DAO1704 Assignment 2

Due Date: 4 September 11:59PM.

Note:
1. The assignment is graded and will contribute to your CA and final marks of the module.
Thus, assignment cheating is subject to disciplinary actions.
2. For each graded assignment, you can only discuss with your own team members. Information
exchange can only occur in your own team. If you discuss or share your assignment workings
or solutions with persons not belonging to your team, your behavior is viewed as assignment
cheating.
3. The assignment is a team-based assignment. Each team member must check the final version
of your assignment submitted to the LumiNUS. If assignment cheating is caught, every team
member will suffer from the same penalty and the disciplinary consequence.

1. Suppose the joint probability distribution of X and Y is as follows:

Y
Excellent Good Poor

Chinese 0.078 a 0.117

X Malay b c 0.135
Indian 0.032 0.08 0.048

If X and Y are independent, what are the values of a, b, and c?

2. Suppose you were given a coin, which you don’t know whether it’s coin A or coin B. The
probability of getting head for coin A is 0.5, and the probability of getting head for coin B is
0.3. Your prior belief is that the given coin is coin A with a probability of 0.9. You flipped
the coin 5 times and obtained 1 head and 4 tails. Assume each flip is independent of each
other, what’s your posterior belief on the probability that the given coin is coin A after 5
flips?

3. An industrial training company that offers week-long courses to corporations has three
instructors as its permanent staff. The company receives requests for this courses from its
many corporate clients. The course fee charged by the training company is $20,000 per
course. The company also has a pool of qualified instructors in Singapore that it can rely
upon whenever demand for their courses exceeds the supply of permanent instructors. Under
a standardized arrangement, an instructor in the pool receives 55% of the course fee
 whenever he/she teaches a course. The weekly demand for courses obeys the following
probability distribution given in the table.

Number of courses Probability

0 0.05
1 0.15
2 0.25
3 0.20
4 0.20
5 0.10
6 0.05

3-1. What is the probability distribution of the company’s weekly revenue after deducting
payments to pool instructors? You need to draw a visualization to show the distribution.

3-2. Calculate the mean and standard deviation of the company’s weekly revenue after
deducting payments to pool instructors.

3-3. Adding more instructors to the permanent staff involves an incremental cost of $2,500
per instructor per week. If you are the boss of the company, how many additional
permanent instructor(s) should you hire?