Introduction to Probability and Statistics

(TERM- I/ AY 2021-22/PGP 2021 batch)

Quiz - 2 Solutions - August 24, 2021
Total points – 40.
Time allotted – 45 minutes.
Instructions:

1. There are 8 questions in this quiz. Each question carries 5 points.

2. Calculator is allowed.

3. Rough sheet along with pen/pencil is allowed for rough work.

4. Give the final answer only. You need not show any steps.

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1. A checkout counter at a supermarket completes the process according to an exponential
distribution with a service rate of 6 per hour. A customer arrives at the checkout counter.
Find the probability that the customer leaves the checkout counter more than 10 minutes
after arriving. Note that, for X ∼ Exp(λ), the cdf is given by F (x) = 1 − e−λx , x > 0.
Let X denote the processing time (in hrs.) at the checkout counter for a randomly chosen customer.
Given, the process times follow an Exponential distribution with service rate λ = 6/hr. We need
to find P (X > 10/60). We have,

P (X > 10/60) = 1 − F (10) = e−10λ/60 = e−1 = 0.3679.

2. Every day a bakery prepares its famous chocolate croissant. A statistically savvy customer
determined that daily demand is normally distributed with a mean of 850 and a standard
deviation of 90. How many such croissants should the bakery make if it wants the probability
of running short on any day to be no more than 30%? Given, z0.30 = 0.524.
Daily demand (X) ∼ N (850, 902 ). We need to find x0 such that P (X > x0 ) ≤ 0.30. Now,
x0 − 850
P (X > x0 ) = P (Z > ) ≤ 0.30
90
implies that
x0 − 850
≥ z0.30 = 0.524.
90
This gives,
x0 ≥ 850 + 0.524 ∗ 90 = 897.16.
Hence, the bakery must make at least 898 croissants.

3. The Tesla Model S-85D is an electric car that the manufacturer claims can travel 270 miles
on a single charge. However, the actual distance depends on a number of factors including
speed and whether the car is driven in the city or on highways. Suppose that the distance is
a normally distributed random variable with a mean of 200 miles and a standard deviation of
20 miles. An owner of this model intends to travel to a nearby city and return on the same
charge. If the total travel distance is 210 miles, what is the probability that car makes it
without running out of power? Given, Φ(0.5) = 0.691.
Distance traveled on a single charge (X) ∼ N (200, 202 ). To find the probability that the car covers
a total distance of 210 miles without running out of power, we need to find P (X > 210). Now,
210 − 200
P (X > 210) = P (Z > ) = 1 − Φ(0.5) = 1 − 0.691 = 0.309.
20

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4. Suppose that by any time t, the number of people who have arrived at a train station to board
a train towards the central terminal station is a Poisson random variable with mean λt. If
the initial train arrives at the station at a time (independent of when the passengers arrive)
that is uniformly distributed over (0, T ), what is the mean number of passengers who board
the train?
For each t ≥ 0, let N (t) denote the number of passenger arrivals till time t, and let Y denote the
arrival time of the train. We need to find E[N (Y )]. Now,

E[N (Y ) | Y = t] = E[N (t) | Y = t]

= E[N (t)], since N (t) and Y are independent
= λt.

This implies, E[N (Y ) | Y ] = λY. This gives,

E[N (Y )] = E[E[N (Y ) | Y ]] = λE(Y ) = λT /2.

5. New books arriving at a library need to be processed before they are sent to the shelves.
Suppose that the time it takes to process a book has mean 10 minutes and standard deviation
3 minutes. If on a particular day, the library has 40 books to process, find the approximate
probability that at least 25 books will be processed in the first 4 hours. Assume that successive
book processing times are independent. Given, Φ(2/3) = 0.7475.
Processing time (X) of one book has E(X) = P 10, sd(X) = 3. Let X1 , . . . , X25 denote the
processing times of 25 books. We need to find P ( 25
i=1 Xi ≤ 240). We have,

25
X 240
P( Xi ≤ 240) = P (X̄ ≤ )
i=1
25
240/25 − 10
= P (Z ≤ √ )
3/ 25
10
= P (Z ≤ − ) = Φ(−2/3)
15
= 1 − Φ(2/3) = 0.2525.

