TUTORIAL 1

STA 60104
Stratified sampling method
Reason: The entire university was divided into the subgroups of
administration, teaching staff and non-teaching staff
Statistic
Reason: A poll would be a sample of eligible voters rather than all
eligible voters
a. Ordinal
b. Nominal
c. Ratio
d. Nominal
Frequency Distribution Table
x Frequency
0 1
1 0
2 2
3 4
4 1
5 2
6 5
7 6
8 1
9 1
10 1
11 0
12 1
Total 25
 Use calculator

25, 27, 28, 33, 33, 35, 36, 39, 41, 44, 45, 53, 57, 61 25. 27. 28. 32. 33. 33. 35. 36. 39.
41. 44. 45. 53. 57. 61.

Median = 36

Q1 = 33

Q3 = 45
35, 50, 50, 50, 60, 75, 75, 75, 80, 85, 85, 90, 90, 100, 100, 100, 100, 125, 125, 150

Minimum = 35 Lower limit = 67.5 – 1.5*32.5 = 18.75

Maximum =150 Upper limit = 100 + 1.5*32.5 = 148.75
Q1 = (60+75)/2 = 67.5
Q2 = 85
Q3 = 100
IQR = Q3 – Q1 = 100 – 67.5 = 32.5
a. Range = Largest Value – Smallest value
=8–0=8
 Mean = 1.925

Range= 2.3 – 1.7 = 0.6 (in RM per liter)

For the past 10 months, the RON 95 price per litre is widely spread between the
highest and lowest price with a variation of RM0.60 per litre. There is a large
deviation from the mean, of RM0.23 per litre. Overall, the variations of the RON 95
price per litre are quite high during the ten months.
CV for the automated system
CV = 227.42/111.36*100 = 20.13%

CV for the live representative

CV = 26.84/150.86*100 = 17.79%

Thus, the relative variation is greater for

automated than for live calls.
a. Stratified random sampling
b. Simple random samping or possibly clu
c. Systematic random sampling
d. Stratified random sampling
Multiplication for dependent events
a. 0.1
b. 0.4
c. 0.1
Tutorial 3

x P(X) ∑ 𝑋(P(X) 𝑋 ! (P(X)

2 0.19 0.38 0.76

3 0.31 0.93 2.79

4 0.23 0.92 3.68

5 0.14 0.70 3.5

6 0.13 0.78 4.68

1 3.71 15.41

a.0.23+0.14+0.13=0.5
b. Mean: ∑ 𝑋x PX
= 3.71

c. Variance:
=∑ 𝑋 ! -(∑ 𝑋! ) !

=15.41-[3.71]2 Standard deviation:√𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒

= 1.65 =√1.65 =1.284

c.The variation of the number of errors per page in a book is 1.2829 from the average.
a. Using the relative frequencies as probabilities, what is the expected number of errors?
Interpret what this value means to the managing editor.

b. Compute the variance and standard deviation for the number of errors and explain what
these values measure.

a.
x P(X) ∑ 𝑋(P(X) 𝑋 ! (P(X)

0 0.56 0 0

1 0.21 0.21 0.21

2 0.13 0.26 0.52

3 0.07 0.21 0.63

4 0.03 0.12 0.48

1 0.80 1.84

B. Mean: 0.80 Manging director expected to see 0.8 errors per ad.
Variance:
=∑ 𝑋 ! -(∑ 𝑋! ) !

=1.84-[0.80]2 Standard deviation:√𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒

=1.2 =√1.2 =1.095
5-84. A Malaysian Volkswagen dealer has total cash rebates of up to RM150,000 per day for
the new Volkswagen Passat. The manager of the dealership summarized the number of cars
sold per day with their respective probabilities as shown in the following table:

x P(X) ∑ 𝑋(P(X) 𝑋 ! (P(X)

0 0.12 0 0

1 0.26 0.26 0.26

2 0.41 0.82 1.64

3 0.21 0.63 1.89

1 1.71 3.79
a. Expected Mean: ∑ 𝑋x PX
= 1.71

b. Variance:
=∑ 𝑋 ! -(∑ 𝑋! ) !

=3.79-[1.71]2 Standard deviation:√𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒

=0.866 =√0.866 =0.931

c. 0.41+0.21=0.62
0.62 X RM150,000=RM93000
Gold Reserved Seat

x P(X) ∑ 𝑋(P(X) 𝑋 ! (P(X)

5 0.25 1.25 6.25

6 0.13 0.78 4.68

7 0.27 1.89 13.23

8 0.35 2.8 22.4

1 6.72 46.56

Platinum reserved seat

x P(X) ∑ 𝑋(P(X) 𝑋 ! (P(X)

3 0.46 1.38 4.14

4 0.25 1 4

5 0.13 0.65 3.25

6 0.16 0.96 5.76

1 3.99 17.15

a. Gold
Expected Mean: ∑ 𝑋x PX
= 6.72

Platinum
Expected Mean: ∑ 𝑋x PX
= 3.99

b. Gold
Variance:
=∑ 𝑋 ! -(∑ 𝑋! ) !

=∑ 𝑋 ! P(X) -2∑ 𝑋 𝑥 𝑃𝑋6 !

Standard deviation:√𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒
=46.56-[6.72]2 =√1.4016 =1.183
=1.4016

Platinum
Variance:
=∑ 𝑋 ! -(∑ 𝑋! ) !

=∑ 𝑋 ! P(X) -2∑ 𝑋 𝑥 𝑃𝑋6 !

Standard deviation:√𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒
=17.15-[3.99]2 =√1.2299 =1.109
=1.2299

c. Coefficient of Gold
CV:SD/MEAN x100%
1.183/6.72 x 100%=17.60%

Coefficient of Platinum
CV: SD/MEAN x100%
1.109/3.99 x100%=27.79%

d. SD is the variation from the mean within each ticket. Both Gold reserved
seats(SD=1.183) and platinum (SD=1.109) do not show much different.
 If compare the variation between both the tickets,given the unequal mean, Platinum with
higher CV%(27.79%) has greater spread then Gold.

Poisson
u:1.5 per pages u:4.5 errors per page
P(X>3)=1-P(X=0)-P(x=1)-P(X=2)-P(X=3)

(" !".$ )$ (&.(% ) (" !".$ )$ (&.(& ) (" !".$ )$ (&.(' )

=1- )!
- +!
- ,!
-
(" !".$ )$ (&.(( )
-!
=1-0.011-0.050-0.112-0.168
=0.658

u=3 per 15 minutes

a.P(X=0)

(" !( )$ (-% )
= )!
=0.0498
b. u=6 per 15 minutes
P(X<4)
=P(X=3)+P(X=2)+P(X=1)+P(X=0)
(" !) )$ (.( ) (" !) )$ (.' ) (" !) )$ (.& ) (" !) )$ (.% )
=
-!
+ ,!
+ +!
+ )!
=0.0892+0.045+0.015+0.0025
=0.152

5-80. Your company president has told you that the company experiences product returns at the
rate of two per month with the number of product returns distributed as a Poisson random
variable. Determine the probability that next month there will be

u=2 per month

a. no returns
P(X=0)
(" !" )$ (&# )
=
'!
=0.135

b. one return
P(X=1)
 (" !" )$ (&$ )
= )!
=0.271
c. two returns
P(X=2)
(" !" )$ (&" )
= =0.271
&!

d. more than two returns

P(X>2)=1- [P(X=0)+P(X=1)]
(" !" )$ (&# ) (" !" )$ (&$ ) (" !" )$ (&" )
= 1−[ '!
+ )!
+ &!
]=1-
0.677=0.323

e. In the last three months your company has had only one month in which the number of
returns was at most two. Calculate the probability of this event occurring.
What will you tell the president of your company concerning the return rate? Make sure you
support your statement with something other than opinion.

1 2 3 TIMES THE NUMBER

2 <2 <2 0.045

<2 2 <2 0.445

<2 <2 2 0.445

TOTAL 0.134

P(X=2)=0.271
P(X>2)=P(X=0)+P(X=1)

(" !" )$ (&# ) (" !" )$ (&$ )

= + =0.406
'! )!

Exercise 8 (Poisson)
On the average, 6.7 cars arrive at the drive-up window of a bank every hour.
u:6.7 per hour

a. Compute the probability that exactly 5 cars will arrive in the next hour.
P(X=5)

(" !%.' )$ (*.,( )

=0.1385
-!
b. Compute the probability that no more than 2 cars will arrive in the next 30 minutes
u:3.35 per 30 MINUTES
P(X≤2):P(X=0)+P(X=1)+P(X=2)
(" !).)( )$ (...-# ) (" !).)( )$ (...-$ )
+ +
'! )!
(" !).)( )$ (...-" )
&!
=0.0351+0.1175+0.1969
=0.3495

c. Compute the probability that less than one car will arrive in the next 2 hours.
u:13.4 per 2 hour
P(X<1)=P(x=0)

(" !$).* )$ ()../ # )

'!
=1.515x10^-6

Binomial Discrete probability

Millennials saving for retirement: 0.70 P
Millennials not saving for retirement: 0.30 Q
n=15

a.P(X=5)
15 C 5(0.70! ) (0.30"!#! )
=15 C 5(0.70! ) (0.30"$ )
=2.98 x 10-3

b.P(X>13)=1-P(X=14)-P(X=15)
=15 C 14(0.70"% ) (0.30" )+15 C 15(0.70"! ) (0.30$ )]
=0.031+4.73x10^-3
=0.035

c.P(3<X<6)=P(X=4)+P(X=5)
=0.00356

d. P(X<2)=P(X=0)+P(X=1)
=5.166X10^-7

e. sample,n=15 However, 3 are not saving:15-3=12

P(X=12)=0.10774

15C 12(0.70"& ) (0.30' )

=0.17004
P:0.80(carry) q:0.20(check) n=25

a. P(X=15)
=25C15 (0.80"! ) (0.20"$ )
=0.0118

b. 0.2(p) 0.8(q) n=25

P(X≤2):P(X=2)+P(X=1)+P(X=0)
=[25C2 (0.20& ) (0.80&' ) +25C1 (0.20" ) (0.80&% )+25C0 (0.20$ ) (0.80&! )]
=[0.071+0.024+3.77x10^-3]
=0.098

c. P(X≥ 24)=P(X=24)+P(X=25)
= 25C24 (0.80&% ) (0.20" )+25C25 (0.80&! ) (0.20$ )
=0.024+3.778x10^-3
P:0.8(text) Q:0.2(no text) N=15

a. P(X=9)
=15C9 (0.80( ) (0.20) )
=0.043

b. P(X>12)=P(X=13)+P(X=14)+P(X=15)
= 15C13 (0.8"' ) (0.2& )+ 15C14 (0.8"% ) (0.2" )+ 15C15 (0.8"! ) (0.2$ )
=0.231+0.132+0.035
=0.398

c. P(3<x<5)=P(X=3)+P(X=4)+P(X=5)
= 15C3 (0.80' ) (0.20"& )+ 15C4 (0.80% ) (0.20"" )+ 15C5 (0.80! ) (0.20"$ )
=9.54x10^-7 +1.145x10^-5 +1.008x10^-4
=1.132x10^-4
Tutorial 4

6-14. A global financial institution transfers a large data file every evening from offices
around the world to its London headquarters. Once the file is received, it must be
cleaned and partitioned before being stored in the company’s data warehouse. Each file
is the same size and the times required to transfer, clean, and partition a file are
normally distributed, with a mean of 1.5 hours and a standard deviation of 15 minutes.

u=1.5 90 SD=15

a. If one file is selected at random, what is the probability that it will take longer than 1
hour and 55 minutes to transfer, clean, and partition the file?

!!"#$%
P(X>1.92)=P(Ƶ> )=P(Ƶ>1.667)=0.0475
!"

b. If a manager must be present until 85% of the files are transferred, cleaned, and
partitioned, how long will the manager need to be there? MUST USE TABLE
Graph:0.5,0.35
Using the table, t= number nearest to 0.35
0.3485(1.03)=0.35-0.3485=0.0015 // 0.3508(1.04)=0.3508-0.35-=0.0008(This is smaller)
&#$%
P(Ƶ> )=1.04
!"
X=105.6 minutes

c. What percentage of the data files will take between 63 minutes and 110 minutes to be
transferred, cleaned, and partitioned?
'(#$% !!%#$%
P(63<x<110)=P( <Ƶ< )=P(-1.8<Ƶ<1.33)=0.8723
!" !"
6-19. Philips is a leading health technology company in improving consumers’ health
and home care. One of its most popular products is LED lights, designed to provide a
safer light source. A hardware store sells the lights on an average of 35 units per day
with the standard deviation of 2.1 units. Assume the number of unit sold for Philips LED
is normally distributed.

𝜇 = 35 𝜎 = 2.1

a. What is the probability that the hardware store is selling more than 40 units of the
LED lights per day?
)%#("
P(X>40)=P(Ƶ> )=P(Ƶ>2.38)=0.0087
*.!

b. What is the probability that the hardware store is selling not more than 32 units of the
LED lights per day?
(*#("
P(X<32)=P(Ƶ< )=P(Ƶ<-1.43)=0.0764
*.!

c. How many units need to be sold to achieve 90% of daily average sales of the LED
lights in the hardware store?
Graph:0.5,0.4
Using the table, t= number nearest to 0.4
(1.28)0.4-0.3997=0.0003(Smaller) (1.29)0.4015-0.04=0.0015
&#("
P(Ƶ> )=1.28
*.!
X=37.6888
=38 units

6-51. Discuss the difference between discrete and continuous probability distributions.
Discuss two situations in which a variable of interest may be considered either
continuous or discrete.
Discrete is the listing of the individual outcome of the whole number. (Dollar values/RM)
Continuous is taking any values over some range of values which is more likely to be
decimal or fraction.
6-61. Two automatic dispensing machines are being considered for use in a fast-food
chain. The first dispenses an amount of liquid that has a normal distribution with a mean
of 11.9 ounces and a standard deviation of 0.07 ounce. The second dispenses an
amount of liquid that has a normal distribution with a mean of 12.0 ounces and a
standard deviation of 0.05 ounce. Acceptable amounts of dispensed liquid are between
11.9 and 12.0 ounces. Calculate the relevant probabilities and determine which
machine should be selected.

m:11.9 sd:0.07
First dispense:
=P(11.9<X<12.0)
!!.$#!!.$ !*#!!.$
= P( < Ƶ< )=P(0<Ƶ<1.429)=0.4235
%.%, %.%,

m:12.0 sd:0.05
Second dispense:
=P(11.9<X<12.0)
!!.$#!* !*#!*
= P( < Ƶ< )=P(-2<Ƶ<0)=0.4773
%.%" %.%"
Machine 2 should be selected.
6-72. If the time required to assemble a product is normally distributed with a mean of
180 minutes and a standard deviation of 15 minutes, find
M:180 sd:15

a. the probability that the product’s assembly time would be less than 168 minutes
!'-#!-%
P(x<168)=P(Ƶ< )=P(Ƶ<-0.8)=0.2119
!"

b. the probability that the product’s assembly time would be greater than 190 minutes
!$%#!-%
P(x>190)=P(Ƶ> )=P(Ƶ>0.67)=0.2514
!"

c. the probability that the product’s assembly time would be between 174 and 186
minutes
!,)#!-% !-'#!-%
P(174<x<186)=P( <Ƶ< )=P(-0.4<Ƶ<0.4)=0.3108
!" !"

d. the number of minutes within which 95% of all such products would be assembled
Graph:0.5,0.45
Using the table, t= number nearest to 0.45
(1.64)0.45-0.4495=0.0005 (1.65)0.4505-0.45=0.0005 1.64+1.65/2=1.645

&#!-%
P(Ƶ> )=1.645
!"
X= 204.675 minutes
6-73. If the average amount of time customers spent online at an Internet retailer’s site
is assumed to be normally distributed with mean of 36 minutes and a standard deviation
of 6 minutes, determine
𝜇 = 36 𝜎 = 6

a. the probability a customer spends less than 30 minutes on the site

(%#('
P(x<30)=P(Ƶ< )=P(Ƶ<-1)=0.1587
'

b. the probability a customer spends more than 44 minutes on the site

))#('
P(x>44)=P(Ƶ> )=P(Ƶ>1.333)=0.0912
'

c. the probability a customer spends between 33 and 42 minutes on the site

=P(33<X<42)
((#(' )*#('
= P( < Ƶ< )=P(-0.5<Ƶ<1)=0.5328
' '

d. the amount of time in minutes spent on the site by no more than 5% of all customers

Graph is considered at a negative side,0.05 (0.5-0.05=0.45)

Using the table, t= number nearest to 0.45
(1.64)0.45-0.4495=0.0005 (1.65)0.4505-0.45=0.0005 1.64+1.65/2=1.645

&#('
P(Ƶ> )=-1.645 (Remember the side of the initial position)
'
X= 26.13 minutes
7-73. The Baily Hill Bicycle Shop sells mountain bikes and offers a maintenance
program to its customers. The manager has found the average repair bill during the
maintenance program’s first year to be $15.30 with a standard deviation of $7.00.
𝜇 = 15.30 𝜎 = 7

a. What is the probability a random sample of 40 customers will have a mean repair
cost exceeding $16.00?

n=40 P(𝑥>16)

)*.''0)-..'
= 𝑃(Ƶ >
' )=P(Ƶ>0.63)=0.2643
( )
√*#

b. What is the probability the mean repair cost for a sample of 100 customers will be
between $15.10 and $15.80?
n=100
P(15.10<𝑥<15.80)
)-.)'0)-..' )-.1'0)-..'
=𝑃( ' <Ƶ <
' )
( ) ( )
√$## √$##
=P(-0.2857<Ƶ<0.7143)=0.375
c. The manager has decided to offer a spring special. He is aware of the mean and
standard deviation for repair bills last year. Therefore, he has decided to randomly
select and repair the first 50 bicycles for $14.00 each. He notes this is not even 1
standard deviation below the mean price to make such repairs. He asks your advice. Is
this a risky thing to do? Based upon the probability of a repair bill being $14.00 or less,
what would you recommend? Discuss.
n=50
Sample size for 14 or less

!"#!$.&'
P(𝑥 ≤ 14)=𝑃(Ƶ < + )
( )
√-.
=𝑃(Ƶ <-1.31)=0.951=9.51%
● The risk is high because the return percentage is low.

7-74. When its ovens are working properly, the time required to bake fruit pies at Ellardo
Bakeries is normally distributed with a mean of 45 minutes and a standard deviation of 5
minutes. Yesterday, a random sample of 16 pies had an average baking time of 50
minutes.

M:45 minutes sd:5 minutes

Sample,n:16 pies for 50 minutes

a. If Ellardo’s ovens are working correctly, how likely is it that a sample of 16 pies would
have an average baking time of 50 minutes or more?

-'0/-
P(X≥50)= 𝑃(Ƶ >
( )=P(Ƶ>4)=0
( )
√$%

b. Would you recommend that Ellardo inspect its ovens to see if they are working
properly? Justify your answer

Yes, definitely need to check because the probability for 16 samples to have a mean of
50 minutes is 0, it appears that the ovens may not be working properly.
3 Random Probability

x P(X) 2
𝑋 (P(X)
∑ 𝑋(P(X)

2 0.19 0.38 0.76

3 0.31 0.93 2.79

4 0.23 0.92 3.68

5 0.14 0.70 3.5

6 0.13 0.78 4.68

1 3.71 15.41

a.0.23+0.14+0.13=0.5

b. Mean: ∑ 𝑋x PX

= 3.71

c. Variance:
2 2 2
=∑ 𝑋 -(∑ 𝑋 )

2 ⎡ ⎤ 2
=∑ 𝑋 P(X) -⎢∑ 𝑋 𝑥 𝑃𝑋⎥ Standard deviation: 𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒
⎢ ⎥
⎣ ⎦
=15.41-[3.71]2 = 1. 65 =1.284
=1.65

c.The variation of the number of errors per page in a book is 1.2829 from the average.
a. Using the relative frequencies as probabilities, what is the expected number of errors?
Interpret what this value means to the managing editor.

b. Compute the variance and standard deviation for the number of errors and explain what
these values measure.

a.
x P(X) 2
𝑋 (P(X)
∑ 𝑋(P(X)

0 0.56 0 0

1 0.21 0.21 0.21

2 0.13 0.26 0.52

3 0.07 0.21 0.63

4 0.03 0.12 0.48

1 0.80 1.84

B. Mean: 0.80 Manging director expected to see 0.8 errors per ad.
Variance:
2 2 2
=∑ 𝑋 -(∑ 𝑋 )

2 ⎡ ⎤ 2
=∑ 𝑋 P(X) -⎢∑ 𝑋 𝑥 𝑃𝑋⎥ Standard deviation: 𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒
⎢ ⎥
⎣ ⎦
=1.84-[0.80]2 = 1. 2 =1.095
=1.2
5-84. A Malaysian Volkswagen dealer has total cash rebates of up to RM150,000 per day for the
new Volkswagen Passat. The manager of the dealership summarized the number of cars sold
per day with their respective probabilities as shown in the following table:

x P(X) 2
𝑋 (P(X)
∑ 𝑋(P(X)

0 0.12 0 0

1 0.26 0.26 0.26

2 0.41 0.82 1.64

3 0.21 0.63 1.89

1 1.71 3.79

a. Expected Mean: ∑ 𝑋x PX

= 1.71

b. Variance:
2 2 2
=∑ 𝑋 -(∑ 𝑋 )

2 ⎡ ⎤ 2
=∑ 𝑋 P(X) -⎢∑ 𝑋 𝑥 𝑃𝑋⎥ Standard deviation: 𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒
⎢ ⎥
⎣ ⎦
=3.79-[1.71]2 = 0. 866 =0.931
=0.866
 c. 0.41+0.21=0.62
0.62 X RM150,000=RM93000

Gold Reserved Seat

x P(X) 2
𝑋 (P(X)
∑ 𝑋(P(X)

5 0.25 1.25 6.25

6 0.13 0.78 4.68

7 0.27 1.89 13.23

8 0.35 2.8 22.4

1 6.72 46.56

Platinum reserved seat

x P(X) 2
𝑋 (P(X)
∑ 𝑋(P(X)

3 0.46 1.38 4.14

4 0.25 1 4

5 0.13 0.65 3.25

6 0.16 0.96 5.76

1 3.99 17.15

a. Gold

Expected Mean: ∑ 𝑋x PX

= 6.72

Platinum

Expected Mean: ∑ 𝑋x PX

= 3.99

b. Gold
Variance:
2 2 2
=∑ 𝑋 -(∑ 𝑋 )

