School: University of the People
Moodle ID: C110223808
Course: MATH 1280-01 – Introduction to Statistics
Assignment: Unit 4 – Discreet Random Variables
University: University of the People
Probability and Statistics in FreshMart Operations
In this assignment, probability and statistical tools are applied to FreshMart Groceries’
operations to validate distributions, calculate expected values, and use the binomial
model for quality control. These calculations provide insights for inventory management
and revenue forecasting.
Question 1: Validating a Discrete Probability Distribution
FreshMart’s probabilities for snacks are as follows: Chips (0.35), Cookies (0.30), Nuts
(0.20), and Crackers (0.15). The total is 0.35 + 0.30 + 0.20 + 0.15 = 1.00. Since the sum
equals one, this is a valid discrete probability distribution. If probabilities did not sum to
one, the model would be invalid, either missing outcomes (sum < 1) or overestimating
likelihoods (sum > 1). In practice, this would require revising the probability assignments
to ensure accuracy (Bluman, 2018).
Question 2: Computing Expected Values and Standard Deviation
FreshMart sells juices at three prices with probabilities: Small ($3.50, 0.40), Medium
($5.00, 0.35), and Large ($7.00, 0.25). The expected value is computed as:
E[X] = (3.50 × 0.40) + (5.00 × 0.35) + (7.00 × 0.25) = 4.90.
Thus, the average revenue per juice purchase is $4.90. To measure variability, the
variance is calculated:
E[X²] = (3.50² × 0.40) + (5.00² × 0.35) + (7.00² × 0.25) = 25.90.
Variance = 25.90 – (4.90²) = 1.89. Standard deviation = √1.89 ≈ 1.37.
This means juice sales average $4.90 with a typical variation of $1.37, useful for
predicting daily sales revenue.
Question 3: Applying the Binomial Distribution
FreshMart’s bakery has a 90% success rate for quality control. If 12 loaves are tested, the
probability that exactly 10 pass is:
P(X=10) = C(12,10) × (0.9^10) × (0.1^2) ≈ 0.230.
This indicates a 23% chance of 10 loaves passing. For a sample of 10 loaves, the
probability that at least 8 meet the standard is:
P(X ≥ 8) = Σ C(10,k) × (0.9^k) × (0.1^(10-k)), for k=8 to 10.
This gives approximately 0.930, or 93%. Such high probabilities confirm FreshMart’s
bread quality is consistent, though ongoing monitoring remains necessary (Triola, 2022).
Conclusion
By applying discrete probability distributions, expected value analysis, and binomial
probabilities, FreshMart can optimize inventory, pricing, and quality control. These tools
ensure that management decisions are data-driven, improving efficiency and customer
satisfaction.
References
Bluman, A. G. (2018). Elementary Statistics: A Step by Step Approach (10th ed.).
McGraw-Hill Education.
Triola, M. F. (2022). Elementary Statistics (14th ed.). Pearson.