CHAPTER 3

EXERCISE WITH SOLUTION

1. The following table shows a partial probability distribution for the MRA Companys projected profits (in
thousands of dollars) for the first year of operation (the negative value denotes a loss):

-100

100
150
200

f (x)

0.10
0.20
0.30
0.25
0.10

a)Find the missing value of f (200). What is your interpretation of this value?
b)What is the probability that MRA will be profitable?
c) What is the probability that MRA will make at least $100,000?
Answer 1
a) The missing value of

f ( 200 )

is 0.05.

b)The MRA will be profitable with the probability of 0.70.

c) 0.40 is the probability that the MAR will make at least $100,000.
2. Data were collected on the number of operating rooms in use at Tampa General Hospital over a 20-day period.
On 3 of the days only one operating room was used; on 5 days, two were used; on 8 days, three were used; and
on 4 days all four rooms were used.
a)Use the relative frequency approach to construct a probability distribution for the number of operating rooms in
use on any given day.
b)Draw a graph of the probability distribution.
c) Show that your probability distribution satisfies the requirements for a valid discrete probability distribution.
Answer 2
a)
No. of operating rooms

No. of days

Probability distribution

f (x)
3
=0.15
20
5
=0.25
20
8
=0.40
20

1 of 12

4
=0.20
20

Total
c)

The given data is satisfying the requirements of discrete probability distribution which are as follows.
i.

ii.

f ( x ) 0

f ( x ) =1

3. Brandon Lang is a creative entrepreneur who has developed a novelty soap item called Jackpot to target
consumers with a gambling habit. Inside each bar of Jackpot shower soap is a single rolled-up bill of U.S.
currency. The currency (rolled up and sealed in shrink-wrap) is appropriately inserted into the soap mixture
prior to the cutting and stamping procedure. The distribution of paper currency (per 1000 bars of soap) is
given in the following table.
Distribution of Paper Currency Prizes
Bill Denomination
Number of Bills
520
260
$20
$10
120
$50
$100
Total
1000

a)What is the expected amount of money in single bar of Jackpot soap?

b)What is the standard deviation of the money in single bar of Jackpot soap?
c) How many bars of soap would a customer have to buy so that, on average, he or she has purchased three bars
containing a $50 or $100 bill?
d)If a customer buys 8 bars of soap, what is the probability that at least one of these bars contains a bill of $20 or
larger?
Answer 3
a) Expected amount =

=xf ( x )

Distribution of Paper Currency Prizes

Number of Bills
Bill Denomination

x
$10
$20
$50
$100
Total

f (x)

0.52
0.26
0.12
0.07
0.29
0.001

xf ( x )
0.52
1.3
1.2
1.4
1.45
0.1
5.97

Expected amount = 5.97

2 of 12

b)Standard deviation =

2= ( x)2 f ( x )

Distribution of Paper Currency Prizes

Number of Bills Expected value
Bill Denomination

x
$10
$20
$50
$100

f (x)

0.52
0.26
0.12
0.07
0.29
0.001

Total

xf ( x )

0.52
1.3
1.2
1.4
1.45
0.1

( x )2
0.94
16.24
196.84
1938.64
8841.64

( x )2 f ( x )
12.48
0.244
1.94
13.77
56.22
8.84

5.97

93.494

2= 93.494
Standard Deviation =

=9.66

Let Y = number of bars that contain a $50 or $100 bill. Observe that Y is a binomial random variable,
where n = numbers of bars purchased and p = probability of a bar containing a $50 or $100 bill = (29/1000)
+ (1/1000) = .03. E[Y] = n p = n 0.03 = 3, thus n = 100. The customer needs to buy 100 bars of soap to
have, on average, three bars with a $50 or $100 bill.

d.