2 ⎡ ⎤ 2
=∑ 𝑋 P(X) -⎢∑ 𝑋 𝑥 𝑃𝑋⎥ Standard deviation: 𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒
⎢ ⎥
⎣ ⎦
=46.56-[6.72]2 = 1. 4016 =1.183
=1.4016

Platinum
Variance:
2 2 2
=∑ 𝑋 -(∑ 𝑋 )

2 ⎡ ⎤ 2
=∑ 𝑋 P(X) -⎢∑ 𝑋 𝑥 𝑃𝑋⎥ Standard deviation: 𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒
⎢ ⎥
⎣ ⎦
=17.15-[3.99]2 = 1. 2299 =1.109
=1.2299
c. Coefficient of Gold
CV:SD/MEAN x100%
1.183/6.72 x 100%=17.60%

Coefficient of Platinum
CV: SD/MEAN x100%
1.109/3.99 x100%=27.79%

d. SD is the variation from the mean within each ticket. Both Gold reserved
seats(SD=1.183) and platinum (SD=1.109) do not show much different.
If compare the variation between both the tickets,given the unequal mean, Platinum with
higher CV%(27.79%) has greater spread then Gold.
Poisson

u:1.5 per pages u:4.5 errors per page

P(X>3)=1-P(X=0)-P(x=1)-P(X=2)-P(X=3)
−𝑢 𝑥
(𝑒 )𝑥 (𝑢 )
𝑥!
−4.5 0 −4.5 1 −4.5 2
(𝑒 )𝑥 (4.5 ) (𝑒 )𝑥 (4.5 ) (𝑒 )𝑥 (4.5 )
=1- 0!
- 1!
- 2!
-
−4.5 3
(𝑒 )𝑥 (4.5 )
3!
=1-0.011-0.050-0.112-0.168
=0.658
u=3 per 15 minutes

a.P(X=0)
−3 0
(𝑒 )𝑥 (3 )
= 0!
=0.0498
b. u=6 per 15 minutes
P(X<4)
=P(X=3)+P(X=2)+P(X=1)+P(X=0)
−6 3 −6 2 −6 1 −6 0
(𝑒 )𝑥 (6 ) (𝑒 )𝑥 (6 ) (𝑒 )𝑥 (6 ) (𝑒 )𝑥 (6 )
=
3!
+ 2!
+ 1!
+ 0!
=0.0892+0.045+0.015+0.0025
=0.152
5-80. Your company president has told you that the company experiences product returns at the
rate of two per month with the number of product returns distributed as a Poisson random
variable. Determine the probability that next month there will be

u=2 per month

a. no returns
P(X=0)
−2 0
(𝑒 )𝑥 (2 )
= 0!
=0.135

b. one return
P(X=1)
−2 1
(𝑒 )𝑥 (2 )
= 1!
=0.271
c. two returns
P(X=2)
−2 2
(𝑒 )𝑥 (2 )
=
2!
=0.271

d. more than two returns

P(X>2)=1- [P(X=0)+P(X=1)]
−2 0 −2 1 −2 2
(𝑒 )𝑥 (2 ) (𝑒 )𝑥 (2 ) (𝑒 )𝑥 (2 )
1−[
=
0!
+ 1!
+ 2!
]
=1-0.677=0.323
e. In the last three months your company has had only one month in which the number of
returns was at most two. Calculate the probability of this event occurring.
What will you tell the president of your company concerning the return rate? Make sure you
support your statement with something other than opinion.

1 2 3 TIMES THE NUMBER

2 <2 <2 0.045

<2 2 <2 0.445

<2 <2 2 0.445

TOTAL 0.134

P(X=2)=0.271
P(X>2)=P(X=0)+P(X=1)
−2 0 −2 1
(𝑒 )𝑥 (2 ) (𝑒 )𝑥 (2 )
=
0!
+ 1!
=0.406
Exercise 8 (Poisson)
On the average, 6.7 cars arrive at the drive-up window of a bank every hour.
u:6.7 per hour
−𝑢 𝑥
(𝑒 )𝑥 (𝑢 )
𝑥!
a. Compute the probability that exactly 5 cars will arrive in the next hour.
P(X=5)
−6.7 5
(𝑒 )𝑥 (6.7 )
5!
=0.1385
b. Compute the probability that no more than 2 cars will arrive in the next 30 minutes
u:3.35 per 30 MINUTES
P(X≤2):P(X=0)+P(X=1)+P(X=2)
−3.35 0 −3.35 1 −3.35 2
(𝑒 )𝑥 (3.35 ) (𝑒 )𝑥 (3.35 ) (𝑒 )𝑥 (3.35 )
0!
+ 1!
+ 2!
=0.0351+0.1175+0.1969
=0.3495

c. Compute the probability that less than one car will arrive in the next 2 hours.
u:13.4 per 2 hour
P(X<1)=P(x=0)
−13.4 0
(𝑒 )𝑥 (13.4 )
0!
=1.515x10^-6
Binomial Discrete probability

Millennials saving for retirement: 0.70 P

Millennials not saving for retirement: 0.30 Q
n=15

𝑥 𝑛−𝑥
P(X=x)= nCx (𝑝 ) (𝑞 )

a.P(X=5)
5 15−5
15 C 5(0. 70 ) (0. 30 )
5 10
=15 C 5(0. 70 ) (0. 30 )
=2.98 x 10-3

b.P(X>13)=1-P(X=14)-P(X=15)
14 1 15 0
=15 C 14(0. 70 ) (0. 30 )+15 C 15(0. 70 ) (0. 30 )]
=0.031+4.73x10^-3
=0.035

c.P(3<X<6)=P(X=4)+P(X=5)
=0.00356

d. P(X<2)=P(X=0)+P(X=1)
=5.166X10^-7

e. sample,n=15 However, 3 are not saving:15-3=12

P(X=12)=0.10774
𝑥 𝑛−𝑥
P(X=x)= nCx (𝑝 ) (𝑞 )
12 3
15C 12(0. 70 ) (0. 30 )
=0.17004

