Hand out 5 Normal distribution.

1. General Hospital's patient account division has compiled data on the age of accounts
receivables. The data collected indicate that the age of the accounts follows a normal
distribution with mean 28 days and standard deviation 8 days.
a. What proportion of the accounts are between 20 and 40 days old?
b. What proportion of the accounts are less than 30 days old?
c. What is the number of days above which 75% of the accounts lie?

2. The length of time of long-distance telephone calls has mean of 18 minutes and standard
deviation of 4 minutes. Suppose a sample of 50 telephone calls is used to reflect on the
population of all long-distance calls. What is the chance that the average of the 50 calls is
between 16 and 17 minutes?

3. The time required to complete a final examination in a particular college course is normally
distributed, with mean of 80 minutes and a standard deviation of 10 minutes. Answer the
following questions.
a. What is the probability of completing the exam in one hour or less?
b. What is the probability a student will complete the exam in a time between 60 and 75
minutes?
c. What is the inter quartile range for completion times?

4. Assume that the dividends of electric utility stocks as of a given date have a normal
distribution with mean of 8.5 percent and standard deviation of 2.5 percent. Find the
probability that the average dividend of 25 such stocks will exceed 10 percent.

5. The ‘Carmate’ automobile batteries have average length of useful life as 48 months. However,
the guarantee stipulated is only 36 months. The company, in order to assure customers about
the quality, also stipulates that if a battery fails in less than 24 months, it will pay a ‘goodwill’
compensation of Rs. 1,000 in addition to the replacement of the battery. Assuming that the s.d.
of the life is 8 months, and that the distribution is normal, find
(i) What percentage of batteries would have to be replaced free of cost?
(ii) What amount of compensation would have to be paid, if the total number of
batteries sold in a year are expected to be 12,000 ?

6. A test is normally distributed with a mean of 40 and a standard deviation of 7. (a) What score
would be needed to be in the 85th percentile? (b) What score would be needed to be in the
22nd percentile?

7. Assume a normal distribution with a mean of 90 and a standard deviation of 7. What limits
would include the middle 65% of the cases.

8. Reclaimed phosphate land in Polk County, Florida, has been found to emit a higher mean
radiation level than other non mining land in the county. Suppose that the radiation level for
the reclaimed land has a distribution with mean 5.0 working levels (WL) and a standard
deviation of 0.5 WL. Suppose further that 20 houses built on reclaimed land are randomly
selected and the radiation level is measured in each.
a. What is the probability that the sample mean for the 20 houses exceeds 4.7 WL?
b. What is the probability that the sample mean is less than 4.8 WL?

9. The reaction time to a certain psychological experiment is considered to be normally

distributed with a mean of 20 seconds and a standard deviation of 4 seconds.
a. What proportion of subjects take between 15 and 30 seconds to react?
b. What proportion of subjects take longer than 30 seconds to react?
 c. What is the reaction time such that only 10% of subjects are faster?
10. Wages for workers in a particular industry average $11.90 per hour with a standard deviation
of 40 cents. The wages are considered to be normally distributed.
a. Suppose you are employed in this industry. What would your wage have to be if 75%
of all workers earn more than you?
b. What proportion of workers receive wages less than $11 per hour?
c. What proportion of workers make between $12 and $13 per hour?

11. A passenger lift ‘Swift’ has rated capacity of 1000 kg load. Passengers using the lift may be
assumed to have weights that are normally distributed with mean 75 kg and s.d. 10 kg. If the
company is planning to put the stipulation of the maximum 12 passengers, what is the
probability that the load on the lift will exceed the capacity?

12. If scores are normally distributed with a mean of 30 and a standard deviation of 5, what percent
of the scores is: (a) greater than 30? (b) greater than 37? (c) between 28 and 34?

13. Daily fluctuations of French CAC-40 stock index from March to June in 1997 seem to follow a
normal distribution with mean of 2600 and a standard deviation of 50. Find the probability that
the CAC-40 will be (i) between 2520 and 2670 (ii) below 2730 and not less than 2450?