Let W = number of bars that contain a $20 or $50 or $100 bill. Observe that W is a binomial random
variable, where n = 8 and p = (70 + 29 + 1 / 1000) = 0.10. P(W 1) = 1 P(W = 0) = 1 - .4305 = .5695.
4. The demand for Carolina Industries product varies greatly from month to month. Based on the past two years of
data, the following probability distribution shows the companys monthly demand:
Unit Demand
300
400
500
600

Probability
0.20
0.30
0.35
0.15

a)If the company places monthly orders equal to the expected value of the monthly demand, what should
Carolinas monthly order quantity be for this product?
b)Assume that each unit demanded generates $70 in revenue and that each unit ordered costs $50. How much will
the company gain or lose in a month if it places an order based on your answer to part (a) and the actual
demand for the item is 300 units?
c) What are the variance and standard deviation for the number of units demanded?

Answer 4

3 of 12

a) Expected value =

=xf ( x )
Unit Demand

Probability

f (x)

300
400
500
600
Total

0.20
0.30
0.35
0.15

xf ( x )
120
175
445

Thus the Carolinas monthly order quantity will be 445.

b)When the units are 445 at a price of $70 the revenue is 70*445= 31150 and the cost is 50*445=$22250. So in this
scenario company is gaining (Profit= Revenue Cost) $8900.
sWhen the units are 300 at a price of $70 the revenue is 70*300 = $21000 and the cost is 50*300= $15000. So the
company is gaining (Profit= Revenue Cost) $6000.
c)
I. Variance =

= ( x ) f ( x )
2

Unit Demand

Probability

f (x)

300
400
500
600
Total

0.20
0.30
0.35
0.15

Expected value

xf ( x )
120
175
445

( x )2
21025
2025
3025
24025

( x )2 f ( x )
4205
608
1059
3604
9476

Variance = 9476.
II. Standard deviation =

2= ( x)2 f ( x )

9476=97

Standard deviation = 97.

5. The J. R. Ryland Computer Company is considering a plant expansion that will enable the company to begin
production of a new computer product. The companys president must determine whether to make the
expansion a medium- or large-scale project. The demand for the new product involves an uncertainty, which
for planning purposes may be low demand, medium demand, or high demand. The probability estimates for the
demands are 0.20, 0.50, and 0.30, respectively. Letting x indicate the annual profit in $1000s, the firms
planners developed profit forecasts for the medium- and large-scale expansion projects.
Medium scale Expansion Large scale Expansion
profits
profits

4 of 12

Demand

Low
Medium
High

f (x)

0.20
0.50
0.30

150
200

f ( y)

0.20
0.50
0.30

100
300

a)Compute the expected value for the profit associated with the two expansion alternatives. Which decision is
preferred for the objective of maximizing the expected profit?
b)Compute the variance for the profit associated with the two expansion alternatives. Which decision is preferred
for the objective of minimizing the risk or uncertainty?

Answer 5
a) Expected value =

=xf ( x )
Medium scale Expansion profitsLarge scale Expansion profits
Expected value
Expected value

x
Demand

Low
Medium
High

150
200

f (x)
0.20
0.50
0.30

Total

x f (x )

y
100
300

f ( y)
0.20
0.50
0.30

=145

yf ( y )
=140

So we have found the medium scale expansion will maximize the profits of the company with $1, 45,000.
b)Variance =

= ( x ) f ( x )
2

Large scale Expansion

profits
Expected value

Medium scale Expansion profits

Expected value

x
Demand

Low
Medium
High

150
200

f ( x ) x f (x )

0.20
0.50
0.30

Total

=145

( x )2 f ( x ) y
1805
907
=2724

100
300

f ( y ) yf ( y )

0.20
0.50
0.30

=140

( y )2 f ( y )
3920
800
7680
=12400

To minimize the risk and uncertainty the medium scale expansion profits variance is more preferable that is 2724.
6. A survey on British Social Attitudes asked respondents if they had ever boycotted goods for ethical reasons
(Statesman, January 28, 2008). The survey found that 23% of the respondents have boycotted goods for ethical
reasons.
a)In a sample of six British citizens, what is the probability that two have ever boycotted goods for ethical reasons?
b)In a sample of six British citizens, what is the probability that at least two respondents have boycotted goods for
ethical reasons?
c) In a sample of ten British citizens, what is the probability that none have boycotted goods for ethical reasons?

