Solution

Problem # 4.6 Solution

l
ia
Hence, the 5 distributor network is better than 3 distributor network, if the probability of the retail shops being stocked

er
is more

at
That is 𝑃 𝑋 ≥ 3 5 𝑛𝑒𝑡𝑤𝑜𝑟𝑘 > 𝑃 𝑋 ≥ 2 3 𝑛𝑒𝑡𝑤𝑜𝑟𝑘

M
5 3 5 4 3 2

2 e
𝑝 1−𝑝 2+ 𝑝 1 − 𝑝 + 𝑝5 > 𝑝 (1 − 𝑝) + 𝑝3

-2 urs
3 4 2
⇒ 10𝑝 1 − 𝑝 + 5𝑝 1 − 𝑝 + 𝑝 > 3𝑝2 (1 − 𝑝) + 𝑝3
3 2 4 5

20 o
D IC
Cancelling 𝑝2 as 𝑝 > 0

M LR
⇒ 10𝑝 1 − 𝑝 2 + 5𝑝2 1 − 𝑝 + 𝑝3 > 3(1 − 𝑝) + 𝑝

,B X
⇒ 10𝑝3 + 10𝑝 − 20𝑝2 + 5𝑝2 − 5𝑝3 + 𝑝3 − 3 + 3𝑝 − 𝑝 > 0

T1 of
⇒ 6𝑝3 + 12𝑝 − 15𝑝2 − 3 > 0
Q rt
Pa
⇒ 3(2𝑝3 + 4𝑝 − 5𝑝2 − 1) > 0

Shounak Basak
10/2/2020
PODS Area, XLRI – Xavier School of Management
81
Solution
Problem # 4.6 Solution

Hence, the 5 distributor network is better than 3 distributor network, if the probability of the retail shops being stocked

l
ia
is more

er
at
That is 𝑃 𝑋 ≥ 3 5 𝑛𝑒𝑡𝑤𝑜𝑟𝑘 > 𝑃 𝑋 ≥ 2 3 𝑛𝑒𝑡𝑤𝑜𝑟𝑘

M
5 3 5 4 3 2
𝑝 1−𝑝 2+ 𝑝 1 − 𝑝 + 𝑝5 > 𝑝 (1 − 𝑝) + 𝑝3

2 e
3 4 2

-2 urs
⇒ 10𝑝 1 − 𝑝 + 5𝑝 1 − 𝑝 + 𝑝 > 3𝑝2 (1 − 𝑝) + 𝑝3
3 2 4 5

20 o
D IC
Cancelling 𝑝2 as 𝑝 > 0
⇒ 10𝑝 1 − 𝑝 2 + 5𝑝2 1 − 𝑝 + 𝑝3 > 3(1 − 𝑝) + 𝑝

M LR
⇒ 10𝑝3 + 10𝑝 − 20𝑝2 + 5𝑝2 − 5𝑝3 + 𝑝3 − 3 + 3𝑝 − 𝑝 > 0

,B X
T1 of
⇒ 6𝑝3 + 12𝑝 − 15𝑝2 − 3 > 0

Q rt
Pa ⇒ 3(2𝑝3 + 4𝑝 − 5𝑝2 − 1) > 0
⇒ 3(2𝑝 𝑝2 − 2𝑝 + 1 − 1(𝑝2 − 2𝑝 + 1) > 0

Shounak Basak
10/2/2020
PODS Area, XLRI – Xavier School of Management
82
Solution
Problem # 4.6 Solution

Hence, the 5 distributor network is better than 3 distributor network, if the probability of the retail shops being stocked

l
ia
is more

er
That is 𝑃 𝑋 ≥ 3 5 𝑛𝑒𝑡𝑤𝑜𝑟𝑘 > 𝑃 𝑋 ≥ 2 3 𝑛𝑒𝑡𝑤𝑜𝑟𝑘

at
5 3 5 4 3 2

M
𝑝 1−𝑝 2+ 𝑝 1 − 𝑝 + 𝑝5 > 𝑝 (1 − 𝑝) + 𝑝3
3 4 2

2 e
-2 urs
⇒ 10𝑝 1 − 𝑝 + 5𝑝 1 − 𝑝 + 𝑝 > 3𝑝2 (1 − 𝑝) + 𝑝3
3 2 4 5

Cancelling 𝑝2 as 𝑝 > 0

20 o
D IC
⇒ 10𝑝 1 − 𝑝 2 + 5𝑝2 1 − 𝑝 + 𝑝3 > 3(1 − 𝑝) + 𝑝

M LR
⇒ 10𝑝3 + 10𝑝 − 20𝑝2 + 5𝑝2 − 5𝑝3 + 𝑝3 − 3 + 3𝑝 − 𝑝 > 0

,B X
⇒ 6𝑝3 + 12𝑝 − 15𝑝2 − 3 > 0

T1 of
⇒ 3(2𝑝3 + 4𝑝 − 5𝑝2 − 1) > 0
Q rt
Pa
⇒ 3(2𝑝 𝑝2 − 2𝑝 + 1 − 1(𝑝2 − 2𝑝 + 1) > 0
⇒ 3 2𝑝 − 1 𝑝 − 1 2 > 0

Shounak Basak
10/2/2020
PODS Area, XLRI – Xavier School of Management
83
Solution
Problem # 4.6 Solution

