Sample Questions for Exam #1

This is not a homework assignment -- nothing to hand in.

Answers and worked out solutions will be available on course portal.

1. The MBA office at the Fox School received two shipments of binders for distributing them to MBA students. The first
shipment contains 100 binders, and 4% of them are defective. The second shipment contains 50 binders, and 6% of
them are defective. Suppose that Emily Norton picks a binder (at random) and later discovers that it is defective (Emily
is obviously very angry ). She is now interested in knowing the following:
[7 points]
a) What is the probability that the defective binder picked by Emily Norton came from the first shipment? Show
work.

b) What is the probability that the defective binder picked by Emily Norton came from the second shipment? Is the
defective binder more likely to come from the second shipment? Show work.
 Sample Questions for Exam #1 2

2.
a) X is a binomial random variable with any n (10 or more) and any p ( 0  p  1 ).

Using this information, can we find P( X  6)  P( X  6) ?

b) The Elm Street bus arrives at the corner of Elm and Main every 30 minutes. You arrive at the corner and want to
take the bus. You have no idea when the last Elm Street bus arrived. What is the expected length of time that you
will wait for the bus? [3 points]
 Sample Questions for Exam #1 3

3. The amount of gasoline G sold each month to customers at Bob's Exxon station in downtown Moorestown is a random
variable. This random variable G can be described as having a normal distribution with mean 2500 gallons and a standard
deviation of 250 gallons (and there is no seasonal variation in sales). Exxon will give Bob an all-expense paid trip to
Philadelphia, including a free dinner at Burger King, if his station pumps more than 3000 gallons in any one month.

a) Let T be the number of free trips Bob will win during the next calendar year. How many trips does he expect to
win? [3 points]

b) During the next calendar year, what is the probability that Bob will win at least 1 trip? [2 points]

c) During the next calendar year, what is the probability that Bob will win exactly 1 trip? [2 points]
 Sample Questions for Exam #1 4

4. The annual income that a farm earns is dependent upon the amount of rain the area receives during the year. The annual
rainfall in this part is approximately normally distributed with a mean of 20 inches and a standard deviation of 3 inches. If
the rainfall is between 17" and 26", income will be $20,000. If there is less than 17", the crop will be wiped out due to
drought and the farm will incur a loss of $8,000. Finally, if the rainfall is over 26", income will be only $5,000. What is the
expected income for the farm? [7 points]
 Sample Questions for Exam #1 5

5. The USA TODAY newspaper publishes Jeff Sagarin's college football ratings every week.
These ratings are computed using a regression model based on the scores of all the games. We will show how to use these
ratings along with the normal distribution to compute the probability that one team beats another.

The rating for A&M at the end of August was 62.1 . Like SAT or IQ scores, this is only meaningful when compared to the
ratings of other schools, like Colorado at 72.8 or Baylor at 68.4. The difference between a pair of ratings gives the expected
point differential (point spread) between the teams if they played each other on a neutral field. So, Colorado would be
favored by 10.7 points over A&M.

The USA TODAY also gives a computed value of home field advantage (assumed the same for all stadiums) at 2.8 points.
So, Colorado would be favored over A&M by 13.5 points if the game is at Colorado but only favored by 7.9 points if the
game is at Kyle Field in A&M.

The Sagarin ratings use a normal distribution with m = rating and s = 6.4 for all teams. This means A&M's performance
each week is a random variable (some good days, some bad days) and fluctuates around 62.1.

Consider A&M playing Colorado at Kyle Field in A&M. Since it is an A&M home game, we can adjust A&M's expected
performance to 62.1+2.8=64.9 . (Equivalently, we could have assumed Colorado's expected performance decreases to 72.8-
2.8. But, we don't adjust both teams.)

If A is the random variable for A&M's performance and C is for Colorado, then the probability that A&M wins is P(A > C).
We assume correlation 0 between A and C.

a) Find the probability that A&M beats Colorado, with the game played at Kyle Field in A&M. [4 points]

b) Find the probability that A&M beats Baylor, with the game played at Baylor. [3 points]