Answer 6
a) Probability of 2 boycotted goods

5 of 12

Binomial probability distribution =

f ( x )=

n!
x
n x
p ( 1 p )
x! ( nx ) !

n =6
= no. of trials
p = 0.23 = probability of success on one trial
x =2
= number of successes in n trials
Sf(x) =
probability of x successes in n trials.

f ( 2 )=

n!
x
nx
p ( 1 p )
x! ( nx ) !

f ( 2 )=

6!
2
62
0.23 (10.23 )
2! ( 62 ) !

f ( 2 )=

720
0.0529 ( 0.3515 )
48

f ( 2 )=0.2788
b)Probability of at least 2 boycotted goods.

f ( x ) 2

n =6
= no. of trials
p = 0.23 = probability of success on one trial
x = 2 = number of successes in n trials
f(x) =
probability of x successes in n trials.
We can find this probability by subtracting the probability of 0 and 1 boycotted goods from 1 (whole probability).

1f ( x )=

n!
x
nx
p ( 1 p )
x! ( nx ) !

6!
6!
0
60
1
61
0.23 (10.23 ) +
0.23 ( 10.23 )
0! ( 60 ) !
1! ( 61 ) !

(
720
720
1( 0.20+ 0.0622)
720
120
1

1( 0.20+0.37 )

f ( 2 )=0.43

c) None have boycotted goods.

n = 10 = no. of trials

6 of 12

p = 0.23 = probability of success on one trial

x =0
= number of successes in n trials
f(x) = probability of x successes in n trials.

f ( x )=

n!
x
nx
p ( 1 p )
x! ( nx ) !

f ( 0 )=

10!
0
100
0.23 ( 10.23 )
0! ( 100 ) !

f ( 0 )=

3628800
0.0732
3628800

f ( 0 )=0.0732
7. When a new machine is functioning properly, only 3% of the items produced are defective. Assume that we will
randomly select two parts produced on the machine and that we are interested in the number of defective parts
found.
a)Describe the conditions under which this situation would be a binomial experiment?
b)How many experimental outcomes yield one defect?
c) Compute the probabilities associated with finding no defects, one defect, and two defects?

Answer 7
a) The trials are identical and they are just defective or non defective. Probabilities of each trial are not changing on
repetition (Independent). So, we can say that this information is meeting conditions of binomial probability
distribution.
b)Yield one defect

f ( x )=

n!
px ( 1 p )nx
x! ( nx ) !

n =2
= no. of trials
p = 0.03 = probability of defective item
x =1
= number of defective item in n trials
f(x) =
probability of x successes in n trials.

f ( x )=

n!
x
n x
p ( 1 p )
x! ( nx ) !

f ( 1 )=

2!
1
21
0.03 ( 10.03 )
1! ( 21 ) !

2
f ( x )= 0.029
1

f ( x )=0.058
7 of 12

c) Probabilities
I. With no defect
X= 0

f ( x )=

n!
x
nx
p ( 1 p )
x! ( nx ) !
2!
0
20
0.03 ( 10.03 )
0! ( 20 ) !

f ( 0 )=

2
f ( x )= 0.9409
2

f ( x )=0.9409
II. With one defect.
X=1

f ( x )=

n!
x
n x
p ( 1 p )
x! ( nx ) !

f ( 1 )=

2!
0.031 ( 10.03 )21
1! ( 21 ) !

2
f ( x )= 0.029
1

f ( x )=0.058
III. With two defect
X= 2

f ( x )=

n!
px ( 1 p )n x
x! ( nx ) !

f ( 2 )=

2!
2
22
0.03 ( 10.03 )
2! ( 22 ) !

2
f ( 2 )= 0.0009
2

f ( 2 )=0.0009
8 of 12

8. Military radar and missile detection systems are designed to warn a country of enemy attacks. A reliability
question deals with the ability of the detection system to identify an attack and issue the warning. Assume that
a particular detection system has a 0.90 probability of detecting a missile attack. Answer the following
questions using the binomial probability distribution:
a)What is the probability that one detection system will detect an attack?
b)If two detection systems are installed in the same area and operate independently, what is the probability that at
least one of the systems will detect the attack?
c) If three systems are installed, what is the probability that at least one of the systems
will detect the attack?
d)Would you recommend that multiple detection systems be operated? Explain.
Answer 8

a)
n =1
= no. of detection system
p = 0.90 = probability of detecting missile attack
x =1
= number of detection system in n trials
f(x) =
probability of x successes in n trials.

f ( x )=

n!
px ( 1 p )nx
x! ( nx ) !

f ( 1 )=

1!
1
11
0.90 ( 10.90 )
1! ( 11 ) !

