Chapter 2
17
Chapter 2
I
Chapter Outline
Instructors Manual
Chapter 2
18
2.10
2.11
2.12
2.13
Summary
II
Teaching Tips
1.
2.
3.
To help understand the meaning of the variance, the instructor may want to
introduce the coefficient of variation (/) as a relative measure of the variability
within a population and its possible use to compare populations of very different
nature.
III
2.1
(a) P(X>=5) = P(1,4) + P(2,3) + P(2,4) + P(3,2) + P(3,3) + P(3,4) + P(4,1) +
P(4,2) + P(4,3) + P(4,4) = 10/16.
(b) P(X>=5 | First is 3) = P(X>=5 and First is 3)/P(First is 3) = (3/16)/(4/16)=3/4.
(c) P(X>=5 | At least 3 in one die) = P(X>=5 and At least 3 in one die)/P(At least
3 in one die) = (5/16)/(7/16)=5/7.
Manual to accompany Data, Models & Decisions: The Fundamentals of Management Science by Bertsimas and Freund. Copyright
2000, South-Western College Publishing. Prepared by Manuel Nunez, Chapman University.
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2.2
(a)
(b)
(c)
(d)
A total of 8 outcomes: HHH, HHT, HTH, HTT, THH, THT, TTH, and TTT.
P(HHT) = 1/8.
P(First two tosses are heads) = 2/8.
P(Two heads in a row) = 3/8.
2.3
(a) P(At least 4 years experience) = P(4 years experience) + P(5 or more years
experience) = 15/100 + 35/100 = 50/100.
(b) P(At least 4 years experience | At least 3 years experience) = P(At least 4
years experience)/P(At least 3 years experience) = (50/100)/(80/100) = 50/80.
2.4
(a) P(Oil at all three places) = (0.70)x(0.85)x(0.80) = 0.476.
(b) P(No oil at any site) = (0.30)x(0.15)x(0.20) = 0.009.
2.5
(a) P(Sunny on Wednesday) = P(Sunny on Tuesday and sunny on Wednesday) +
P(Cloudy on Tuesday and sunny on Wednesday) = (0.3)x(0.60) + (0.7)x(0.3)
= 0.18 + 0.21 = 0.39.
(b) P(Sunny on Tuesday and Wednesday) = (0.30)x(0.60) = 0.18.
2.6
(a) According to the table below the prime time slot would yield the highest
expected net profit ($112,000).
Time Slot
Morning
Afternoon
Prime Time
Late Evening
Estimated Earnings
$160,000
$208,000
$512,000
$128,000
(b) The company should buy the morning and the prime time slots, with a total
expected contribution to earnings of $152,000.
2.7
2.8
Consider the decision tree below. We assume that the boxes are labeled A, B, and
C. Without loss of generality, we assume that the initially chosen box is A. Hence,
there are four possible scenarios, each with the same probability: the prize is in A
and the host shows B, the prize is in A and the host shows C, the prize is in B and
the host must show C, or the prize is in C and the host must show B. Therefore,
Manual to accompany Data, Models & Decisions: The Fundamentals of Management Science by Bertsimas and Freund. Copyright
2000, South-Western College Publishing. Prepared by Manuel Nunez, Chapman University.
Instructors Manual
Chapter 2
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the host shows B with probability 2/4 = 0.50, and it shows C with probability 2/4
= 0.50. According to this decision tree, you should always change your pick.
2.9
Let H denote the person has HIV, R the test is positive, and N the test is negative.
Then P(H) = 550000/250000000 = 0.0022, P(R | H) = 0.99, and P(N | not H) =
0.99.
(a) We want to compute P(H | R). Notice that P(R) = P(R | H)xP(H) + P(R | not
H)xP(not H) = 0.002178 + 0.009978 = 0.012156. Therefore, P(H | R) = P(R |
H)xP(H)/P(R) = 0.002178/0.012156 = 0.18.
(b) Let D denote that the person is a drug user. We want to compute P(H | R and
D). Notice that P(H and D) = 275000/250000000 = 0.0011 and P((not H) and
D) = (10000000 - 275000)/250000000 = 0.0389. We assume that P(R | H and
D) = P(R | H) = 0.99 and P(N | (not H) and D) = 0.99. Then P(R and D) =
(0.99)x(0.0011) + (0.01)x(0.0389) = 0.001478. Therefore, P(H | R and D) =
P(H and R and D)/P(R and D) = P(R | H and D)xP(H and D)/P(R and D) =
(0.99)x(0.0011)/(0.001478) = 0.74.
