marsilni

not sure if this helps... (I am writing this from memory) .

instead of memorizing the formula - draw out the tree and calculate the total probs. and then work backward.s.. the Bayes formula is the only thing that is intimidating.

company has a 80% chance of product launch success, 20% chance of product launch failure.
if product launch is successful - company makes profits 80% of the time. If failure - makes profits 30% of the time.

Company has made a profit. What was the probability that the product launch failed.


draw a tree diagram

Product launch success 0.8 profit 0.8
success 0.8 loss 0.2

launch failure 0.2 profit 0.3
0.2 loss 0.7

company made a profit...

success/profit=0.8 * .8 = .64
success/loss = 0.16
failure/profit = 0.06
failure/loss = 0.14

Total profit probability = .64 + .06 = 0.7
This is a given... probability that it was a failure on the product launch = 0.06 / 0.70 ...

CP