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Topics: Normal Distribution, Functions of Random Variables

The document contains examples of calculations involving the normal distribution. It addresses probabilities related to servicing car transmissions, age distributions of employees, combinations of independent normal random variables, finding probability intervals, and calculating profits from two divisions with normal distributions. Various properties of the normal distribution are demonstrated, including finding probabilities, percentiles, means, and ranges containing a given probability.

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rushikesh wadekar
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412 views

Topics: Normal Distribution, Functions of Random Variables

The document contains examples of calculations involving the normal distribution. It addresses probabilities related to servicing car transmissions, age distributions of employees, combinations of independent normal random variables, finding probability intervals, and calculating profits from two divisions with normal distributions. Various properties of the normal distribution are demonstrated, including finding probabilities, percentiles, means, and ranges containing a given probability.

Uploaded by

rushikesh wadekar
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Topics: Normal distribution, Functions of Random Variables

1. The time required for servicing transmissions is normally distributed with  = 45 minutes
and  = 8 minutes. The service manager plans to have work begin on the transmission of a
customer’s car 10 minutes after the car is dropped off and the customer is told that the car
will be ready within 1 hour from drop-off. What is the probability that the service manager
cannot meet his commitment?

A. 0.3875
B. 0.2676
C. 0.5
D. 0.6987
ANS : -
Given mean = 45 , standared deviation = 8
As per given condition the work will start after 10 min so mean will be 45+10 = 55
We have asked customer the car will be ready after 1 hour(x) = 60
Hence,
Z = (60 – 55) / 8 = 0.625
From z table
Z value will be 0.73237
the probability that the service manager cannot meet his commitment = 1 – 0.73237
= 0.2676

2. The current age (in years) of 400 clerical employees at an insurance claims processing center
is normally distributed with mean  = 38 and Standard deviation  =6. For each statement
below, please specify True/False. If false, briefly explain why.
A. More employees at the processing center are older than 44 than between 38 and
44.
B. A training program for employees under the age of 30 at the center would be
expected to attract about 36 employees.

ANS :-
A. First find out the probability for employees older than 44 :
X = 44 , mean = 38, std = 6
1 - Stats.norm.cdf ( 44 , 38 , 6 ) = 1- 0.8413
= 0.1587
Now find the probability of employees between 38 and 44 :-
Stats.norm.cdf ( 44 , 38 , 6 ) - stats.norm.cdf (38,38, 6)
= 0.8413 - 0.5
= 0.3413
As we can clearly see that the probability of employees age between 38-44 is more than
employees age more than 44.
So the given statement is False.

B. Lets calculate the probability of employees age under 30 :


X = 30 , mean = 38, std = 6
Stats.norm.cdf ( 30 , 38 , 6 ) = 0.0912

So the total number of emplyees age under 30 is 0.0912*400 = 36.48

So we can say that the statement is True.

3. If X1 ~ N(μ, σ2) and X2 ~ N(μ, σ2) are iid normal random variables, then what is the difference
between 2 X1 and X1 + X2? Discuss both their distributions and parameters.
ANS :-

4. Let X ~ N(100, 202). Find two values, a and b, symmetric about the mean, such that the
probability of the random variable taking a value between them is 0.99. 

A. 90.5, 105.9
B. 80.2, 119.8
C. 22, 78
D. 48.5, 151.5
E. 90.1, 109.9
ANS :-
Mean = 100 and std = 20
probability of the random variable taking a value between them is 0.99
hence,
Z value at 99 % =
Stats.norm.ppf (0.995) = 2.5758

1st value will be 2.5758*20 + 100 = 151.51


2nd value will be (-2.5758)*20 + 100 = 48.484

So option D is correct.
5. Consider a company that has two different divisions. The annual profits from the two
divisions are independent and have distributions Profit 1 ~ N(5, 32) and Profit2 ~ N(7, 42)
respectively. Both the profits are in $ Million. Answer the following questions about the
total profit of the company in Rupees. Assume that $1 = Rs. 45
A. Specify a Rupee range (centered on the mean) such that it contains 95% probability
for the annual profit of the company.
B. Specify the 5th percentile of profit (in Rupees) for the company
C. Which of the two divisions has a larger probability of making a loss in a given year?

ANS :-
Total profit = profit 1 + profit 2
Mean = profit 1 (mean) + profit 2 (mean)
= 5 + 7 = 12
Std = sqrt (9+16)
= sqrt (25)
=5

Mean in rs = 12*45 = 540


Std in rs = 5* 45 = 225

A ) Range for 95 % :-
Stats.norm.interval ( 0.95 , 540 , 225)

Range is rs ( 99.008 , 980.991 ) in millions

B ) the 5th percentile :-


From z score we need to find the value of 0.5000-0.050 = 0.4500
We are getting the value of -1.645

the 5th percentile of profit = mean + (-1.645)*std


= 540 – (1.645 * 225 )
= 540 – 370.125
= 169.87 = 170 in million

C)
Probability of 1st division making loss = stats.norm.cdf ( 0, 5 , 3 )
= 0.0479
nd
Probability of 2 division making loss = stats.norm.cdf ( 0, 7, 4 )
= 0.04005
We can see that 1 division can make more loss compared to 1st division.
st

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