P:0.80(carry) q:0.20(check) n=25

a. P(X=15)
𝑥 𝑛−𝑥
P(X=x)= nCx (𝑝 ) (𝑞 )
15 10
=25C15 (0. 80 ) (0. 20 )
=0.0118

b. 0.2(p) 0.8(q) n=25

P(X≤2):P(X=2)+P(X=1)+P(X=0)
2 23 1 24 0 25
=[25C2 (0. 20 ) (0. 80 ) +25C1 (0. 20 ) (0. 80 )+25C0 (0. 20 ) (0. 80 )]
=[0.071+0.024+3.77x10^-3]
=0.098

c. P(X≥ 24)=P(X=24)+P(X=25)
24 1 25 0
= 25C24 (0. 80 ) (0. 20 )+25C25 (0. 80 ) (0. 20 )
=0.024+3.778x10^-3
P:0.8(text) Q:0.2(no text) N=15

a. P(X=9)
𝑥 𝑛−𝑥
P(X=x)= nCx (𝑝 ) (𝑞 )
9 6
=15C9 (0. 80 ) (0. 20 )
=0.043

b. P(X>12)=P(X=13)+P(X=14)+P(X=15)
13 2 14 1 15 0
= 15C13 (0. 8 ) (0. 2 )+ 15C14 (0. 8 ) (0. 2 )+ 15C15 (0. 8 ) (0. 2 )
=0.231+0.132+0.035
=0.398

c. P(3<x<5)=P(X=3)+P(X=4)+P(X=5)
3 12 4 11 5 10
= 15C3 (0. 80 ) (0. 20 )+ 15C4 (0. 80 ) (0. 20 )+ 15C5 (0. 80 ) (0. 20 )
=9.54x10^-7 +1.145x10^-5 +1.008x10^-4
=1.132x10^-4
Lecture exercise 7
70% of the students applying to a university are accepted. Using the binomial probability
tables, what is the probability that among the next 18 applicants
𝑥 𝑛−𝑥
p:0.7(Accept) q:0.3(rejected) n=18 P(X=x)= nCx (𝑝 ) (𝑞 )

a. At least 16 will be accepted?

P(X≥16):P(X=16)+P(X=17)+P(X=18)
16 2 17 1 18 0
=18C16 (0. 7 ) (0. 3 )+18C17 (0. 7 ) (0. 3 )+18C18 (0. 7 ) (0. 3 )
=0.0458 +0.0126+1.628x10^-3
=0.06

b. Exactly 10 will be accepted?

P(X=10)
10 8
=18C10 (0. 7 ) (0. 3 )
=0.0811

c. Exactly 5 will be rejected? P:0.3 q:0.7

P(X=5)
5 13
=18C5 (0. 3 ) (0. 7 )
=0.2017

d. Determine the expected number of acceptances.

µ =np
=18(0.7)=12.6

e. Compute the standard deviation.

2
σ =npq
=18(0.7)(0.3) =3.78

SD: 3. 78=1.944
 !"#
μ = 1.5 h = 90 mins, σ = 15 mins Z=
$

%%&"'(
a. P(X > 115) = P(Z > )
%&
= P(Z > 1.67)
= 0.04746
Refer Z table,
b. The area = 0.35
0.85 – 0.5 Z score = 1.04
0.5 = 0.35 +"'(
= 1.04
%&
X = 105.6 minutes

)*"'( %%("'(
c. P(63 < X < 110) = P( <Z< )
%& %&
= P(–1.8 < Z < 1.33)
= 0.87231
 !"#
μ = 35, σ = 2.1 Z=
$

,("*&
a. P(X > 40) = P(Z > ) = P(Z > 2.381)
-.%
P(Z > 2.381)
= 8.63 x 10–3

*-"*&
b. P(X < 32) = P(Z < ) = P(Z < –1.429)
-.%
P(Z < –1.429)
= 0.0765

c. The area = 0.4, nearest Z score = 1.28

+"*&
= 1.28
-.%
X = 37.688
Discrete – list the individual outcomes (Whole numbers)
Continuous – Take any value over some range of values (Decimal/Fraction)

Eg: dollar values

 !"#
Machine 1: μ = 11.9, σ = 0.07 Z=
$
%%.'"%%.' %*"%%.'
P(11.9 < X < 12) = P( <Z< )
(.() (.()
= P(0 < Z < 1.429)
= 0.4235

Machine 2: μ = 12, σ = 0.05

%%.'"%* %*"%*
P(11.9 < X < 12) = P( <Z< )
(.(+ (.(+
= P(–2 < Z < 0)
= 0.47725

Machine 2 should be selected as it has higher percentage

 !"#
μ = 180, σ = 15 Z=
$
%,-"%-(
a. P(X < 168) = P(Z < )
%+
= P(Z < –0.8)
= 0.21186