14. The mean cost for employee alcohol rehabilitation programs involving hospitalization is
$10,000 ((USA Today, September 12, 1991). Assume that rehabilitation program cost has a
normal distribution with a standard deviation of $2,200
i. What is the probability that a rehabilitation program will cost at least $12,000?
ii. What is the cost range for the 10% most expensive rehabilitation programs?

15. The grade point averages of a large population of cadets in MA206 are approximately normally
distributed with a mean of 2.4 and a standard deviation of 0.8.
a) What fraction of the students will possess a grade point average in excess of 3.0?
b) If cadets possessing a grade point average equal to or less than 1.9 are dropped from
USMA, what percentage of the cadets will be dropped?
c) What grade point average would you need to be in the 90th percentile? The 45th
percentile?

16. The time, in hours, that a copying machine may work without breaking down is a normally
distributed random variable with mean 549 and standard deviation 68. Find the probability
that the machine will work for at least 500 hours without breaking down.

17. Scores on a management aptitude examination are believed to be normally distributed with
mean 650 (out of a total of 800 possible points) and standard deviation 50. What is the
probability that a randomly chosen manager will achieve a score above 700? What is the
probability that the score will be below 750?

18. Assume that the price of a share of TWA stock is normally distributed with mean 48 and
standard deviation 6. What is the probability that on a randomly chosen day in the period
for which our assumptions are made, the price of the stock will be more than $60 per
share? Less than $60 per share? More than $40 per share? Between $40 and $50 per share?

19. The amount of oil pumped daily at Standard Oil’s facilities in Prudhoe Bay is normally
distributed with mean 800,000 barrels and standard deviation 10,000. In determining the
 amount of oil the company must report as its lower limit of daily production, the company
wants to choose an amount such that for 80% of the days, at least the reported amount x is
produced. Determine the value of the lower limit x.

20. Models of the pricing of stock options make the assumption of a normal distribution. An
analyst believes that the price of an IBM stock option is a normally distributed random
variable with mean $8.95 and variance 4. The analyst would like to determine a value such
that there is a 0.90 probability that the price of the option will be greater than that value.
Find the required value.

21. The number of people responding to a mailed information brochure on cruises of the Royal
Viking Line through an agency in San Francisco is approximately normally distributed.
The agency found that 10% of the time, over 1,000 people respond immediately after a
mailing, and 50% of the time, at least 650 people respond right after the mailing. Find the
mean and the standard deviation of the number of people who respond following a mailing.

22. The National Bank has found that the average daily balance in its customers’ savings
accounts is Rs. 8000 with a s.d. of Rs. 2000. Further, the average daily balances have been
found to be normally distributed.
( a ) What percentage of the bank’s savings account holders carry average daily balances in
excess of Rs. 11000 ?
( b ) The bank is considering issuing free drafts up to Rs. 10,000 to customers carrying average
daily balances in excess of a certain amount. If the bank does not want to give this facility to
more than 5 % of its customers, what is the minimum average daily balance it should
prescribe ?

23. The speeds of all cars traveling on a stretch of interstate highway 1-95 are normally
distributed with a mean of 68 miles per hour and a standard deviation of 3 miles. Find the
percentage of travelers who are violating the 65 miles speed limit.

24. The weekly food expenditure for large families ( families at least 2 children) in London is
known to be Normally distributed with mean £155 and a standard deviation of £32.
1. What is the probability that a randomly selected large family spends less than £110
2. What is the probability that a randomly selected large family spends more than £225 on
food per week?
3. What is the probability that a randomly selected large family spends between £ 115 and
£210 per week?
4. In a random sample of 420 large families in London how many families spent in the above
cases.

25. The lifetime of a certain kind of battery is a random variable having a normal distribution with
a μ=300 hours and σ 35hours. Find the probability that one of those batteries will have a life
time more than 320 hours. Also find the value above which we can expect to find the best 25%
of these batteries?

