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hil61217_ch24.qxd 5/14/04 16:46 Page 24-1
24CHAPTER
Probability Theory
n decision-making problems, one is often faced with making decisions based upon phe- I nomena that have uncertainty associated with them. This uncertainty is caused by in- herent variation due to sources of variation that elude control or the inconsistency of nat- ural phenomena. Rather than treat this variability qualitatively, one can incorporate it into the mathematical model and thus handle it quantitatively. This generally can be accom- plished if the natural phenomena exhibit some degree of regularity, so that their variation can be described by a probability model. The ensuing sections are concerned with meth- ods for characterizing these probability models.