IEORE4101: Probability, Statistics, and Simulation 4/20/2021, 10:00am EST

Final Exam, Spring 2021

Deadline: 4/20/2021, 12:00pm EST Instructor: Mingliu Chen

Please carefully read through the following instructions:

This exam contains 7 regular and 2 bonus questions. The maximum points one can receive is 100.
That is, with bonus points, your final score is min{100, your points (including the bonus)}. A question
may have multiple parts. Feel free to attach additional pages if you are running out of space. Make
sure to support your final answers with proper explanations and derivations. No credit for unsupported
answers.
This is an open-book exam. You are allowed to use your notes, previous assignments (and assignment
solutions), and all the materials I posted on Coursework for IEOR E4101. You are NOT allowed to
discuss this exam with others during the exam. You are allowed to use a basic scientific calculator but
NOT allowed to use any coding device or software. In addition, you are also subjected to SEAS Honor
Code.
You have 120 minutes to complete this exam and upload your solutions to Coursework. Some tables
of interests are provided in the back of the exam. Please make good use of them.
The submission portal closes at 12:10pm EST, sharp. You should only use the last
10 minutes to submit your solutions, but not keep working on unfinished problems. No
submission will be accepted afterwards! Missing the submission deadline will result a 0
score on this exam, so please do not wait until the last minute to submit.
Good Luck!

I have read and will comply with the instructions above.

Your signature:

1
Problem 1: We have a sample of 100 independent and identically distributed normal random variables,
denoted as {X1 , X2 , ..., X100 }. That
P is, we 
consider the population has an normal distribution with mean
2 100
µ and variance σ . Define X̄ = i=0 X1 /100. [15 total points]

(a) Consider X50 . What distribution does X50 follow? [2 points]

(b) What distribution does X̄ follow? Do you need to perform any approximation here? Explain your
answers. [2 points]
(c) Suppose the population has an exponential distribution with rate λ instead. Provide solutions to
part (a) and (b) again, respectively. [4 points]
(d) Continue with the exponential distributed population with
rate λ = 1. Find the probability that
the sample mean X̄ is between 2 and 5, i.e. P 2 ≤ X̄ ≤ 5 . [7 points]

2
Problem 2: Denote p̂ as the point estimator of the sample proportion of a Bernoulli population. We
have seen in one of the homework that using p̂(1− p̂) as a point estimator for the variance of this Bernoulli
distribution is actually biased. Please prove this statement formally: p̂(1 − p̂) is a biased estimator for
the variance of a Bernoulli sample. [15 total points]

3
Problem 3: Suppose that X1 , ..., Xn are normal with mean µ1 ; Y1 , ..., Yn are normal with mean µ2 ;
and W1 , ..., Wn are normal with mean µ1 − µ2 . Assuming that all 3n random variables are independent
with a common variance, find the maximum likelihood estimators of µ1 and µ2 . [10 total points]

4
Problem 4: Consider a density function of a random variable X:
1 1
f (x) = , ∀x ≥ ,
9x4 3
and f (x) = 0, otherwise. [20 total points]
(a) Suppose your computer can only generate standard uniform random variables. Derive the inverse-
transform method to generate X. [5 points]

(b) Suppose your computer can also generate random variable Y with density
1 1
g(y) = , ∀y ≥ ,
3y 2 3

and g(y) = 0, otherwise. Can you derive an acceptance-rejection method to generate X, using a
proposal given by the random variable Y ? If not, please also explain why. [5 points]

(c) Suppose your computer can also generate random variable Z with density
4 1
h(z) = , ∀z ≥ ,
81z 5 3
and h(z) = 0, otherwise. Can you derive an acceptance-rejection method to generate X, using a
proposal given by the random variable Z? If not, please also explain why. [5 points]

(d) Suppose you run the procedure in part (a) for 100 independent replications. So you have 100 i.i.d.
copies of X, denoted by X√1 , X2 , ..., X100 . Derive, in terms of Xi , the point estimate and 90%
confidence interval for P ( X + X/2 ≥ 5), where X has density function f (x), in part (a). [5
points]

5
Problem 5: A study claims that the average basal temperature of healthy dogs is 101.5 degrees
Fahrenheit. To investigate this claim, a pet shop has randomly selected 200 healthy dogs. Their mean
temperature is 102.1 with a sample standard deviation of 2.1 degrees. [15 total points]
(a) Carry out a hypothesis test on the validity of this claim at the 5% significance level. Use the test
statistic approach. [5 points]
(b) Without carrying out further calculation, do you think your conclusion would change in part (a)
if the significance level is changed to 10%? Explain your answer. [5 points]
(c) Calculate the power of the hypothesis test in part (a), assuming the true average temperature of
healthy dogs is 102.6 degrees Fahrenheit. [5 points]

6
Problem 6: A car dealership collected the oil consumption (quarts per 50,000 miles) of five 2020 model
year sedans:
6.20, 6.95, 6.53, 5.56, 6.59.
[18 total points]
(a) Give a 95% confidence interval for the mean oil consumption. What assumption have you made
here? [5 points]

(b) Without carrying out any further calculation, do you think the 90% confidence interval is wider or
shorter than your answer in part (a)? Give your reasoning. [3 points]
(c) Give a 95% confidence interval for the standard deviation of the oil consumption. What assumption
have you made here? [5 points]

(d) Now, suppose further data are collected forming a sample of 100 sedans. It turned out, somewhat
by chance, that the sample mean and the sample standard deviation remained exactly the same
as those obtained from the 5 determinations shown above. Conduct a hypothesis test, at the
5% significance level, on the validity of a recent claim from the manufacturer that the mean oil
consumption (quarts per 50,000 miles) is no greater than 6.40. Use the p-value approach. [5 points]

7
Problem 7: A recent poll among basketball fans indicated that the Lakers is favored to win the title
this year over the Nets by 52 versus 48 percentages, with a margin of error ±3.5 percent. [7 total points]
(a) Since the 4-point gap between the teams is larger than the margin of error, some fans argue that
the Lakers is very likely to win. Using your statistical reasoning, are they correct? Explain your
answer. [3 points]
(b) From the poll outcome percentages and the margin of error, infer the approximate number of fans
participated in the survey. You may assume that the poll calculates the margin of error at the
95% confidence level. [4 points]

8
Bonus Problems: There are two bonus problems, worth 5 points in total:
(a) Consider an acceptance-rejection method with constant C = 3, representing the bounds of the
ratio between density functions of the desired and the proposed random variables. Derive the
acceptance probability. [3 points]

(b) Based on experience, on average, 10% of IEOR students passed the waiver exam for 4100 section.
Suppose there are 250 incoming students for Fall 2021 semester, compute the probability that more
than 25 students passing the waiver exam this year. Your final answer needs to be a number not
a formula. [2 points]