Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Statistics and Probability Expert

1. Edwards Life Sciences is trying to decide if it should sell a new type of medical product.  Fixed costs associated to the production of the product are estimated to be $25,500.  The product will sell for $1,200 with variable cost of $900. The sales manager believes that sales will be normally distributed with an average of 95 annually, with a standard deviation of 18.

a)What is the breakeven point?
b) What is the probability of a loss?
c)  What is the profit/loss when 120 units are sold?
d)  How many units must be sold to earn a profit of $15,000?
e)  What is the probability of a profit of $15,000or more?


2. A store sells Space Jam Magazine for $6 each, buys them for $3 each, and receives a $1 credit for every unsold copy that is returned to the distributor.  Over the past 85 weeks it has experienced the following demand.

Demand                  100    250    500    700   
Number of Weeks     20     25     35        5

a) Fill in the payoff table below for the decision of determining how many magazines to order.  Assume that the store cannot sell more magazines than it orders.
b) Determine the probability distribution for demand using the given data.
c) Using an expected profit criterion, which amount is the best amount to order?   


                               Demand
                     100        250        500        700

Ordering        100
Alternatives
                   250

                   500
           
                   700

3. A company is trying to decide on an alternative to grow their production capacity.  Payoffs (in thousands) have been estimated as follows.

                        Demand

                                  Low        Poor        Good        Excellent
                     A1         12           1               11           13
Alternatives    A2           7          10              13           11
                     A3          15        14              −4           12   

        Probability           .35          .30         .15          .20

a) Which alternative is best using a maximin criterion?
b) Which alternative is best using a maximean criterion?
c) Determine the expected payoff for each alternative. Which alternative maximizes expected payoff?
d) Determine the MAD for the A1 alternative.  Do not find the standard deviation for the other alternatives.

4. A company is trying to determine how to obtain more production capacity. They are considering the five alternatives given below. The results of the expected payoff and various risk calculations for each alternative are listed below.
a) Find the best alternative that has a maximum expected payoff and a MAD at most 200.
b) Find the best alternative that has an expected payoff of at least 290 and a standard deviation as small as possible.
c) Find the best alternative using MAD passed payoff at risk with alpha α = .10.

                                 Demand:
                              High            Moderate        Low  
    Build    Small        400               200            100
    Build Medium       500                250          -150
    Build Large           750               375          -400
    Expand               350                300           100
    Lease                 300                300            200
    Buy a competitor 500               300            100
    Probability:         .5                   .3                .2


        Expected        Standard        Mean          Absolute   
Alternative              Payoff        Deviation        Deviation
Build Small              280           125                 120
BuildMedium            295           247                 205   
Build Large             408            435                343
Expand                  285            95                   74       
Lease                    280            40                    32   
Buy a competitor    360           155                  140
 
5.  A construction company is being sued as the result of an accident suffered by an employee.  The plaintiff was working on a balcony railing when it gave way and he suffered serious injuries as a result.  In his suit, he charged the company with negligence and asked for an award of $3 million.  The company was advised by its lawyers that there is a 70% chance that the construction company will be found negligent.  However, even with a negative verdict, there is only a 20% chance that the jury will award the full $2 million.  There is a 50% chance that the award will be for only $1 million, a 20% chance it will be for $100,000, and a 10% chance the award will be $10,000.  The lawyers also indicated that they could settle before the trial using an arbitrator.  The lawyers believe that with an arbitrator there is a 60% that the plaintiff will be awarded $1,000,000, and a 40% chance that the plaintiff will be awarded $500,000.  If they go to trial and are found negligent, they could settle for $1.75 million before the jury determines the award.  There is also a third possibility of settling without a trial and without an arbitrator.  In this alternative the cost to the construction company would be $900,000.

a) Construct a decision tree that represents this situation.
b) Determine what course of action the construction should take in order to minimize its expected cost.
c) Identify the worst case for the course of action given in part b)

6. The S & P 500 and another stock, which we call stock XYZ, have the monthly percentage changes during 2011 given below.

a) Use the formula ß= (n (∑xy)-(∑ x) (∑ y)/ (n∑x2)-(∑x) 2) to determine beta.

b) On October 9, 2012 the stockAmazon (AMZN) has a beta of .82, and the stock Questcor (QCOR) has a beta of 1.58. If the expected payoff for both of these stocks is the same, which stock is a better investment based on the risk measure beta?

c) If a stock has ß much greater than 1, what does this mean?

Month       S & P         Stock XYZ       
January    -0.0194       -0.1453       
February    0.0635        0.0234       
March        -0.0569      -0.1115       
April          -0.028        -0.0508       
May           0.0905       -0.1774       
June         -0.0976       -0.1055       
July          -0.0959        -0.1793       
August      -0.0937       -0.1281       
September  -0.0221       0.0027       
October       0.0797      -0.0022       
November    0.0757       0.0811       
December    0.0382       0.1485       
Sum           -.0660        -.6444

Statistics and Probability, Statistics

  • Category:- Statistics and Probability
  • Reference No.:- M91635

Have any Question? 


Related Questions in Statistics and Probability

If the results of a t-test lead you to reject the null

If the results of a t-test lead you to reject the null hypothesis, what is the probability that you have made a Type II error?

A population of lawnmowers life expectancy is described

A population of lawnmowers' life expectancy is described with a Weibull distribution, where α=1 and β=15. Determine 1× (once) and 2× (twice) the expected mean lifes for the population, as well as their corresponding cumu ...

Mouse parts produces mouse ears white gloves and other

Mouse Parts produces mouse ears, white gloves and other parts that are incorporated into the production of Mickey Mouse souvenirs. One of the components used in production has an annual demand of 250 units, and this is c ...

In a poll of 2003 adults within the united states for the

In a poll of 2,003 adults within the United States for the Wall Street Journal, 57% of adults said that public education needs to be improved. Construct a 95% confidence interval for the proportion of all U. S. adults wh ...

The term critical value is often used to refer to the value

The term critical value is often used to refer to the value of a test statistic that determines statistical significance at some fixed α level for a test. For example,  + 1.96 are the critical values for a two-tailed z-t ...

A shoe company checks police records on 1200 randomly

A shoe company checks police records on 1200 randomly selected auto accidents and notes that teenagers were at the wheel in 180 of them. Construct a 90% confidence interval estimate of the proportion of shoe accidents th ...

According to an article in newsweek the natural ratio of

According to an article in Newsweek, the natural ratio of girls to boys is 100:105. In China, the birth ratio is 100: 114 (46.7% girls). Suppose you don't believe the reported figures of the percent of girls born in Chin ...

1 compute pearsons r between the life satisfaction variable

1. Compute Pearson's r between the life satisfaction variable and the family income variable in Table 1. Test the r for statistical significance, and draw conclusions about the meaning of the test. 2. Compute a Pearson c ...

You are interested in using linear regression to test

You are interested in using linear regression to test whether drinking a protein shake improves weightlifting performance. From a sample of 200 college students, you estimate a linear regression with WEIGHTLIFT as the de ...

Reading journal assignment stage iifor this portion of the

Reading Journal Assignment Stage II For this portion of the journal, you will create five journal entries, each addressing the prompts given below. Each entry will be one page in length, double spaced, with 12 point font ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen