95-796 HOMEWORK 1 Name: NIZEYIMANA Jean Paul Carnegie Mellon University in Rwanda Andrew ID: jnizeyim Course: Statistics

for IT Managers 1. a)

Looking at the Histogram of volume, we can see that the distribution is positively skewed. Looking at the Box plot of volume, we can see that there is an outlier (Row 2: volume = 31415.9). b) Descriptive Statistics: Volume
Variable Volume N 30 N* 0 Mean 11735 SE Mean 1340 StDev 7340 Minimum 1616 Q1 7245 Median 9027 Q3 16811 Maximum 31416

Mean = 11735 Median = 9027 Standard deviation = 7340 Variance = the square of the standard deviation = 73402 = 53875600 Range = maximum minimum = 31416 1616 = 29800 Interquartile range = Q3 Q1 = 16811 7245 = 9566

Based on these statistics, the hypothesis stated that the distribution is positively skewed is confirmed because the mean > median (11735 > 9027). c) Diameters of first six trees: 7, 11, 12, 16, 18, 20 - Mean = (7+11+12+16+18+20) / 6 = 84 /6 = 14 - Median = (12+16) /2 = 14 - Standard deviation: Deviations: -7, -3, -2, 2, 4, 6 Squared deviations: 49, 9, 4, 4, 16, 36 Variance: S2 = (49+9+4+4+16+36) / (6-1) = 118/5 = 23.6 Standard deviation: S = - Range = 20-7 = 13 2. Conditional probability and Bayes rule We are given the following probabilities: P(use drugs) = 0.03 this means that P(dont use drugs) = 0.97 P(positive | uses drugs) = 0.95 this means that P(negative | uses drugs) = 0.05 P(positive | doesnt use drugs) = 0.2 this means that P(negative | doesnt use drugs) = 0.8
23.6

= 4.86

Using Bayes rule: a) P(uses drugs | positive) =

P(positive | uses drugs) P(use drugs) P(positive | uses drugs) P(use drugs) + P(positive | doesn' t drugs) P(don' t use drugs)

0.95 * 0.03 = 0.0285 / 0.2225 = 0.128090 0.95 * 0.03 + 0.2 * 0.97

b)

P(uses

drugs

negative)

P(negative | uses drugs) P(use drugs) P(negative | uses drugs) P(use drugs) + P(negative | doesn' t drugs) P(don' t use drugs)

0.05 * 0.03 = 0.0015 / 0.7775 = 0.001929 0.05 * 0.03 + 0.8 * 0.97

c) P(uses drug | A and B are positive) = P(uses drug | A is positive) * P(uses drug | B is positive)
P(A is positive | uses drugs) P(use drugs) P(A is positive | uses drugs) P(use drugs) + P(A is positive | doesn' t drugs) P(don' t use drugs) P(B is positive | uses drugs) P(use drugs) P(B is positive | uses drugs) P(use drugs) + P(B is positive | doesn' t drugs) P(don' t use drugs)

0.95 * 0.03 0.95 * 0.03 * = 0.128090* 0.128090= 0.0164070481 0.95 * 0.03 + 0.2 * 0.97 0.95 * 0.03 + 0.2 * 0.97

d) P(B is positive | A is positive) = P(B is positive | use drugs) P(use drugs | A is positive) + P(B is positive | dont use drug) P (dont use drug | A is positive) =
P( don' t use drugs | B is positive) P(B is positive) P( don' t use drugs | B is positive) P(B is positive) + P(don' t use drugs | B is negative) P(B is negative)

* = 0.128090+
P( uses drugs | B is positive) P(B is positive) P( uses drugs | B is positive) P(B is positive) + P(uses drugs | B is negative) P(B is negative)

0.87191

0.87191 * 0.19 0.128090 * 0.19 * 0.128090 + *0.87191 0.87191 * 0.19 + 0.8 * 0.81 0.128090 * 0.19 + 0.05 * 0.81

= 0.2036 * 0.128090 + 0.3754 * 0.87191 = 0.3534 3. Discrete and continuous random variables a) Manager 1: We have the interval [$5,000, $35,000] Mean: = ($5,000 + $ 35,000) / 2 = $ 20,000 Standard deviation Manager 2: The mean and the standard deviation of his groups monthly expenses are the same as those estimated. Mean: = $21,000 Standard deviation: Manager 3: Mean: =

= ($35,000 - $ 5,000) /

12 = $8660.2540

=$2,000

p ( x)

= 0.2($15,000) + 0.4($20,000) + 0.3($25,000) + 0.1($30,000) = $21500 Variance:

2 = ( x )

p( x)

= ((-6500)2 0.2 + (-1500)2 0.4 + (3500)2 0.3 + (8500)2 0.1)) = $20250000 Standard deviation:

2 = 20250000 = $4500

b) Using Minitab, we can calculate these probabilities. The steps are: Select Calc > Probability Distributions > Normal Select Cumulative Probability Fill-in the values in the dialog box (mean, standard deviation and the input constant) Click OK Manager 1:

i) From Minitab,
Cumulative Distribution Function
Normal with mean = 20000 and standard deviation = 8660.25 x 17000 P( X <= x ) 0.364517 and x 24000 P( X <= x ) 0.677916

