BUS 273 - Problem Sheet #6

Q1. Before books aimed at preschool children are marketed, reactions are obtained from a
panel of preschool children. These reactions are categorized as favorable, neutral, or
unfavorable. Subsequently, book sales are categorized as high, moderate, or low, according
to the norms of this market. Similar panels have evaluated 1,000 books in the past. The
accompanying table shows their reactions and the resulting market performance of the
books.

a. If the panel reaction is favorable, what is the probability that sales will be high?
b. If the panel reaction is unfavorable, what is the probability that sales will be low?
c. If the panel reaction is neutral or better, what is the probability that sales will be low?
d. If sales are low, what is the probability that the panel reaction was neutral or better?

Q2. The Watts New Lightbulb Corporation ships large consignments of lightbulbs to big
industrial users. When the production process is functioning correctly, which is 90% of the
time, 10% of all bulbs produced are defective. However, the process is susceptible to an
occasional malfunction, leading to a defective rate of 50%. If a defective bulb is found, what
is the probability that the process is functioning correctly? If a nondefective bulb is found,
what is the probability that the process is operating correctly?

Q3. Sally Firefly purchases hardwood lumber for a custom furniture-building shop. She uses
three suppliers, Northern Hardwoods, Mountain Top, and Spring Valley. Lumber is classified
as either clear or has defects which includes 20% of the pile. A recent analysis of
the defect lumber pile showed that 30% came from Northern Hardwoods and 50% came
from Mountain Top. Analysis of the clear pile indicates that 40% came from Northern and
40% came from Spring Valley. What is the percent of clear lumber from Mountain Top
supplier? What is the percent of lumber from Mountain Top?
Q4. After meeting with the regional sales managers, Lauretta Anderson, president of Cowpie
Computers Inc., you find that she believes that the probability that sales will grow by 10% in
the next year is 0.70. After coming to this conclusion, she receives a report that John Cadariu
of Minihard Software, Inc., has just announced a new operating system that will be available
for customers in 8 months. From past history she knows that in situations where growth has
eventually occurred, new operating systems have been announced 30% of the time.
However, in situations where growth has not eventually occurred, new operating systems
have been announced 10% of the time. Based on all these facts, what is the probability that
sales will grow by 10%?