PROBABILITY / CONFIDENCE INTERVALS

MT5154

Answer questions (a) to (e) in MS EXCEL and put any comments in Text Boxes. MS EXCEL file
should be loaded to LOOP

Answer question (f) in MS Word and load to LOOP.

(a) Basic Probability

A company are drilling for oil at 4 sites (A,B,C,D). Based on studies on each site they have worked out
the probability of finding oil is equal to

Site A: V Site B: W Site C: X

Sites A, B and C are independent of each other.

Site D is in the same country as Site A and they believe that if find oil on Site A the probability they
will find oil on site D is equal to Y, but conversely if they don’t find oil on site A the probability of
finding oil on site D will reduce to Z.

Sites D, B and C are independent of each other.

(V, W, X, Y and Z) can be found on LOOP beside your name

Using MS EXCEL, find the probability of

(i) not finding oil on site A

(ii) finding oil on sites A and B
(iii) finding oil on sites A or B
(iv) finding oil on sites A and B and C
(v) finding oil on sites A or D
(vi) finding oil on exactly 3 sites
(vii) finding oil on site A or B or C or D
(viii) not finding oil on sites (A or B) and not finding oil on sites (C or D)

(b) Binomial Probability Distribution

A Company has tendered for 5 contracts in the US and 3 contracts in France. The probability of
winning the US contracts is equal to X1 (same probability for all five). The probability of winning the
French contracts is equal to Y1 (same probability for all three).

(ix) What is the probability they win 0 contracts in the US?

(x) What is the probability they win less than 3 contracts in the US?
(xi) What is the probability they win 4 contracts overall?
(c) Poisson Distribution

An IT service company provide system breakdowns service to a large number of customers.

To aid the management of their technicians’ workload they have collected the following
data on systems breakdowns for the last 200 days.
Number of daily
Breakdowns Frequency

0 11

1 31

2 48

3 41

4 29

5 19

6 12

7 5

8 4

TOTAL 200

They believe that this data follows a Poisson Distribution.

a) In MS EXCEL, using this assumption or otherwise calculate the following
probabilities.
i) Probability of 0 breakdowns in a single day
ii) Probability of more than 5 breakdowns in a single day
iii) Probability of more than 10 breakdowns in 3 days
Comment on the accuracy of these results and check any assumptions made.

Note: Do not simply type your answers into MS EXCEL. Use MS EXCEL to calculate probabilities.
(d) Probability

In MS EXCEL, using your House Price Data,

(i) estimate the probability that a randomly selected house in the east in a terraced house
and comment on the accuracy of your estimate
(ii) estimate the probability that a randomly selected house in City A costs more than
€400,000

(e) Confidence Intervals

In MS EXCEL, using your House Price Data,

(i) calculate 90%, 95% and 99% confidence intervals for the price of a house in City A.
(ii) calculate a 95% confidence interval for the size of a semi-detached house in the east of
City A

Note: Do not simply type your answers into MS EXCEL. Use MS EXCEL to calculate confidence
intervals. Only use functions. Do not use Data Analysis Tools.

(f) Sampling Distributions

The SPSS file “Studentdist.sav” contains the distances that 1000 students have to travel when going
to college. It also contains the average distances travelled to college calculated from 200 samples of
100 students randomly taken from the 1,000.

Graph both of these variables, and comment on the difference between the two distributions.