26. The I.Q. of the MBA graduates of a management Institute is distributed normally with mean
120 and s.d. as 5. The ‘Bright’ consulting company wants to interview only 10 out of the 120
graduates. What is the minimum I.Q. they should prescribe for a graduate to be called for
interview?
 Standard Normal Probabilities The values in the table are the areas
between zero and the z-score. That is, P(0<Z<z-score)
z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09
0.0 0.0000 0.0040 0.0080 0.0120 0.0160 0.0199 0.0239 0.0279 0.0319 0.0359
0.1 0.0398 0.0438 0.0478 0.0517 0.0557 0.0596 0.0636 0.0675 0.0714 0.0753
0.2 0.0793 0.0832 0.0871 0.0910 0.0948 0.0987 0.1026 0.1064 0.1103 0.1141
0.3 0.1179 0.1217 0.1255 0.1293 0.1331 0.1368 0.1406 0.1443 0.1480 0.1517
0.4 0.1554 0.1591 0.1628 0.1664 0.1700 0.1736 0.1772 0.1808 0.1844 0.1879
0.5 0.1915 0.1950 0.1985 0.2019 0.2054 0.2088 0.2123 0.2157 0.2190 0.2224
0.6 0.2257 0.2291 0.2324 0.2357 0.2389 0.2422 0.2454 0.2486 0.2517 0.2549
0.7 0.2580 0.2611 0.2642 0.2673 0.2704 0.2734 0.2764 0.2794 0.2823 0.2852
0.8 0.2881 0.2910 0.2939 0.2967 0.2995 0.3023 0.3051 0.3078 0.3106 0.3133
0.9 0.3159 0.3186 0.3212 0.3238 0.3264 0.3289 0.3315 0.3340 0.3365 0.3389
1.0 0.3413 0.3438 0.3461 0.3485 0.3508 0.3531 0.3554 0.3577 0.3599 0.3621
1.1 0.3643 0.3665 0.3686 0.3708 0.3729 0.3749 0.3770 0.3790 0.3810 0.3830
1.2 0.3849 0.3869 0.3888 0.3907 0.3925 0.3944 0.3962 0.3980 0.3997 0.4015
1.3 0.4032 0.4049 0.4066 0.4082 0.4099 0.4115 0.4131 0.4147 0.4162 0.4177
1.4 0.4192 0.4207 0.4222 0.4236 0.4251 0.4265 0.4279 0.4292 0.4306 0.4319
1.5 0.4332 0.4345 0.4357 0.4370 0.4382 0.4394 0.4406 0.4418 0.4429 0.4441
1.6 0.4452 0.4463 0.4474 0.4484 0.4495 0.4505 0.4515 0.4525 0.4535 0.4545
1.7 0.4554 0.4564 0.4573 0.4582 0.4591 0.4599 0.4608 0.4616 0.4625 0.4633
1.8 0.4641 0.4649 0.4656 0.4664 0.4671 0.4678 0.4686 0.4693 0.4699 0.4706
1.9 0.4713 0.4719 0.4726 0.4732 0.4738 0.4744 0.4750 0.4756 0.4761 0.4767
2.0 0.4772 0.4778 0.4783 0.4788 0.4793 0.4798 0.4803 0.4808 0.4812 0.4817
2.1 0.4821 0.4826 0.4830 0.4834 0.4838 0.4842 0.4846 0.4850 0.4854 0.4857
2.2 0.4861 0.4864 0.4868 0.4871 0.4875 0.4878 0.4881 0.4884 0.4887 0.4890
2.3 0.4893 0.4896 0.4898 0.4901 0.4904 0.4906 0.4909 0.4911 0.4913 0.4916
2.4 0.4918 0.4920 0.4922 0.4925 0.4927 0.4929 0.4931 0.4932 0.4934 0.4936
2.5 0.4938 0.4940 0.4941 0.4943 0.4945 0.4946 0.4948 0.4949 0.4951 0.4952
2.6 0.4953 0.4955 0.4956 0.4957 0.4959 0.4960 0.4961 0.4962 0.4963 0.4964
2.7 0.4965 0.4966 0.4967 0.4968 0.4969 0.4970 0.4971 0.4972 0.4973 0.4974
2.8 0.4974 0.4975 0.4976 0.4977 0.4977 0.4978 0.4979 0.4979 0.4980 0.4981
2.9 0.4981 0.4982 0.4982 0.4983 0.4984 0.4984 0.4985 0.4985 0.4986 0.4986
3.0 0.4987 0.4987 0.4987 0.4988 0.4988 0.4989 0.4989 0.4989 0.4990 0.4990