Hence, the 5 distributor network is better than 3 distributor network, if the probability of the retail shops being stocked
is more

l
ia
That is 𝑃 𝑋 ≥ 3 5 𝑛𝑒𝑡𝑤𝑜𝑟𝑘 > 𝑃 𝑋 ≥ 2 3 𝑛𝑒𝑡𝑤𝑜𝑟𝑘

er
5 3 5 4 3 2

at
𝑝 1−𝑝 2+ 𝑝 1 − 𝑝 + 𝑝5 > 𝑝 (1 − 𝑝) + 𝑝3

M
3 4 2

2 e
⇒ 10𝑝 1 − 𝑝 + 5𝑝 1 − 𝑝 + 𝑝 > 3𝑝2 (1 − 𝑝) + 𝑝3
3 2 4 5

-2 urs
Cancelling 𝑝2 as 𝑝 > 0

20 o
D IC
⇒ 10𝑝 1 − 𝑝 2 + 5𝑝2 1 − 𝑝 + 𝑝3 > 3(1 − 𝑝) + 𝑝
⇒ 10𝑝3 + 10𝑝 − 20𝑝2 + 5𝑝2 − 5𝑝3 + 𝑝3 − 3 + 3𝑝 − 𝑝 > 0

M LR
⇒ 6𝑝3 + 12𝑝 − 15𝑝2 − 3 > 0

,B X
T1 of
⇒ 3(2𝑝3 + 4𝑝 − 5𝑝2 − 1) > 0

Q rt
⇒ 3(2𝑝 𝑝2 − 2𝑝 + 1 − 1(𝑝2 − 2𝑝 + 1) > 0
Pa
⇒ 3 2𝑝 − 1 𝑝 − 1 2 > 0
Either, 𝑝 > 1 or 2𝑝 > 1

Shounak Basak
10/2/2020
PODS Area, XLRI – Xavier School of Management
84
Solution
Problem # 4.6 Solution

Hence, the 5 distributor network is better than 3 distributor network, if the probability of the retail shops being stocked
is more

l
ia
That is 𝑃 𝑋 ≥ 3 5 𝑛𝑒𝑡𝑤𝑜𝑟𝑘 > 𝑃 𝑋 ≥ 2 3 𝑛𝑒𝑡𝑤𝑜𝑟𝑘

er
5 3 5 4 3 2

at
𝑝 1−𝑝 2+ 𝑝 1 − 𝑝 + 𝑝5 > 𝑝 (1 − 𝑝) + 𝑝3

M
3 4 2
⇒ 10𝑝 1 − 𝑝 + 5𝑝 1 − 𝑝 + 𝑝 > 3𝑝2 (1 − 𝑝) + 𝑝3
3 2 4 5

2 e
-2 urs
Cancelling 𝑝2 as 𝑝 > 0

20 o
⇒ 10𝑝 1 − 𝑝 2 + 5𝑝2 1 − 𝑝 + 𝑝3 > 3(1 − 𝑝) + 𝑝

D IC
⇒ 10𝑝3 + 10𝑝 − 20𝑝2 + 5𝑝2 − 5𝑝3 + 𝑝3 − 3 + 3𝑝 − 𝑝 > 0

M LR
⇒ 6𝑝3 + 12𝑝 − 15𝑝2 − 3 > 0

,B X
⇒ 3(2𝑝3 + 4𝑝 − 5𝑝2 − 1) > 0

T1 of
Q rt
⇒ 3(2𝑝 𝑝2 − 2𝑝 + 1 − 1(𝑝2 − 2𝑝 + 1) > 0
Pa
⇒ 3 2𝑝 − 1 𝑝 − 1 2 > 0
Either, 𝑝 > 1 or 2𝑝 > 1
1
As 𝑝 ≯ 1, we find 𝑝 >
2

Shounak Basak
10/2/2020
PODS Area, XLRI – Xavier School of Management
85
Discrete distributions

l
ia
er
at
M
The values obtained by a random variable form a distribution of values

2 e
-2 urs
that the random variable can take

20 o
D IC
M LR
,B X
These probabilities of taking the values by the random variable form the

T1 of
Q rt
distribution of the random variable
Pa

Shounak Basak
10/2/2020
PODS Area, XLRI – Xavier School of Management
86
Discrete distributions

The distribution of random variable 𝑋 is determined by the probabilities

l
ia
er
of the individual values taken by the random variable

at
M
2 e
-2 urs
𝑃 𝑋=𝑥 𝑥 ∈ 𝑟𝑎𝑛𝑔𝑒 𝑜𝑓 𝑋

20 o
D IC
M LR
,B X
Also, the addition rule

T1 of
Q rt
Pa

𝑃 𝑋∈𝐵 = 𝑃(𝑋 = 𝑥)
𝑥∈𝐵

Shounak Basak
10/2/2020
PODS Area, XLRI – Xavier School of Management
87
Discrete distributions

l
ia
er
at
The events 𝑋 = 𝑥 varies over the range of 𝑋

M
2 e
-2 urs
20 o
D IC
These events are mutually exclusive and exhaustive and their

M LR
probabilities must add up to 1

,B X
T1 of
Q rt
Pa
The probabilities 𝑃(𝑋 = 𝑥) can be represented as a histogram

Shounak Basak
10/2/2020
PODS Area, XLRI – Xavier School of Management
88