2.10
Let S1 denote the lamp comes from first shipment, S2 denote the lamp comes
from second shipment, and D denote the lamp is defective. We want to compare
P(S1 | D) to P(S2 | D). We have P(S1) = 100/150 = 2/3, P(S2) = 50/150 = 1/3, P(D
| S1) = 0.04, and P(D | S2) = 0.06. First, P(D) = P(D | S1)x P(S1) + P(D | S2)x
Manual to accompany Data, Models & Decisions: The Fundamentals of Management Science by Bertsimas and Freund. Copyright
2000, South-Western College Publishing. Prepared by Manuel Nunez, Chapman University.
Instructors Manual
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P(S2) = 7/150. Therefore, P(S1 | D) = P(D | S1)x P(S1)/P(D) = 8/14, and P(S2 | D)
= P(D | S2)x P(S2)/P(D) = 6/14. In conclusion, the lamp is more likely to come
from the first shipment.
2.11
Let TB denote the person is infected with the TB bacteria, and let D denote the
person has the disease. We have P(TB) = 1/3 and P(D | TB) = 0.10.
(a) P(D) = P(D | TB)x P(TB) + P(D | not TB)xP(not TB) = 0.10x(1/3) + 0x(2/3) =
1/30.
(b) P(TB | not D) = P(not D | TB)xP(TB)/P(not D) = 9/29.
2.12
2.13
2.14
(a) The distributions are given below.
Time Task A
1
2
P(Time)
0.40
0.60
Time Task B
1
2
3
P(Time)
0.20
0.58
0.22
Time Job
1
2
3
P(Time)
0.07
0.71
0.22
(b) E(Time A) = 1.6, E(Time B) = 2.02, and E(Time job) = 2.15; (Time A) =
0.49, (Time B) = 0.65, and (Time job) = 0.52.
(c) The distribution is given below. E(Cost) = $4,160 and (Cost) = $958.75.
Cost
$2,200
$3,400
$3,600
$4,400
$5,000
$5,800
2.15
P(Cost)
0.07
0.13
0.27
0.31
0.06
0.16
Manual to accompany Data, Models & Decisions: The Fundamentals of Management Science by Bertsimas and Freund. Copyright
2000, South-Western College Publishing. Prepared by Manuel Nunez, Chapman University.
Instructors Manual
Chapter 2
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(e) and (f) Let R denote the net revenue. The following table summarizes the
available options. E[R] = $50,500 and (R) = $22,600. The best option is to
add one more instructor (marginal increase of $800 in net revenues).
R
P(R) R (1 instr.) R (2 instr.) R (3 instr.)
$0
0.05
-$2,500
-$5,000
-$7,500
$20,000
0.15
-$2,500
-$5,000
-$7,500
$40,000
0.25
-$2,500
-$5,000
-$7,500
$60,000
0.25
-$2,500
-$5,000
-$7,500
$69,000
0.15
$8,500
$6,000
$3,500
$78,000
0.10
$8,500
$17,000
$14,500
$87,000
0.05
$8,500
$17,000
$25,500
Expectation
$800
-$50
-$2,000
2.16
Let X be the number of boats constructed each month and let C be the monthly
cost of the operation. Notice that C = 4800X + 30000.
(a) E(X) = 4 and (X) = 1.3.
(b) E(C) = 4800x4 + 30000 = $49,200 and (C) = 4800x(1.3) = $6,240.
(c) E(C) = 49200 + 23000 = $72,200 and (C) = $6,240.
(d) E(C) = 49200 + 4x(7000-4800) = $58,000 and (C)=7000(1.3) = $9,100.
2.17
Cost x P
13
35
49
34
19
151
2.18
2.19
Let T be the employee's total weekly salary and let V be the overtime per week.
Notice that T = 40x12 + 18xV = 480 + 18V. E(T) = 480 + 18x15 = $750, (T) =
18x4 = $72, and VAR(T) = 5184.
2.20
Let A, B, and C be the daily production rate of the Andover, Bedford, and
Concord plants, respectively. Notice that X = A + B + C.
