyzing the probabilities of profit and loss associated with each of the investment decision, a business can be apply the probability models to calculate which investment or investment combinations has been yield the highest expected profit.

Customer Service

Customer service may be the physical customer service, such as banking window service, or virtual customer services, such as an Internet world. In either case, probability models or uncertainity can be help a company in creating the policy related to customer service. For such of the policies, the models of the queuing theory are integral part of it. These models allow companies to understand the efficiency of related to their current and accurate system of customer service and make changes to the optimize the system. If a company encounters problems within the long lines or long online wait times, this may be cause the company to lose customers. In this situation, queuing models become an most of the important part of problem solving.