Indian POST GRADUATE PROGRAMME

QUANTITATIVE ANALYSIS FOR

Institute of MANAGEMENT - I
Management Lucknow COURSE INSTRUCTOR: GAURAV GARG

Problem Set – 4

1) Consider the simple linear regression model Y = a + bX + e, with E(e) =0, Var (e) =σ2 and e’s
independent. Assume that X values are nonrandom constants.
a. Show that the least squares estimate of b can be represented as the linear combinations of
Y values.
b. Show that the correlation between LSE of b and mean of Y values is 0.

2) A company owns 400 laptops. Each laptop has an 8% probability of not working. You randomly
select 20 laptops for your salespeople. (a) What is the likelihood that 5 will be broken? (b)
What is the likelihood that they will all work? (c) What is the likelihood that they will all be broken?

3) A study indicates that 4% of American teenagers have tattoos. You randomly sample 30 teenagers.
What is the likelihood that exactly 3 will have a tattoo?

4) An XYZ cell phone is made from 55 components. Each component has a .002 probability of being
defective. What is the probability that an XYZ cell phone will not work perfectly?

5) The ABC Company manufactures toy robots. About 1 toy robot per 100 does not work. You
purchase 35 ABC toy robots. What is the probability that exactly 4 do not work?

6) The LMB Company manufactures tires. They claim that only .007 of LMB tires are defective. What
is the probability of finding 2 defective tires in a random sample of 50 LMB tires?

7) An HDTV is made from 100 components. The TV works properly when all the components work.
Each component has a .005 probability of being defective. What is the probability that an HDTV will
not work perfectly?

8) The number of cracks requiring repair in a section of motor way is assumed to follow a Poisson
distribution with a mean of two cracks per mile: (i) What is the probability that there are no cracks
that require repair in 5 miles of motor way? (ii) What is the probability that at least one crack
requires repair in one-half mile of motor way? (iii) What is the probability that there are exactly
three cracks that require repair in 2 miles of motor way?

9) One-hundred-year records of earthquakes in a region show that there were 10 earthquakes of

intensity 6 or more. Calculate the following: (i) the probability that such earthquakes will occur in
the next 3 years; (ii) the probability that no such earthquake will occur in the next 10 years.

10) Suppose that in one year the number of industrial accidents follows a Poisson distribution with
mean 3. What is the probability that in a given year there will be at least 1 accident?
11) Suppose inter-arrival times at a hospital emergency room during a weekday are exponentially
distributed, with an average inter-arrival time of 9 minutes. What would the average number of
arrivals per hour be? What is the probability that less than 5 minutes will elapse between any two
arrivals?

12) Suppose that the average speed of passenger trains are normally distributed with a mean average
speed of 88 miles per hour and a standard deviation of 6.4 miles per hour. (a) What is the
probability that a train will average less than 70 miles per hour? (b) What is the probability that a
train will average more than 80 miles per hour? (c) What is the probability that a train will average
between 90 and 100 miles per hour?

13) According to the Air Transport Association America, the average operating cost of an MD-80 Jet
airliner is $2,087 per hour. Suppose the operating costs of an MD-90 Jet airliner are normally
distributed with a standard deviation of $175 per hour. Obtain the level k, (i) where only 20% of the
all operating costs are less than k; (ii) where 65% of the all operating costs are more than k; (iii) )
where only 85% of the all operating costs are less than k; (iii) where 85% of the all operating costs
are less than k.

14) Incoming phone calls generally are thought to be Poisson distributed. If an operator averages 2.2
phone calls every 30 seconds, what is the expected amount of time between calls? What is the
probability that a minute or more elapse between incoming calls? Two minutes?