SEHH1070 Tutorial Exercise 4

1. Suppose an investor is decided to invest in one of the following two alternative investments,
which the estimated profits (in $) of each investment under various economic conditions are
given.

Estimated profits (in $)

Economic conditions Investment A Investment B

Economy declines 4,000 1,000

No change 1,000 3,000

Economy expands 3,000 2,000

Based on the past experience, the investor estimates the following probabilities for each
economic condition.

Economic conditions Economy declines No change Economy expands

Probability 0.30 0.50 0.20

According to the investor’s information, determine whether Investment A or Investment B

can have more estimated profit.

2. A salesperson has found that the probability of making various numbers of sales per day,
given that calls on 8 sales prospects can be made, is presented in the following table.
Calculate the expected number of sales per day and the standard deviation of the number of
sales.
Number of sales 1 2 3 4 5 6 7 8

Probability 0.04 0.15 0.20 0.25 0.19 0.10 0.05 0.02

3. The following table provides a probability distribution for the random variable y.
y f(y)
5 0.2
6 a
7 b
Given the expected value of y is 6.25, find the values of a and b.
4. A local gas station opens from 7am to midnight every day. Sales records show that the
number of customers arriving at the station per hour can be modelled by a Poisson
distribution with a mean of 20 customers per hour.
(a) Find the standard deviation in the number of customer arrivals during a two hour period.
(b) Find the probability that the arrival time between two successive customers is less than
10 minutes.
(c) Suppose the station will open at 7am tomorrow. Find the probability the second
customer will arrive the station before 7:15am tomorrow.

5. Suppose a fair die is rolled 8 times in an experiment,

(a) what is the probability that “6” is observed twice?

(b) find the mean and the standard deviation of the number of times for “6” being
observed.

6. From the past record, it was found that 60% of college students prefer Brand A notebook
computer. Suppose a random sample of 8 students is selected.

(a) Find the expected number of students who will prefer Brand A notebook computer.
(b) Determine the probability that exactly 3 of the students will prefer Brand A notebook computer.
(c) Determine the probability that at least 1 of the students will prefer Brand A notebook computer.

7. AYA is an insurance company which provides universal auto insurance to motorists in

country A. Records show that 20% of the motorists are under the age of 25. Among these
young drivers, 30% of them are claims free. In promoting “Road Safety” on roads to the
young generation, AYA is planning to offer a 15% reduction in premiums for young drivers
who are claims free. For a random sample of 10 motorists insured by AYA, find the
probability that exactly 3 of them will receive a premium reduction.

8. On average, 2.4 customers per minute arrive at an airline check-in desk during the peak
period. Assume that the number of arrivals follows a Poisson Distribution, what is the
probability that there will be more than three arrivals in a minute?

9. The number of calls to the information and communication technology office (ICTO) at a
college during a one-hour period can be modelled by a Poisson distribution with mean
equal to 6.

(a) Compute the probability that there will be less than 2 calls to ICTO during a one-hour
period.
(b) Compute the probability that there will be exactly 15 calls to ICTO during a three-hour
period.
10. The number of buses arriving at a bus stop during rush hour has a Poisson distribution with
a mean of 18 per hour.

(a) Find the probability that there are at least two buses arriving at the bus stop in a
randomly selected period of 10 minutes during rush hour.
(b) Find the variance of the time between two consecutive bus arrivals at the bus stop
during rush hour. State its unit.
(c) Find the standard deviation in the number of buses arriving at the bus stop in a
randomly selected period of 30 minutes during rush hour.

11. The manager of a company selected a sample of Hong Kong households to participate in
the test of a new toothpaste package. It was found that 42% of the households in Hong
Kong preferred the new package.

(a) What is the probability that at least two households prefer the new package in a random
sample of six households in Hong Kong?
(b) 12 households live on the 14th floor of a building. The manager found that 5 of them preferred
the new package. Suppose 6 households are randomly selected without replacement from the 14th
floor of that building, what is the probability that exactly four households prefer the new package?

12. A department group includes five engineers and nine technicians. If five individuals are
randomly chosen and assigned to a project group, what is the probability that the project
group will include exactly two engineers?

13. A marketing team of 5 members for a company will be chosen randomly from a potential
group of 15 employees. Ten of the 15 employees have no prior marketing experience while
the others have some degree of experience.

(a) What is the probability that exactly 2 of the members chosen for the team have some
prior marketing experience?
(b) What is the probability that at most 1 of the members chosen for the team have some
prior marketing experience?

14. Suppose division A of the Operations Department at ICAC is made up of 4 senior

investigators and 11 junior investigators. The ICAC Commissioner is planning to form a
special investigation team by choosing 5 staff members from division A. Assuming random
selection is allowed. Find the probability that at least three members in the special
investigation team are senior investigators.