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6. A certain market has both an express checkout line and a superexpress checkout line. Let X1
denote the number of customers in line at the express checkout at a particular time of day,
and let X2 denote the number of customers in line at the superexpress checkout at the same
time. Suppose the joint pmf of X1 and X2 is as given in the accompanying table.

x2
0 1 2 3
0 .08 .07 .04 .00
1 .06 .15 .05 .04
x1 2 .05 .04 .10 .06
3 .00 .03 .04 .07
4 .00 .01 .05 .06

Find the probability that there are at least two more customers in one line than in the other
line.
To find, P (|X1 − X2 | ≥ 2). The probability values corresponding to the given event are marked in
red. The required probability comes out to be 0.22.

x2
0 1 2 3
0 .08 .07 .04 .00
1 .06 .15 .05 .04
x1 2 .05 .04 .10 .06
3 .00 .03 .04 .07
4 .00 .01 .05 .06

7. Suppose that a binary message – either 0 or 1 – must be transmitted by wire from location A
to location B. However, the data sent over the wire are subject to a channel noise disturbance,
so, to reduce the possibility of error, the value 2 is sent over the wire when the message is 1
and the value −2 is sent when the message is 0. If x, x = ±2, is the value sent from location A,
then, R, the value received at location B, is given by R = x + N , where N is the channel noise
disturbance. When the message is received at location B, the receiver decodes it according to
the following rule:

(a) If R ≥ 0.5, then the received message is taken as 1.

(b) If R < 0.5, then the received message is taken as 0.

Suppose the channel noise follows a standard Normal distribution. Find the probabilities
of making an error (probability of message 1 incorrectly determined to be 0 and message 0
incorrectly determined to be 1). Given, Φ(1.5) = 0.9332, Φ(2.5) = 0.9938.

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 P (decoded message = 0 | true message = 1)
= P (R < 0.5 | x = 2)
= P (x + N < 0.5 | x = 2)
= P (N < −1.5) = Φ(−1.5)
= 1 − Φ(1.5) = 1 − 0.9332 = 0.0668.

P (decoded message = 1 | true message = 0)

= P (R ≥ 0.5 | x = −2)
= P (x + N ≥ 0.5 | x = −2)
= P (N ≥ 2.5) = 1 − Φ(2.5)
= 1 − 0.9938 = 0.0062.

8. The following table gives information on the expected return and standard deviations of stocks
of the three chocolate companies – Godiva, Ghirardelli and Amul.

Company Country Expected return SD of return

Godiva Belgium 9.8% 3.6%
Ghirardelli USA 8.2% 2.1%
Amul India 8.4% 2.9%

An open trade market of cocoa beans (the main ingredient of dark chocolate) between Europe
and the USA has prompted a positive correlation of 0.62 between the stocks of Godiva and
Ghirardelli, while both of these two are uncorrelated with stock prices of Amul. Inspired
by the growth of dark chocolate market in India, Willy Wonka, the Chocolate baron, has
invested 35% in Godiva, 35% in Ghirardelli and 30% in Amul. Find the standard deviation
of the return of Mr. Wonka’s portfolio.
The return of Mr. Wonka’s portfolio is given by R = 0.35X1 + 0.35X2 + 0.30X3 , where X1 , X2
and X3 respectively denote the returns of Godiva, Ghirardelli and Amul. The variance of the return
is given by

V ar(R) = 0.352 ∗ V ar(X1 ) + 0.352 ∗ V ar(X2 ) + 0.302 V ar(X3 ) + 2 ∗ 0.35 ∗ 0.35 ∗ Cov(X1 , X2 ),

since Cov(X1 , Xp
3 ) = Cov(X2 , X3 ) = 0 owing to independence. Note that, Cov(X1 , X2 ) =
Corr(X1 , X2 ) ∗ V ar(X1 )V ar(X2 ). Thus,

V ar(R) = 0.352 ∗ 3.62 + 0.352 ∗ 2.12 + 0.302 ∗ 2.92 + 2 ∗ 0.35 ∗ 0.35 ∗ (0.62 ∗ 3.6 ∗ 2.1) = 4.033.
p
Thus, the standard deviation of the return is V ar(R) = 2.008%.