(a) E(X) = E(A) + E(B) + E(C) = 91 + 67 + 69 = 227.
Manual to accompany Data, Models & Decisions: The Fundamentals of Management Science by Bertsimas and Freund. Copyright
2000, South-Western College Publishing. Prepared by Manuel Nunez, Chapman University.
Instructors Manual
Chapter 2
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Let S denote the size of the sales force and let R denote the yearly sales revenue.
(a) E(S) = 26.25, VAR(S) = 39.7, and (S) = 6.3.
(b) E(R) = 2.8, VAR(R) =1.35, and (R) = 1.16.
(c) COV(S, R) = 6.8 and CORR(S, R) = 0.93.
2.22
Let U1 be the umbrellas sold at the department store, U2 be the umbrellas sold at
the outlet, and S be the total sales revenue. Then S = 17U1 + 9U2. E(S) =
17x(147.8) + 9x(63.2) = $3,081, VAR(S) = 289VAR(U1) + 81VAR(U2) +
2x17x9x51x37xCORR(U1, U2) = 1266773 and (S) = $1,125.51.
2.23
2.24
VAR(R)
0.0006
0.0011
0.0015
0.0020
0.0024
(R)
0.0250
0.0328
0.0391
0.0444
0.0492
Return Plots
S.D.
0.0040
0.0030
CORR=-0.6
0.0020
CORR=-0.3
CORR=0
CORR=0.3
CORR=0.6
0.0010
0.0000
0.14
0.15
0.16
0.17
0.18
0.19
0.20
0.21
Mean
Manual to accompany Data, Models & Decisions: The Fundamentals of Management Science by Bertsimas and Freund. Copyright
2000, South-Western College Publishing. Prepared by Manuel Nunez, Chapman University.
Instructors Manual
Chapter 2
24
2.25
2.26
2.27
Let X be the number of persons (out of 11) who show up. X is binomial with
parameters n = 11 and p = 0.8.
(a) P(X<=5) = 0.012.
(b) P(X = 10) = 11(0.8)10(0.2) =0.236.
(c) E(X) = 11(0.8) = 8.8. E(Profit) = 1200E(X) - 3000P(X=11) = $10,302.
(d) 1200(0.8)10 = $9,600.
(e) Yes, because if one person shows up, then it is very likely that his/her
companions will also show up. Therefore, the event a person shows up is not
independent of the event the next person shows up.
2.28
(a) 500(0.15) = 75.
(b) 7.98.
2.29
(a) P(Exactly one) = 9(0.06)(0.94)8 = 0.33. P(more than one) = 1 - P(exactly one)
- P(none of them) = 1 - 0.33 - 0.57 = 0.10.
(b) P(Exactly one) = 6(0.12)(0.88)5 = 0.38. P(more than one) = 1 - P(exactly one)
- P(none of them) = 1 - 0.38 - 0.46 = 0.16.
(c) (0.94)3(0.88)2 = 0.64
2.30
(a) P(At least 4) = 0.06 + 0.01 + 0.001 = 0.071.
(b) P(At most 2) = 0.118 + 0.303 + 0.324 = 0.745.
Manual to accompany Data, Models & Decisions: The Fundamentals of Management Science by Bertsimas and Freund. Copyright
2000, South-Western College Publishing. Prepared by Manuel Nunez, Chapman University.
Instructors Manual
2.31
Chapter 2
25
(0.15)4 = 0.0005.
2.32
(a) The preference of a given customer is independent of the preference of
another customer and the probability that a customer prefer thin crust pizza is
the same for all 6 customers.
(b) The distribution is in the table below.
X
0
1
2
3
4
5
6
P(X)
0
0.002
0.015
0.082
0.246
0.393
0.262
Let X be the number of times the Fund will increase over the next 12 months. X is
Binomial with n = 12 and p = 0.65.
(a) P(X = 7) = 0.204.
(b) E(X) = 12(0.65) = 7.8. Expected change = E(5X - 4(12-X)) = 9E(X) - 48 =
9(7.8) -48 = 22.2%.
2.34
Let X be the number of customers (out of 10) who are frequent ATM users. X is
Binomial with n = 10 and p = 0.4.
(a) P(X >= 4) = 0.62.
(b) P(X <= 6) = 0.945.
(c) P(4 <= X <= 6) = 0.563.
