Sum of Random Variables

1. Consider a random variable y which is defined as y=3 x 1 + x 2+ 4 x 3, where x 1 , x 2 ,∧x 3 are all
normally distributed random variables as follows: x 1 N ( 20,5 ) , x 2 N ( 50 , 15 ) ,∧x 3 N (40,12).

(a) Determine the distribution of y .

(b) What is the probability that a random draw on y will result in a value between 270 and
333?

2. Consider the production of a product that goes through TWO stages sequentially. The times
taken at each stage is normally distributed as follows t 1 N ( 1.5 hrs , 15 mins . ) and
t 2 N ( 3.5 hrs, 45 mins . ). In stage 1 the workers are paid @ $18/hour and in stage 2 the
workers are paid @ $25/hour. (i) What is the distribution governing the time taken to
manufacture a unit of the product? (ii) What is the distribution of the labor cost of production
per unit? (iii) Suppose the manufacturer is to bid for a contract to supply 100 units of the
product. To be safe, it uses a cost assumption (C) such that the actual cost has a 75% chance
of being lower than the assumed cost: what is the value of C? (Hint: for (iii) treat the cost of
each unit as a random variable)

3. Consider a manufacturing process which includes FOUR sequential processes: P1, P2, P3
and P4. Every manufactured product has to go through these processes sequentially. Each of
the processes has a significant manual component and hence the time taken is a random
variable. The respective times are as follows (all are in minutes):
t 1 N ( 15 ,2 ) , t 2 N (35 ,5 ) , t 3 N ( 25 , 4 ) ,∧t 4 N ( 50 ,6 )

(a) What is the average time taken to manufacture a single product? And what is the standard

deviation of the time?

(b) What is the probability that a product will take between two hours, and two and a quarter
hours to manufacture?

(c) If your labor cost at the processes are as follows: Process1, $15/hour; Process2, $25/hour;
Process3, $25/hour; and Process4, $40/hour, what are the mean and the standard
deviation of cost of production for a unit of the product

(d) If you are to supply an order of FIVE units, what is the average total time to
manufacture five units of the product and the standard deviation of producing the batch of

five units? (Hint: the time for each unit is a random variable)