1
f ( 1 )= 0.9
1

f ( 1 )=0.9
b)
n =2
= no. of detection system
p = 0.90 = probability of detecting missile attack
x = 1 = number of detection system in n trials
f(x) = Probability of x successes in n trials.

2!
2!
1
21
2
22
0.90 ( 10.90 ) +
0.90 ( 10.90 )
1! ( 21 ) !
2! ( 22 ) !

2
2
0.09+ 0.81
1
2

0.18+0.81
f ( 1 )=0.99
c)
n
p

=3
= no. of detection system
= 0.90 = probability of detecting missile attack

9 of 12

x = 1 = number of detection system in n trials

f(x) =
probability of x successes in n trials.
We can find this probability by subtracting the probability of 0 detection system from 1 (whole probability).

3!
0
30
0.90 ( 10.90 )
0! ( 30 ) !

(
6
1( 0.001 )
6
1

1( 0.001 )

f ( 1 )=0.999
d)There is not as such big difference between single and multiple detection system. In my point of view 1 system is
enough but to gain perfection or maximum security we can use multiple systems.
9. Consider a Poisson probability distribution with 2 as the average number of occurrences per time period
a)Write the appropriate Poisson probability function?
b)What is the average number of occurrences in three time periods?
c) Write the appropriate Poisson probability function to determine the probability of x occurrences in three time
periods?
d)Find the probability of two occurrences in one time period?
e) Find the probability of six occurrences in three time periods?
f) Find the probability of five occurrences in two time periods?
Answer 9

a) Poisson probability function =

e
f ( x )=
x!

x 2

2e
f ( x )=
x!

b)Average no. of occurrence

= .n
23=6
So the average no. of occurrence is 6 for 3 time periods.
c) Probability functions in 3 time period.
x 6

6e
f ( x )=
x!

d)2 occurrence in 1 time period

= mean or average number of occurrences in an interval

10 of 12

e=
x= 2
f(x)=

2.71828
= number of occurrences in the interval
probability of x occurrences in the interval
x

e
f ( x )=
x!
2

2 .e
f ( 2 )=
2!

f ( 2 )=

0.5412
2

f ( 2 )=0.2706
e) Probability of 6 occurrences in 3 time period.
= 2
= mean or average number of occurrences in an interval
e=
2.71828
x= 6
= number of occurrences in the interval
f(x)=
probability of x occurrences in the interval
x

e
f ( x )=
x!

6 .e
f ( 6 )=
6!

f ( 6 )=

115.64
720

f ( 6 )=0.1606
f) Probability of 5 occurrences in 2 time period.
= 2
= mean or average number of occurrences in an interval
e=
2.71828
x= 5
= number of occurrences in the interval
f(x)=
probability of x occurrences in the interval
x

e
f ( x )=
x!

11 of 12

4 .e
f ( 5) =
5!

f ( 5) =

18.73
120

f ( 5 ) =0.1560
10. Telephone calls arrive at the rate of 48 per hour at the reservation desk for Regional Airways.
a)Find the probability of receiving 3 calls in a 5-minute interval?
b)Find the probability of receiving 10 calls in 15 minutes?
c) Suppose that no calls are currently on hold. If the agent takes 5 minutes to complete processing the current call,
how many callers do you expect to be waiting by that time?
d)If no calls are currently being processed, what is the probability that the agent can take 3 minutes for personal
time without being interrupted?
Answer 10
a) 3 calls in 5 minutes interval
= 48 = mean or average calls in one hour
e=
2.71828
x= 3
= number of occurrences in the interval
f(x)=
probability of x occurrences in the interval
As the data is given in minutes format so we will convert no. of calls in minute format.
=
x=

4
3

= mean or average calls in 5 minutes.

= number of calls received
x

e
f ( x )=
x!