The probability that is between $17,000 and $24,000 is 0.677916 0.364517 = 0.313399 ii) From Minitab we can calculate the probability that is less than $22,000 and the probability that it is greater than $22,000 will be 1- P(is less than $22,000)
Cumulative Distribution Function
Normal with mean = 20000 and standard deviation = 8660.25

x P( X <= x ) 22000 0.591319 (less than $22,000)

Thus the probability that is greater than $22,000 will be 1- 0.591319 = 0.408681 iii) Cumulative Distribution Function
Normal with mean = 20000 and standard deviation = 8660.25 x 18000 P( X <= x ) 0.408681

the probability that it is below $18,000 is 0.408681

iv) Because this is a single value, (random variable) the probability will be zero (P(x=$25,000 = 0) Manager 2: i) From Minitab,
Cumulative Distribution Function
Normal with mean = 21000 and standard deviation = 2000 x 17000 P( X <= x ) 0.0227501 and x 24000 P( X <= x ) 0.933193

The probability that is between $17,000 and $24,000 is 0.933193 0.0227501 = 0.910443 ii) From Minitab we can calculate the probability that is less than $22,000 and the probability that it is greater than $22,000 will be 1- P(is less than $22,000)
Cumulative Distribution Function
Normal with mean = 21000 and standard deviation = 2000

P( X <= x )

22000

0.691462 (less than $22,000)

Thus the probability that is greater than $22,000 will be 1- 0.691462 = 0.308538 iii) Cumulative Distribution Function
Normal with mean = 21000 and standard deviation = 2000 x 18000 P( X <= x ) 0.0668072

the probability that it is below $18,000 is 0.0668072

iv) Because this is a single value, (random variable) the probability will be zero (P(x=$25,000 = 0) Manager 3: i) From Minitab,
Cumulative Distribution Function
Normal with mean = 21500 and standard deviation = 4500 x 17000 P( X <= x ) 0.158655 and x 24000 P( X <= x ) 0.710743

The probability that is between $17,000 and $24,000 is 0.710743 0.158655 = 0.552088 ii) From Minitab we can calculate the probability that is less than $22,000 and the probability that it is greater than $22,000 will be 1- P(is less than $22,000)
Cumulative Distribution Function
Normal with mean = 21500 and standard deviation = 4500 x P( X <= x ) 22000 0.544236 (less than $22,000)

Thus the probability that is greater than $22,000 will be 1- 0.544236 = 0.455764 iii) Cumulative Distribution Function
Normal with mean = 21500 and standard deviation = 4500 x 18000 P( X <= x ) 0.218350

the probability that it is below $18,000 is 0.218350

iv) Because this is a single value, (random variable) the probability will be zero (P(x=$25,000 = 0) c) This is an inverse problem. With Minitab we can calculate this value using the Inverse Normal Cumulative Probability. The steps are the following: Select Calc > Probability Distributions > Normal Select Inverse cumulative probability

Fill-in the values in the dialog box (mean, standard deviation and the input constant) Click OK The input constant will be 20% = 0.2

For manager 1:
Inverse Cumulative Distribution Function
Normal with mean = 20000 and standard deviation = 8660.25 P( X <= x ) 0.2 x 12711.3

Thus the company should budget $12,711 for manager 1. For manager 2:
Inverse Cumulative Distribution Function
Normal with mean = 21000 and standard deviation = 2000 P( X <= x ) 0.2 x 19316.8

Thus the company should budget $19,317 for manager 2. For manager 3:
Inverse Cumulative Distribution Function
Normal with mean = 21500 and standard deviation = 4500 P( X <= x ) 0.2 x 17712.7

Thus the company should budget $17,713 for manager 3.

d) We will use the same approach as the above (on c) but the input constant will be 0.02 For manager 1:
Inverse Cumulative Distribution Function
Normal with mean = 20000 and standard deviation = 8660.25 P( X <= x ) 0.02 x 2214.01

Thus the company should budget $2214 for manager 1. For manager 2:

Inverse Cumulative Distribution Function

Normal with mean = 21000 and standard deviation = 2000 P( X <= x ) 0.02 x 16892.5

Thus the company should budget $16,893 for manager 2. For manager 3:
Inverse Cumulative Distribution Function
Normal with mean = 21500 and standard deviation = 4500 P( X <= x ) 0.02 x 12258.1

Thus the company should budget $12,258 for manager 3.

4. a) n (number of trials) = 1000 p (probability of success i.e no defective) = 1-0.01 = 0.99 q(probability of failure i.e defective) = 1% = 0.01 Mean of defective chips: = nq = 1000 * 0.01 = 100 Standard deviation:

npq

1000 * 0.01 * 0.99

= 9.9

b) Total cost: 1000 * $200= $200,000 Total sell: 1000 * $1000 = $1,000,000 Profit if no defective: $1,000,000 - $200,000 = $800,000 p(800,000) = 0.98 and p(-200,000) = 0.02 The manufacturers expected profit will be: 0.98($800,000) + 0.02($-200,000) = $780,000 c) In this case the profit will be 1($800,000) = $800,000 since there would be no defective The implementation of this technology will increase the manufacturers expected profit to $800,000 - $780,000 = $20,000