Assignment 1

[Section 1,3, & 5 submission 26th/27th ]

1.
a. A very large shipment of parts contains 20% defectives. Two parts are chosen
at random from the shipment and checked. Let the random variable X denote
the number of defectives found. Find the probability distribution of this
random variable.
b. A shipment of 20 parts contains 4 defectives. Two parts are chosen at
random from the shipment and checked. Let the random variable Y denote
the number of defectives found. Find the probability distribution of this
random variable. Explain why your answer is different from that for part (a).
c. Find the mean and variance of the random variable X in part (a).
d. Find the mean and variance of the random variable Y in part (b)
2.
A public interest group hires students to solicit donations by telephone. After a
brief training period students make calls to potential donors and are paid on a
commission basis. Experience indicates that early on these students tend to have
only modest success and that 70% of them give up their jobs in their first two weeks
of employment. The group hires 6 students which can be viewed as a random
sample.
a. What is the probability that at least 2 of the 6 will give up in the first two weeks?
b. What is the probability that at least 2 of the 6 will not give up in the first two
weeks?

3.
A notebook computer dealer mounts a new promotional campaign. Purchasers of
new computers may, if dissatisfied for any reason, return them within 2 days of
purchase and receive a full refund. The cost to the dealer of such a refund is $100.
The dealer estimates that 15% of all purchasers will, indeed, return computers
and obtain refunds. Suppose that 50 computers are purchased during the
campaign period.
a. Find the mean and standard deviation of the number of these computers that
will be returned for refunds.
b. Find the mean and standard deviation of the total refund costs that will accrue
as a result of these 50 purchases.

4.
An insurance company holds fraud insurance policies on 6,000 firms. In any given
year the probability that any single policy will result in a claim is 0.001. Find the
probability that at least 3 claims are made in a given year. Use the Poisson
approximation to the binomial distribution.

5.
The tread life of Road Stone tires has a normal distribution with a mean of 35,000
miles and a standard deviation of 4,000 miles.
a. What proportion of these tires has a tread life of more than 38,000 miles?
b. What proportion of these tires has a tread life of less than 32,000 miles?
c. What proportion of these tires has a tread life of between 32,000 and 38,000
miles?
d. Draw a graph of the probability density function of tread lives, illustrating why
the answers to parts (a) and (b) are the same and why the answers to parts (a),
(b), and (c) sum to 1.