3 4

4e
f ( x )=
3!

f ( x )=

1.1718
6

f ( 3 ) =0.1953
b)10 calls in 15 minutes.
= 12 = mean or average calls in 15 minutes.
x = 10
= number of calls received

12 of 12

e
f ( x )=
x!

10 12

12 e
f ( 10 ) =
10!

f ( 10 ) =

380433.43
3628800

f ( 10 ) =0.10483
c) = 48 (5 / 60) = 4

I expect 4 callers to be waiting after 5 minutes.

40 e4
f (0)
0.0183
0!

The probability none will be waiting after 5 minutes is .0183.

11. More than 50 million guests stayed at bed and breakfasts (B & Bs) last year. The website for the Bed and
Breakfast Inns of North America, which averages approximately seven visitors per minute, enables many B &
Bs to attract guests without waiting years to be mentioned in guidebooks (Time, September 2001).
a)What is the probability of no website visitors in a 1 minute period?
b)What is the probability of two or more website visitors in a 1 minute period?
c) What is the probability of one or more website visitors in a 30 second period?
d)What is the probability of five or more website visitors in a 1 minute period?
Answer 11
= 7
= mean or average visitors in one minute
e=
2.71828
x=
number of visitors in the interval
f(x)=
probability of x occurrences in the interval
a) No visitor in one minute period
x

e
f ( x )=
x!

0 7

7e
f ( 0 )=
0!

f ( 0 )=

0.000911
1

f ( 0 )=0.0009
b)2 visitors in one minute

13 of 12

We can calculate the probability by subtracting the probability of 2 from 1.

x

e
f ( x )=
x!

0 7

1 7

(
)
0.000911 0.00638
f ( x )=1(
+
1
1 )
7e 7e
f ( x )=1
+
0!
1!

f ( x )=1 ( 0.0009+0.00638 )

f ( x )=1 ( 0.00728 )
f ( x )=0.99271
c) 1 visitors in 30 seconds
= 3.5
= mean or average visitors in 30 seconds.
We can calculate the probability by subtracting the probability of 1 from 1.
x

e
f ( x )=
x!

0 3.5

( )
0.03019
f ( x )=1(
1 )
3.5 e
f ( x )=1
0!

f ( x )=1 ( 0.03019 )
f ( x )=0.96981

d)5 visitors in one minute

x

e
f ( x )=
x!

14 of 12

0 7

1 7

2 7

3 7

4 7

(
)
0.000911 0.00638 0.0446 0.3127 2.189
f ( x )=1(
+
+
+
+
1
1
2
6
24 )
7e 7e 7e 7e 7e
f ( x )=1
+
+
+
+
0!
1!
2!
3!
4!

f ( x )=1 ( 0.0009+0.00638+0.0223+0.05212+0.0912 )

f ( x )=1 ( 0.1729 )
f ( x )=0.8271

12. Airline passengers arrive randomly and independently at the passenger screening facility at a major
international airport. The mean arrival rate is 10 passengers per minute.
a)What is the probability of no arrivals in a 1 minute period?
b)What is the probability of 3 or fewer arrivals in a 1 minute period?
c) What is the probability of no arrivals in a 15 second period?
d)What is the probability of at least 1 arrival in a 15 second period?
Answer 12
= 10
= mean or average passenger in one minute
e=
2.71828
x=
number of visitors in the interval
f(x)=
probability of x occurrences in the interval
a) No arrivals in one minute.

e
f ( x )=
x!
0 10

10 e
f ( 0 )=
0!

f ( 0 )=

0.0000454
1

f ( 0 )=0.0000454
b)3 arrivals in a minute.
x

e
f ( x )=
x!

15 of 12

0 7

1 10

2 10

3 10

10 e 10 e 10 e 10 e
f ( x )=
+
+
+
0!
1!
2!
3!

f ( x )=

0.0000454 0.000454 0.00454 0.0454

+
+
+
1
1
2
6

f ( x )=0.0000454+0.000454+0.0022+0.0075

f ( x )=0.01019
c) No arrivals in 15 seconds.
As the requirement is in seconds then well convert the average in seconds format.

e
f ( x )=
x!
0 2.5

2.5 e
f ( 0 )=
0!

f ( 0 )=

0.0820
1

f ( 0 )=0.0820
d)1 arrivals in 15 seconds.

x e
f ( x )=1
x!

