Problem Set on Probability Distributions

1. An analyst believes that the price of an IBM stock is a normally distributed random variable with
mean $105 and variance 24. The analyst would like to determine a value such that there is a 0.90
probability that the price of the stock will be greater than that value. Find the required value.
Answer : 98.728
2. During the years 1998–2012, a total of 29 earthquakes of magnitude greater than 6.5 have
occurred in Papua New Guinea. Assume that the time spent waiting between earthquakes is
exponential.
a. What is the probability that the next earthquake occurs within the next three months?
b. Given that six months has passed without an earthquake in Papua New Guinea, what is the
probability that the next three months will be free of earthquakes?
c. What is the probability of zero earthquakes occurring in 2014?
d. What is the probability that at least two earthquakes will occur in 2014?

Ans : a : 0.3837 b. 0.6163 c. 0.1440 d. 0.5775

3. A factory produces 150 electronic gadgets each day. Each gadget has a 97% chance of passing
the final quality inspection.

a. What is the probability that at least 145 gadgets pass the quality inspection on a given day?
b. The delivery times of the gadgets to customers are normally distributed with a mean of 3
days and a standard deviation of 0.5 days. What is the probability that a randomly selected
delivery takes between 2.5 and 3.5 days?

Ans: a. 0.7043 b. 0.6826

4. An insurance company pays out an average of 4 major medical claims in a month.

(a) What is probability that it pays no major medical claims in the coming month?

(b) What is the probability that it pays at most 2 major medical claims in the coming

month?

(c) What is the probability that it pays at least 4 major medical claims in the coming

month?

(d) What is the probability that in the next 6 months, there are two months when the

company pays 4 major medical claims in each of them?

(e) What is the probability that in the next 6 months, there are at least two months
when the company pays 4 major medical claims in each of them?

Ans: (a) 0.018; (b) 0.238; (c) 0.567; (d) 0.240; (e) 0.333

5. 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.
Answer: mean =650, sd=273.44
6. At a 911 call center, calls come in at an average rate of one call every two minutes. Assume that
the time that elapses from one call to the next has the exponential distribution.

a. Find the probability that after a call is received, it takes more than three minutes for the next call

to occur.

b. Suppose that two minutes have elapsed since the last call. Find the probability that the next call

will occur within the next minute.

c. Find the probability that less than 20 calls occur within an hour.

Ans : a) 0.2231 b) 0.3935 c) 0.021873

7. The principal of an architecture firm tells her client that there is at least a 50% chance of having
an acceptable design by the end of the week. She knows that there is only a 25% chance that
any one designer would be able to do so by the end of the week.

a. Would she be correct in her statement to the client if she asks two of her designers to work
on the design, independently? No. Prob=

b. If not, what if she asks three of her designers to work on the design, independently?

Ans: a. No, because probability that at least one designer produces an acceptable design=0.4375

b. Yes, because probability that at least one designer produces an acceptable design=0.5781

8. A McDonald’s manager knows that cars arrive at the drive-through at the average rate of two
cars per minute between the hours of 12 noon and 1:00 p.m. She needs to determine and
interpret the probability of the following events:

(a) Exactly 6 cars arrive between 12 noon and 12:05 p.m.

(b) Fewer than 6 cars arrive between 12 noon and 12:05 p.m.

(c) At least 6 cars arrive between 12 noon and 12:05 p.m.

Answers: (a) 0.063; (b) 0.067; (c) 0.933

Answer : 0.86444

10. A person can pass an exam with probability 0.3. This person takes ten exams, and passing or
failing in one exam does not hamper or alter the chance of passing or failing in the other exams.
Then
a. What is the probability that the person will pass exactly 3 exams?
b. What is the probability that the person will pass at least 2 but at most 4 exams given that
she/he will pass at most 5 exams.

Ans: a. 0.266 b. 0.735

11. Let the time between e-mail messages during work hours be exponentially distributed with an
average rate of 1 call in 25 minutes.
a. What is the probability that you do not get an e-mail for more than one hour?
c. What is the probability that you get an e-mail within 10 minutes?

Ans : a. 0.0907 b.0.3297

12. The typing speed of on a new kind of keyboard is approximately normally distributed. The
probability that the speed will be more than 65 words per minute is 0.45 and the probability that
the speed will be more than 70 words per minute is 0.15.
a. Find the mean and the standard deviation of the typing speed
b. Suppose the requirement is to type more than 60 words in every minute. What is the
chance that the assignment will be finished?
c. Suppose for every 100 words typed, $20 is charged. Given that the speed is independent
in every minute, what is the chance that at least $40 will be earned in 2 consecutive
minutes.
d. There are 4 typists typing leaflets which has more than 50 words to be typed in a
minute. What is the chance 2 of the 4 typists will fail to meet the deadline?
Answer: a) mean =64.31, sd =5.49 b) 0.7837, c)0, d) 0.000124
13. Let X be a normally distributed random variable with mean 16 and standard deviation 3. Find P
(11 < X <20). Also find P (17 <X <19) and P(X>15).
Answer: 0.860998, 0.210786,0.630559