%'("%-(
b. P(X > 190) = P(Z > )
%+
= P(Z > 0.667)
= 0.25239

%)."%-( %-,"%-(
c. P(174 < X < 186) = P( %+
<Z< %+
)
= P(–0.4 < Z < 0.4)
= 0.31084

d. The area = 0.95 – 0.5 = 0.45

Nearest Z score = (1.64 + 1.65) ÷ 2 = 1.645

/"%-(
%+
= 1.645
X = 204.68 min
 !"#
μ = 36, σ = 6 Z=
$

0("0,
a. P(X < 30) = P(Z < )
,
= P(Z < –1)
= 0.15866

.."0,
b. P(X > 44) = P(Z > )
,
= P(Z > 1.33)
= 0.09176

0("0,
c. P(33 < X < 42) = P(Z < )
,
00"0, .*"0,
= P( <Z< )
, ,
= P(–0.5 < Z < 1)
= 0.5328

d. Area = 0.45
Z score = (1.64 + 1.65) ÷ 2 = –1.645
/"0,
= –1.645
,
X = 26.13 minutes
 1
!"#
μ = 15.3, σ = 7 Z= !
"

a. n = 40
%,"%+.0
P(X > 16) = P(Z > # )
$%
= P(Z > 0.632)
= 0.26369

b. n = 100
%+.%"%+.0 %+.-"%+.0
P(15.1 < X < 15.8) = P( # <Z< # )
&%% &%%
= P(–0.286 < Z < 0.714)
= 0.37495

c. n = 50
%."%+.0
P(X < 14) = P(Z < # )
'%
=P(Z < –1.313)
= 0.0946

It is a risky thing to do because the probability of the repair

bill being $14.00 or less is 9.46%
 1
!"#
μ = 45, σ = 5, 𝑥̅ = 50, n = 16 Z= !
"

+(".+
a. P(X > 50) = P(Z > ' )
&(
= P(Z > 4)
=0

b. Yes, since the probability for 16 samples has mean of

50 minutes, it appears that the ovens may not be working
properly.
a. 12

10

0
0 5 10 15 20 25 30

Strong negative/inverse relationship

b. r = –0.9707
c.
Step 1: Step 4: Decision rule
H0: ρ = 0 Since –9.895<–2.4469, reject H0.
Ha: ρ ≠ 0)
Step 5: Conclusion
Step 2: There is correlation exist between variables x and y.
α = 0.05
df = n–2 = 8–2 = 6
Reject H0 if t > 2.4469 or t <–2.4469

Step 3: Test statistic

𝑟
𝑡=
1 − 𝑟!
𝑛−2

−0.9707
𝑡=
1 − (−0.9707)!
8−2
= −9.895
a. W𝑦 = 26.83 – 0.4923(𝑥)

b. W𝑦 = 26.83 – 0.4923(10)
= 21.907

Interpretation for intercept (A): The initial y is 26.83.

c. If x increase by 1 unit, the average y will decrease

by 0.4923 unit. (Interpretation of slope) Therefore,
x increase by 10 units, y will decrease by 4.923 units.
 75

70

65

60

55

50
60 65 70 75 80 85

a. It is scattered randomly in one direction, showing a weak

positive relationship.

b. r = 0.0713
c.
H0: ρ = 0
Ha: ρ ≠ 0

α = 0.05
df = n – 2 = 10 – 2 = 8
Reject H0 if t > 2.306 or t < –2.306

0.0713
𝑡=
1 − 0.0713#
10 − 2
= 0.2021

Since 0.2021<2.306, do not reject H0.

There is no correlation exist between ergonomic and standard keyboards at 5% significance level.
 ^ = 1.0416 + 0.0099 𝑛𝑜. 𝑜𝑓 𝑝𝑎𝑔𝑒𝑠
𝑎. 𝑃𝑟𝑖𝑐𝑒

b. r = 0.7503
R2 = 0.563
56.3% of the variation in price is explained by the variation of number of pages. The remainder 43.7% is
explained by other factors.
 10

9
c.
8
H0: ρ = 0
7
Ha: ρ ≠ 0
6

α: 0.1 5

df = n–2 = 7–2 = 5 4

Reject H0 if t>2.015 or t<–2.015 3

0.7503 1
𝑡=
1 − 0.7503! 0
450 500 550 600 650 700 750 800
7−2
= 2.5378
d. Strong positive relationship
Since 2.5378>2.015, reject H0.

There is correlation between number of pages and price at 10% significance level.
i. Independent variable: GMAT, dependent variable: GPA

ii. 𝑦Q = 0.300323 + 0.00487x

iii. If GMAT score increase by 1 unit, the average GPA will

Increase by 0.00487 unit.

iv. r = 0.893209, strong positive relationship

v.
H0: ρ = 0
Ha: ρ ≠ 0

α: 0.05
df = n–2 = 20–2 = 18
Reject H0 if t>2.1009 or t<–2.1009

0.893209
𝑡=
1 − 0.893209#
20 − 2
= 8.428

Since 8.428>2.1009, reject H0.

There is correlation between GMAT and GPA at 5% significance level.

&&' ).+#,+-,
vi. R2 = 0.8932092 = 0.7978 OR = = 0.7978 (Use SSR/SST if multiple R is not given)
&&( #.).-/,,

79.78% of the variation in GPA is explained by GMAT.

The remainder 20.22% is explained by other factors.

vii. 𝑦Q = 0.300323 + 0.00487x

𝑦Q = 0.300323 + 0.00487(600) = 3.222
a. 𝑦! = 87.79 – 0.97x1 + 0.002x2 – 8.723x3
b. Hypothesis testing for
Overall model
H0: β1 = β2 = β3 = 0
Ha: at least one βi ≠0

α = 0.01
Reject H0 if p-value < 0.01

p-value of F = 0.007

0.007<0.01, reject H0.