2.35
Let X be the number of clubs (out of 5) which will accept Jim. X is Binomial with
n = 5 and p = 0.65.
(a) P(X = 3) = 0.3364.
(b) P(X >= 3) = P(X=3) + P(X=4) + P(X=5) = 0.3364 + 0.3124 + 0.11603 =
0.765.
(c) 1 - (0.35)3 = 0.96.
Manual to accompany Data, Models & Decisions: The Fundamentals of Management Science by Bertsimas and Freund. Copyright
2000, South-Western College Publishing. Prepared by Manuel Nunez, Chapman University.
Instructors Manual
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2.36
Let X be the number of passengers (out of 6) who will become ill. X is Binomial
with parameters n = 6 and p = 0.12. P(X <= 2) = P(X=0) + P(X=1) + P(X=2) =
0.46 + 0.38 + 0.13 = 0.97.
2.37
Let X be the number of devices (out of 5) which will sound an alarm when no
intruder is present. X is Binomial with parameters n = 5 and p = 0.1. P(X >= 2) =
P(X=2) + P(X=3) + P(X=4) + P(X=5) = 0.073 + 0.008 + 0.000 + 0.000 = 0.081.
2.38
Let X be the number of customers (out of 16) who come from houses in which
gas is used for residential heating. X is Binomial with parameters n = 16 and p =
0.9. P(X >= 12) = P(X=12) + P(X=13) + P(X=14) + P(X=15) + P(X=16) = 0.051
+ 0.142 + 0.275 + 0.329 + 0.185 = 0.982.
IV
Manual to accompany Data, Models & Decisions: The Fundamentals of Management Science by Bertsimas and Freund. Copyright
2000, South-Western College Publishing. Prepared by Manuel Nunez, Chapman University.
Instructors Manual
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Manual to accompany Data, Models & Decisions: The Fundamentals of Management Science by Bertsimas and Freund. Copyright
2000, South-Western College Publishing. Prepared by Manuel Nunez, Chapman University.
Instructors Manual
Chapter 2
28
Let N denote the event that the result of the test is negative and S denote the event
that the slide occurs. Notice that P(not N | S) =0.9, P(N | not S) = 0.85, and P(S) =
0.9. To compute the probabilities on the branches we do the following:
P(N) = P(N | S)P(S) + P(N | not S)P(not S) = (0.1)(0.01) + (0.85)(0.99) =
0.8425
P(S | N) = (0.1)(0.01)/(0.8425) = 0.0012
P(S | not N) = (0.9)(0.01)/(0.1575) = 0.06
Manual to accompany Data, Models & Decisions: The Fundamentals of Management Science by Bertsimas and Freund. Copyright
2000, South-Western College Publishing. Prepared by Manuel Nunez, Chapman University.
Instructors Manual
Chapter 2
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Manual to accompany Data, Models & Decisions: The Fundamentals of Management Science by Bertsimas and Freund. Copyright
2000, South-Western College Publishing. Prepared by Manuel Nunez, Chapman University.
Instructors Manual
Chapter 2
30
GRAPHIC CORPORATION
Consider the decision tree below. According to this tree, the optimal decision
strategy is to install the G-LAN using normal production techniques, with an
EMV of $637,000. Let R, S, and T denote the event we get a positive, neutral, and
negative result from the test, respectively. Let G denote the event that the G-LAN
installation is successful, and B that it is not successful. To compute the
probabilities on the branches of the tree, we do the following:
P(R) = P(R | G)P(G) + P(R | B)P(B) = (0.7)(0.92) + (0.15)(0.08) = 0.656,
P(S) = P(S | G)P(G) + P(S | B)P(B) = (0.2)(0.92) + (0.1)(0.08) = 0.192,
P(T) = P(T | G)P(G) + P(T | B)P(B) = (0.1)(0.92) + (0.75)(0.08) = 0.152,
P(B | R) = (0.15)(0.08)/(0.656) = 0.0183,
P(B | S) = (0.10)(0.08)/(0.192) = 0.0417,
P(B | T) = (0.75)(0.08)/(0.152) = 0.3947.
Manual to accompany Data, Models & Decisions: The Fundamentals of Management Science by Bertsimas and Freund. Copyright
2000, South-Western College Publishing. Prepared by Manuel Nunez, Chapman University.