Indian POST GRADUATE PROGRAMME

Institute of QUANTITATIVE ANALYSIS FOR MANAGEMENT - I

Management Lucknow COURSE INSTRUCTOR: GAURAV GARG

Problem Set – 1
(Random Variable and its properties)

1) The state of Connecticut had in circulation an instant lottery game called “cash rich”. The cost of each
ticket for this lottery ticket was $1. A player could instantly win $500, $23, $13, $9, $7, $3, or $1. The
following table lists the number of tickets with different prizes from a total of 6,000,000 tickets printed
for this lottery.
Prize (in dollars) Number of Tickets
0 4640940
1 999960
3 222000
7 60000
9 37500
13 24000
23 15000
500 600
Total 6000000

Obtain the expected gain of the player?

2) A battery cell is labeled as good if it works for at least 300 days in a clock; otherwise it is labeled as
bad. Three manufacturers, A, B and C make cells with probability of making good cells as 0.95, 0.90
and 0.80 respectively. Three identical clocks are selected and cells made by A, B and C are used in clock
numbers 1, 2 and 3 respectively. Let X be the total number of clocks working after 300 days. Find the
probability mass function of X.

3) Find the expected number of throws of a fair die required to obtain a 6.

4) Consider a sequence of independent coin flips, each of which has a probability p of being heads. Define
a random variable X as the length of the run (of either heads or tails) started by the first trial. Find
E(X).

5) Verify, if the following functions can be the pmf or not

n
i. Cx px (1-p) n-x, for 0 < p < 1 and x = 0, 1, 2, …, n.
ii. e-aax/x!, a>0 and x = 0,1, 2, ….

6) The daily water consumption X (in million of liters) is a random variable with p.d.f.
−x
x
f X ( x )= e 3 , x >0
9

a. Find E(X) and Var(X).

b. Find the probability that on a given day, the water consumption is not more than 6 million
liters.

7) A target is made of three concentric circles of radii 1/√3, 1, √3 feet. Shots within the inner circle give 4
points, within the next ring 3 points and within the third ring 2 points. Shots outside the target give 0.
Let X be the distance of the hit from the centre (in feet) and let the pdf of X be
 {
2
, x >0
f ( x )= π (1+ x 2) .
0, otherwise
What is the expected score in a single shot?

8) There are n people at a circular table in a Chinese restaurant. On the table, there are n different
appetizers arranged on a big Lazy Susan. Each person starts munching on the appetizer directly in front
of him or her. Then someone spins the Lazy Susan so that everyone is faced with a random appetizer.
What is the expected number of people that end up with the appetizer that they had originally?

9) Each night for 30 nights an ecologist sets a trap for a rabbit. The trap is very attractive so there is
always a rabbit in the trap the next morning. (Only one because the trap isn’t large enough for
two.) The rabbits that are trapped, are marked and released. Daily traps are independent of one
another. If there are 100 rabbits in the area and each night the 100 are equally likely to be
trapped, what is the expected number of distinct rabbits that are trapped during the 30 night
period?

10) The time (in minutes) that a flight from Lucknow to Delhi is early or late is a random variable X
with density f(x) = (36 − x 2)/288 for −6 < x < 6 and 0, otherwise. Here negative values indicate the
flight being early, and positive values indicate it being late. Assuming daily flight arrivals to be
independent, find the probability that the last flight of the day comes almost on time (at most one
minute early or one minute late) for a full week.

11)The prince has searched all over his kingdom for the maiden who left her glass slipper at the ball.
He finally arrives at the place where Cinderella and her two step-sisters live. The slipper only fits
Cinderella and she does not want to get exposed. Her step-sisters wish that the slipper fits them
and so they want to try it repeatedly. Therefore, all three maidens get mixed after every trial. All
three are wearing veils and similar dresses. The price is not able to comprehend who has already
tried the slipper. Each time he selects one maiden randomly out of the three and tries the slipper
on her. What is the probability that the prince will find Cinderella in less than 3 attempts? In how
many attempts the prince is expected to find Cinderella?

12)A pair of dice is tossed repeatedly till we get a sum of 7. Obtain expected number of tosses of the
pair of dice to get a sum of 7.

13)The prince has searched all over his kingdom for the maiden who left her glass slipper at the ball.
He finally arrives at the place where Cinderella and her two step-sisters live. The slipper only fits
Cinderella. The prince tries the slipper on the three maidens in random order. What is the
expected number of maidens on whom the prince tries the slipper until he finally finds Cinderella?

14)In the game of birdcage, you pay $1 to play the game. If one of the three dice comes up 6, you get
$2 back (earning $1). If two dice come up 6, you get $3 back (earning $2), and if all three dice
come up 6, you get $4 back (earning $3). What is your expected earning in one game?

15)A median of a continuous random variable is a value m such that P(X ≥ m) = ½ = P(X ≤ m). What is
the median of a continuous random variable having density function f ( x )=3 x 2 , 0≤ x ≤

16)Monthly sales of a certain product are believed to have following distribution:

Number of items (x) 5,000 6,000 7,000 8,000 9,000 Total Probability
p(x) 0.2 0.3 0.2 0.2 0.1 1.0
Suppose that the company has the fixed production cost of $8,000 and each item brings $2
(production cost per item is zero). Find expected monthly profit from product sales.

17)The daily exchange rate of one dollar in euros during the first three months of 2007 can be
inferred to have the following distribution:
x 0.73 0.74 0.75 0.76 0.77 0.78 Total Probability
p(x 0.05 0.10 0.25 0.40 0.15 0.05 1.0
)
Assume daily exchange rates are independent of one another. What is the probability that for two
days in a row the exchange rate will be above 0.75?