STAT6202 Exercises 8

1. A mail order company uses two mail services A and B. It sends 80% of its parcels by service A and 20%
by B. Service A is expensive and only 2.5% of its deliveries arrive late, while B is cheaper but 10% of
its deliveries arrive late. We will use the following notation for events:

• event A: a parcel is sent by service A

• event B: a parcel is sent by service B
• event L : a delivery arrives late.

(a) From the above information, calculate the following probabilities: P (A), P (B), P (L|A) and
P (L|B).
(b) Calculate P (L) and P (B|L) and say in words what these probabilities are. Explain the distinction
between “the proportion of deliveries from service B that arrive late” and “the proportion of late
deliveries that are sent by service B”.

2. In a population, 5% of people have high blood pressure. Of those who have high blood pressure, 75%
drink alcohol, while of those who do not have high blood pressure, only 50% drink alcohol. What
percentage of the population drink alcohol? What percentage of drinkers have high blood pressure?

3. National Oil Company conducts exploratory oil drilling operations in the south western United States. To
fund the operation, investors form partnerships that provide the financial support necessary to drill a fixed
number of oil wells. Each well drilled is classified as a ‘producer’ well or a ‘dry’ well. Past experience
shows that this type of exploratory operation provides producer wells for 15% of all wells drilled. A
newly formed partnership has provided the financial support for drilling at 12 exploratory wells.

(a) What is the probability that all 12 wells will be dry?

(b) What is the probability that exactly 1 well will be a producer well?
(c) In order to make the partnership venture profitable, at least 3 of the exploratory wells must be
producer wells. What is the probability that the venture will be profitable?
Your answers to all sub questions should include an appropriately defined random variable, the prob-
ability you are going to calculate in terms of this random variable and you should clearly show your
calculations.

4. In a frozen food production process, a random sample of 5 items from each production batch is checked
to see whether each item is tightly packed. The whole production batch is accepted if none of the 5 items
in the sample are loosely packed, and rejected if 3 or more are loosely packed. If 1 or 2 items are loosely
packed a second sample of 5 is taken. Suppose the packing machine is giving 5% of the items loosely
packed, what is the probability that

(a) a batch is accepted;

(b) a further sample of 5 will be necessary?
Your answers to all sub questions should include an appropriately defined random variable, the prob-
ability you are going to calculate in terms of this random variable and you should clearly show your
calculations.
5. A company acquires 60 retail outlets as part of a take-over. It employs management consultants to assess
each outlet and recommend them either for closure or retention. If retention is recommended the company
plans to spend about 0.5 million pounds on modernising each outlet. From wide experience in this area,
the consultants believe that only about half the outlets will be judged to be satisfactory. Assuming this
figure is correct:

(a) How much might the company expect to spend in total?

(b) What is the probability that fewer than 25 outlets will have to be disposed of?
(c) What is the probability that more than 20 million pounds will be needed to modernise all outlets
recommended for retention (i.e. by spending 0.5 million pounds on each)?
Your answers to all sub questions should include an appropriately defined random variable, the prob-
ability you are going to calculate in terms of this random variable and you should clearly show your
calculations.

6. An airline finds that, on average, 2% of the persons who reserve seats for a certain flight do not, in fact,
turn up for the flight. Consequently the airline decides to allow 75 persons to reserve seats on a plane
which can only accommodate 73 passengers. What is the probability that there will be a seat available
for every person who turns up for the flight?
Your answer should include an appropriately defined random variable, the probability you are going to
calculate in terms of this random variable and you should clearly show your calculations.