Solution to Specific Problems in Worksheet 1 and Chapter 3 (in Lecture

Notes)

1. Problems in Chapter 3:
Subsection 3.4.1: Example 1.
Here, the random variable of interest is denoted by X which is defined as the number
of workers taking public transportation. X is a discrete random variable because X can
take only specific values like 0, 1, …, 10. Specifically, X follows Binomial
distribution with parameters n = 10 and p = 0.3. Now, we can use the following
commands to find the probabilities using Excel.
P(X =3 ¿=¿ BINOM.DIST(3,10,0.3,FALSE)=0.266.
P(X ≥ 3) =1- P(X ≤ 2) = 1-BINOM.DIST(2,10,0.3,TRUE)=0.61

Subsection 3.4.1: Example 2.

Here, the random variable of interest is denoted by X which is defined as the number
of defective items. X is a discrete random variable because X can take only specific
values like 0, 1, …, 5. Specifically, X follows Binomial distribution with parameters n
= 5 and p = 0.01. Now, we can use the following commands to find the probabilities
using Excel.
P(X =0 ¿=¿ BINOM.DIST(0,5,0.01,FALSE)=0.95
P(X =1¿=¿ BINOM.DIST(1,5,0.01,FALSE)=0.048.

Expectation: E(X)=np=5*0.01=0.05

For finding about precision of the expected number of defective items in the sample,
we find V(X)=np(1-p)=0.0495.

Subsection 3.5.1: Example 1.

Here, the random variable of interest is denoted by X which is defined as the number
of phone calls. X is a discrete random variable because X can take only specific
values like 0, 1, …, ∞. Specifically, X follows Poisson distribution with parameter d.
Now, we can use the following commands to answer the related problems using
Excel.
48
(a) Here, d= ×5=4 . So, P(X=3) = POISSON.DIST(3,4,FALSE) = 0.195
60
48
(b) Here, d= ×15=12. So, P(X=10) = POISSON.DIST(10,12,FALSE) = 0.104
60
(c) Using (a), d=4, which is the expected number of calls in 5-minute interval. If the
agent takes 5 minutes to complete the current call, then we expect 4 calls to be
waiting by that time.
P(X=0) = POISSON.DIST(0,4,FALSE) = 0.018.
48
(d) Here, d= ×3=2.4 . So, P(X=0)= POISSON.DIST(0,2.4,FALSE) = 0.0907
60

Subsection 3.5.1: Example 2.

Here, the random variable of interest is denoted by X which is defined as the number
of number of breakdowns. X is a discrete random variable because X can take only
specific values like 0, 1, …, ∞. Specifically, X follows Poisson distribution with
parameter d=1.5. Now, we can use the following commands to answer the related
 problems using Excel.

So, P(X≥3)=1-P(X≤ 2)=1-POISSON.DIST(2,1.5,TRUE) = 0.1911

Section 3.6: Example

Here, the random variable of interest is denoted by X which is defined as the weight
of a package. X is a continuous random variable because X can take any value from 0
to ∞ . Specifically, X follows Normal distribution with parameters =8.2 and =0.1.
Now, we can use the following commands to answer the related problems using
Excel.
(a) P(X < 8) = NORM.DIST(8,8.2,0.1,TRUE) = 0.02275

(b) P(X ≥ w) =0.05, i.e. P(X ≤ w) =0.95. w = NORM.INV(0.95,8.2,0.1)=8.364

(c) X1, X2 are random variables which denote weights of two packages.
X +X
Then, 1 2 follows Normal distribution with mean 8.2 and standard deviation
2
0.1/ √ 2=0.07 .
X +X2
So,P 1 ( 2 )
<8.3 =¿ NORM.DIST(8.3,8.2,0.07,TRUE) =0.923.

(d) Suppose Y is a random variable which is defined as the number of packages

weighing atleast 8.3 ounces. Y is a discrete random variable because Y can take
only specific values like 0, 1, …, 5.

Specifically, Y follows Binomial distribution with paramaters n = 5 and

p = P(X≥8.3) = 1-NORM.DIST(8.3,8.2,0.1,TRUE) =0.158.

Then, (Y ≤1)=¿ BINOM.DIST(1,5,0.158,TRUE)=0.82.

2. Identify whether the variable is continuous or discrete and also the distribution of the
variable and then answer the related questions:
(a) Census Bureau’s Current Population Survey shows that 28% of the individuals,
aged between 25 and older, have completed four years of college. For a sample of
20 individuals in a village, aged 25 and older, answer the following questions:
(i) What is the probability that 2 or fewer will have completed four years of
college?

(ii) What is the probability that 3 or more will have completed four years of
college?

Here, the random variable of interest is denoted by X which is defined as

the number of individuals completing four years of college. X is a discrete
random variable because X can take only specific values like 0, 1, …, 20.
Specifically, X follows Binomial distribution with parameters n = 20 and p
= 0.28. Now, we can use the following commands to find the probabilities
using Excel.
(i) P(X ≤ 2) = BINOM.DIST(2,20,0.28,TRUE) = 0.0525
(ii) P(X ≥ 3) =1- P(X ≤ 2) = 1-BINOM.DIST(2,20,0.28,TRUE) = 0.9474
(b) Trading volume on the New York Stock Exchange is heaviest during the first hour
and last half hour of the trading day. The early morning trading volumes (millions
of shares) for 13 days in January and February are known to have a mean of 190
and standard deviation 10.1. With suitable assumptions, answer the following:
(i) What is the probability that, on a randomly selected day, the early morning
trading volume will be less than 180 million shares?
(ii) How many shares would have to be traded for the early morning trading
volume on a particular day to be among the busiest 5% of days?

Here, the random variable of interest is denoted by X which is defined as the early
morning trading volume. Ideally X should be a discrete random variable.
However, the volumes are expressed in millions and are quite large, so for
purpose of probability/percentile computation, X can be assumed to follow
Normal distribution with parameters μ=190 ,σ =10.1. Now, we can use the
following commands to answer the questions using Excel.
(i) P(X <180) = NORM.DIST(180,190,10.1,TRUE) = 0.161
(ii) P(X ≥ w) =0.05, i.e. P(X ≤ w) =0.95.
w= NORM.INV(0.95,190,10.1)=206.613.
Thus, approximately 206.613 million of shares requires to be traded on a
particular day to be among the busiest 5% of days.

(c) National Safety Council (NSC) estimates that off-the-job accidents cost US
businesses almost $200 billion annually in lost productivity. Based on NSC
estimates, companies with 50 employees are expected to average three employees
off-the-job accidents per year. Answer the following questions:
(i) What is the probability of no off-the-job accidents for 6 months?
(ii) What is the probability of atleast two off-the-job accidents during a one-year
period?
Here, the random variable of interest is denoted by X which is defined as the off-
the-job accidents. X is a discrete random variable. X can be assumed to follow
Poisson distribution with parameter d. Now, we can use the following commands
to answer the questions using Excel.
(i) Here, d = (3/2) = 1.5. P(X =0) = POISSON.DIST(0,1.5,FALSE) = 0.223
(ii) Here, d = 3. P(X ≥ 2) =1- P(X ≤ 1) = 1- POISSON.DIST(1,3,TRUE) =0.8.