Making use of multivariate distributions

Advanced Probability: Uncertainty in Data

Maarten Van den Broeck

Senior Content Developer at DataCamp

The role of probability and distributions in business decisions

• Quantify uncertainty
• Assess risks
• Better data-driven choices

Course overview

Chapter 1

Advanced probability for business decisions

Chapter 2

Measuring and managing uncertainty

Chapter 3

Simulation techniques for decision support

Prerequisite knowledge and skills

• Basic knowledge of statistics
• Recommended DataCamp course: Introduction to Statistics

Univariate distributions

• Probabilities for a single variable
• Summarize data and make informed decisions
• However, real-world data is often more complex

Multivariate distributions

• Two or more variables interacting and changing together
• Deeper insights into data

Joint probability

• Value combinations of different variables at the same time
• How likely are they to happen simultaneously?

Example: coffee shop

• Understanding customer behavior
  • How much do customers spend?
  • How long do they stay?
• Separately:
  • Average spend: $5
  • Average stay: 30 minutes
• Together:
  • Customers who stay more than one hour spend 30% more

Example: coffee shop

Time Spent in Shop	Average Spending ($)
< 30 minutes	$5.00
30 - 60 minutes	$6.00
> 60 minutes	$6.50

$$ $$

• Use to plan interventions: discounts, comfortable seating

Let's practice!

Advanced Probability: Uncertainty in Data