Model is statistically significant at 1% significance level.

c. R2 = SSR/SST = 16646.091/38517.760 = 0.4322

43.22% of the variation in y is explained by the variation in x1, x2 and x3.
The remainder 56.78% is explained by other factors.
d. Independent variables
H0: βi = 0
Ha: βi ≠ 0

α = 0.01
Reject H0 if p-value < 0.01

p-value
x1 0.113 > 0.01, do not reject H0

x2 0.005 < 0.01, reject H0

x3 0.258
>0.01, do not reject H0

x1 and x3 are not significant because their p-value is bigger than 0.01.

e. If x2 increase by 1, the average y will increase by 0.002, holding other variables constant.
If x3 increase by 1, the average y will decrease by 8.723, holding other variables constant.

f. The confidence interval for β1 and β3 contain 0. This indicates that x1 and x3 are not statistically significant at
5% significance level.
a. If x1 increase by 1, the average y increases by 4.14, holding other variables constant.
If x2 increase by 1, the average y increases by 8.72, holding other variables constant.

b. 𝑦! = 12.67 + 4.14(4) + 8.72(9)

= 107.71
a. If local unemployment rate increase by 1, the average
weekly sales decreases by 412, holding other variables
constant.

If weekly average high temperature increase by 1, the

average weekly sales increases by 818, holding other
variables constant.

If number of activities in the local community increase by 1,

the average weekly sales decreases by 93, holding other
variables constant.

If average price of gasoline per gallon increase by 1, the

average weekly sales decreases by 71, holding other variables
constant.

b. 𝑦! = 22167 – 412(5.7) + 818(61) – 93(14) – 71(3.39)

= 22167 – 2348.4 + 49898 – 1302 – 240.69
= 68173.91
 a. 𝑦! = 5.045 – 0.051x1 + 0.888x2
If x1 increases by 1, the average y will
decrease by 0.051, holding other variables
constant.
SUMMARY OUTPUT If x2 increases by 1, the average y will
Regression Statistics increase by 0.888, holding other variables
Multiple R
R Square
0.91920364
0.84493534
constant.
Adjusted R The initial y is 5.045.
Square 0.80063115
Standard
Error 6.82197441
Observation
s 10

ANOVA
Significance
df SS MS F F
Regression 2 1775.12466 887.562328 19.0712293 0.00146823
Residual 7 325.775344 46.5393349
Total 9 2100.9

Standard Upper
Coefficients Error t Stat P-value Lower 95% Upper 95% Lower 95.0% 95.0%
Intercept 5.04515107 8.69826436 0.58001814 0.58008425 -15.522976 25.6132779 -15.522976 25.6132779
x1 -0.0512744 0.24134318 -0.2124543 0.83780676 -0.6219603 0.51941154 -0.6219603 0.51941154
x2 0.88797327 0.1475206 6.01931692 0.00053192 0.53914247 1.23680407 0.53914247 1.23680407
b. Hypothesis testing for
c. Independent variables
Overall model
H0: βi = 0
H0: β1 = β2 = 0
Ha: βi ≠ 0
Ha: at least one βi ≠ 0
α = 0.05
α = 0.05
Reject H0 if p-value < 0.05
Reject H0 if p-value < 0.05.
p-value
p-value for F = 0.001
x1 0.838 > 0.05, do not reject H0
x2 0.0005 < 0.05, reject H0
0.001 < 0.05, reject H0.
x1 is not significant and x2 is significant at 5% significance
The overall model is significant at 5% significance level.
level.
a. 𝑦! = 21.043 + 0.255x1 + 9.038x2
If x1 increase by 1, the average y will increase
by 0.255, holding other variables constant.

If x2 increase by 1, the average y will increase

by 9.038, holding other variables constant.

The initial y is 21.043

b. r2 = 0.9506
95.06% of the variation in y is explained by
the variation in x1 and x2.

The remainder 4.94% is explained by other

factors.
c. Overall model d. Independent variables
H0: β1 = β2 = 0 H0: βi = 0
Ha: at least one βi ≠ 0 Ha: βi ≠ 0

α = 0.05 α = 0.05
Reject H0 if p-value < 0.05 Reject H0 if p-value < 0.05

p-value of F = 0.0024 p-value

x1 0.475 > 0.05, do not reject H0
0.0024 < 0.05, reject H0 X2 0.001 < 0.05, reject H0

The overall model is significant at 5% significance level x1 is not significant and x2 is significant at 5%
significance level
 -1 :
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 Find t in Excel: = t.inv.2t

= t.inv.2t
Ho: µ ≤ 4000
Ha: µ > 4000

a = 0.05
Reject H0 if t <
Ho: π ≥ 0.21
Ha: π <0.21

a = 0.05
Reject H0 if z < –1.645

p = 0.1903
Z = (0.1903 – 0.21)/–– 0.21(0.79)/883
= -1.438

-1.438 > –1.645, do not reject H0.

At least 21% of adults with incomes exceeding $50,000

per year gave the ads “high approval” at 5%
significance level.
a) H0: Sector and retirement investment
decision
Ho: Daily stock price changes for this stock are
independent
Ha: Daily stock price changes for this stock are
dependent

a = 0.05, df = 4
Reject h0 if x2 > 9.488
H0: Drink preferences and age are
independent.
Ha: Drink preferences and age are
dependent.

a = 0.05, df = (4-1)(2-1) = 3
Reject H0 if X2 > 7.815
Interest = FV – (PMT x n)
= 323943.07 – (1000 x 180)
= $143943.07
24. A self-employed person has a Keogh retirement plan. If deposits of $7500 are
made each year into an account paying 8% compounded annually, how much will
be in the account after 20 years?

FV = = PMT x [(1+i)^n-1]/i
PMT = $7500 = 7500 x [(1+0.08)^20-1]/0.08
i = 0.08 = $343214.73
n = 20
FV = PMT x [(1+i)^n-1]/i
PMT = 1200 = 1200 x [(1+0.0025)^144 -1]/0.0025
i = 0.03/12 = 0.0025 = $207689.10
n = 12 x 12 = 144

Interest = FV – (PMT x n)
207689.10 – (1200 x 144) = $34889.10