( )
2.5 e
f ( 1 )=1(
0! )
0.0820
f ( 1 )=1(
1 )
0 2.5

f ( 1 )=1( 0.0820 )
16 of 12

f ( 1 )=0.918
13. A random variable x is uniformly distributed between 1.0 and 1.5.
a) Show the graph of the probability density function.

f(x)
3
2
1

.50 = 1.25).
1.0
1.5
2.0
b)Find P(x
P(x = 1.25) = 0. The probability of any single point is zero since the area under the curve above any single point is
zero.
c) Find P(1.00 <= x <= 1.25).
P(1.0 x 1.25) = 2(0.25) = 0.50
d)Find P (1.20 <= x <=1.50).
P(1.20 < x < 1.5) = 2(0.30)= 0.60
14. Delta Airlines quotes a flight time of 2 hours, 5 minutes for its flights from Cincinnati to Tampa. Suppose we
believe that actual flight times are uniformly distributed between 2 hours and 2 hours, 20 minutes.
a) Show the graph of the probability density function for flight times.
b)What is the probability that the flight will be no more than 5 minutes late?
c) What is the probability that the flight will be more than 10 minutes late?
d)What is the expected flight time?
15. Delta Airlines quotes a flight time of 2 hours, 5 minutes for its flights from Cincinnati to Tampa. Suppose we
believe that actual flight times are uniformly distributed between 2 hours and 2 hours, 20 minutes.
a) Show the graph of the probability density function for flight times.
f(x)
3/20
1/10
1/20
x
110

120

130

140

Minutes

b)What is the probability that the flight will be no more than 5 minutes late? (as it reaches at 2.05)
P(x 130) = (1/20) (130 - 120) = 0.50
c) What is the probability that the flight will be more than 10 minutes late?
P(x > 135) = (1/20) (140 - 135) = 0.25
d)What is the expected flight time?

E ( x)

120 140
130 minutes
2

16. General Hospitals patient account division has compiled data on the age of accounts receivable. The data
collected indicate that the age of the accounts follows a normal distribution with=28 days and = 8 days.
a) What portion of the accounts is between 20 and 40 days oldthat is, P(20 <= x <= 40)?

17 of 12

At x = 20,

20 28
1.0
8
Cumulative probability = 0.1587,

40 28
1.5
8
, Cumulative probability = 0.9332

At x = 40,
P(20 x 40) = 0.9332 0.1587 = 0.7745

b)The hospital administrator is interested in sending reminder letters to the oldest 15% of accounts. How many days
old should an account be before a reminder letter is sent?
The oldest 15% of the accounts would be in the upper tail of the normal distribution with a cumulative probability 0.85.
The area or probability closest to 0.85 occurs for the cumulative probability of 0.8508.
The corresponding z = 1.04. Thus we have.

1.04

x x 28

8 , Therefore solving for x, we have x = 8(1.04) + 28 = 36.32.

An account should be
sent a reminder letter after 36.32 days.
c) The hospital administrator wants to give a discount to those accounts that pay their balance by the twenty-first day.
What percentage of the accounts will receive the discount?

21 28
0.875
8
, Cumulative probability = 0.1906

At x = 21,
Therefore 0.1906 or approximately 19% of the accounts will receive the discount.
17. To boost holiday sales, a jewelry store in Bismarck, North Dakota, is advertising the following promotion: If
more than seven inches of cumulative snow fall on December 24, 25, 26, 27, and 28 , you get your money back
on all purchase made on December 17. To analyze this promotion, the store manager has collected data and
determined that snowfall over this 5-day period in December is normally distributed with an average of 6 inches
and standard deviation of 0.559 inches. What is the probability that the store will have to refund the money to its
December 17 customers?
Let Y = inches of snowfall on December 24 through 28.

Y is a normal random variable with mean of 6 inches and standard deviation of 0.559 inches.
So P(Y > 7) = P(Z > 1.79) = 1 P(Z 1.79) = 1 0.9633 = 0.0367

76
1.79
,
0.559

End Chapter 3

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