Bayesian Analysis

BAYESIAN ANALYSIS By:Hit e n d ra s in h Za la

Bayesian Analysis  

To determine the impact of various possibilities on the ultimate financial need The probability of a certain event occurring, if it is conditional on the occurrence of a previous event , is given by the product of the probability of the previous event and that of the present event

Bayesian analysis for purchasing   

P ( 0 . 1 0 / M )= 0 . 5 0 

P ( 0 . 0 5 / M )= 0 . 30

P(0.15/M)=0.20 P ( M )= 0 . 6 0 P(0.50/NM)=0.30 P(0.02/NM=0.30

P(N/M)=0.40 P(0/NM)=0.40

Calculation Probability (0.05)=(0.60×0.30)+(0.40×0.30)=0.30  Probability (0.15)=(0.60×0.20)=0.12  Probability (0.02)=(0.40×0.30)=0.12  Probability (0)= (0.40×0.40)=0.16 

Calculation      

Rs. 1,10,00,000×0.30= 33,00,000 Rs. 1,05,00,000×0.30= 31,50,000 Rs. 1.15,00,000×0.12= 13,80,000 Rs. 1,02,00,000×0.12= 12,24,000 Rs.1,00,00,000×0.16= 16,00,000 Expected Value=Rs.1,06,54,000

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