1

Solution to Case 7: Titan I ndustries Ltd: Providing Real-Value to

Customers



Solution 1:

From the case:


930
920
1
=
=
x
a

940
950
2
=
=
x
b

If a price is randomly selected, probability that it will be between Rs 930 to Rs
940:


2 1
940 930 10
( ) 0.3333
950 920 30
x x
f x
b a

= = = =

Mean of a uniform distribution = 935
2
950 920
2
) ( =
+
=
+
=
b a
x E


Variance of a uniform distribution =

75
12
) 30 (
12
) 920 950 (
12
) (
) (
2 2 2
= =

=
a b
x Var


Standard deviation of a uniform distribution =

= =

=
12
30
12
920 950
12
a b
o 8.66







Solution 2:

2
(i) Probability of obtaining sales greater than 35 million ( 35) P x > can be
shown graphically as below:

Figure (a): Probability of obtaining sales greater than Rs 35 million




















The z score for this problem is

5 . 2
6
20 35
=

=
o
x
z

The probability for this z score from the z distribution table is 0.4938. This value is the
probability of randomly drawing a score between mean and 35. Each half of the
distribution contains 0.5000 of the area. Therefore, the probability of getting sales more
than 35 can be obtained by subtracting 0.4938 from 0.5000. So the probability of
( 35) P x > is

(Probability of value greater than the mean) (Probability of the value between mean and
35)
= (0.5000 0.4938)
= 0.0062

(ii) Probability of obtaining sales between Rs 15 million to 25 million.

The x value and the corresponding z value is shown in Figures (a) and (b)
















20 = 35
6 = o
3
There will be two z scores for this problem. These two are calculated as below:

83 . 0
6
5
6
20 15
=

=
o
x
z

83 . 0
6
5
6
20 25
+ = =

=
o
x
z

From the z distribution table, the probability for 0.83 z score is 0.2967 and the
probability for +0.83 z score is also 0.2967. So, the probability of obtaining sales
between Rs 15 million to Rs 25 million can be obtained by adding 0.2967 to 0.2967.
So, the required probability of (15 25) P x < < is

(Probability of the value between the mean and 15) + (Probability of the value
between mean and 25)

= (0.2967 +0.2967)

= 0.5934


Figure (b): Probability of obtaining sales between Rs 15 million and Rs 25
million
































15 20 = 25
6 = o
4



Figure (c): Corresponding z scores for probability of obtaining sales between
Rs 15 million and Rs 25 million




















(iii) Probability of getting sales between Rs 15 million and Rs 18 million.

The x value and the corresponding z value are shown in Figures (a) and (b)

There will be two z scores for this problem. These are calculated as below:

8333 . 0
6
5
6
20 15
=

=
o
x
z

3333 0
6
2
6
20 18
.
x
z =

=
o

=

From the z distribution table, the probability for 0.83 z score is 0.2967 and the
probability for 0.33 z score is 0.1293. So, the probability of obtaining sales
between 15 million to 18 million can be obtained by subtracting 0.1293 from
0.2967. So the required probability of (15 18) P x < < is:













-0.83 0 = z +0.83

.2967
.2967
5
(Probability of value between the mean and 15) (Probability of the value
between mean and 18)
= (0.2967 0.1293)
= 0.1674

Probability of obtaining sales between Rs 15 million and Rs 18 million

















Corresponding z scores for probability of obtaining sales between Rs 15 million
and Rs 18 million






























15 18 20 =
6 = o












-0.8 3 -0.33 0 = z

.1293
.2967
6


Solution 3

From the question, = 10.2 per minute, and the exponential probability density
function is
x
e x f

= ) ( in an exponential distribution. The required probabilities can
be calculated by using the formula .
x
e

In this case:

(a) The probability that at least 25 minutes will elapse between arrivals will be:

x
e

=

= =
) 25 ( 2 . 10
e 0.0000


(b) The probability that at least 12 minutes will elapse between arrivals will be:

x
e

=

= =
) 12 ( 2 . 10
e 0.0000


(c) The probability that at least 06 minutes will elapse between arrivals will be:

x
e

=

= =
) 6 ( 2 . 10
e 0.0000


(d) The probability that at least 01 minutes will elapse between arrivals will be:

x
e

=

= =
) 1 ( 2 . 10
e 0.0000372