Question

your company has an agreement according to which it can return
to the supplier shipments where 3+ containers have faulty
materials). According to the same agreement, your company is
entitled to compensation on a progressive scale. Specifically, a
clause in the agreement states that the supplier will compensate
your company as follow: If **more than**
**4** but **less than**
**7** containers are faulty, the supplier will pay a
penalty of $10,000; If there are **7 or more** faulty
containers but **less than 10** then the penalty would
increase to $15,000, and; if **at least 10** are
faulty the supplier pays a penalty of $20,000.

(1) What are the chances that the supplier will have to pay a penalty?

(2) What are the chances that the supplier will not have to pay a penalty?

(3) What is the probability that the supplier will have to pay at most $15,000?

(4) What is the likelihood that the supplier will have to pay $15,000 or more?

*Hint 1: When working with complex events it is important to
pay close attention to the following keywords: lass than, more
than, X or more, X or less, no more than, no less than, at most,
and at least.*

*Hint 2: Create a new random variable, PenaltyPaidBySupplier.
List the possible outcomes and specify their probabilities*

Number of faulty containers |
Frequency |

0 | 93 |

1 | 7 |

2 | 5 |

3 | 4 |

4 | 2 |

5 | 1 |

6 | 1 |

7 | 1 |

8 | 2 |

9 | 1 |

10 or more |
3 |

Answer #1

1.

P(penalty) = sum of freq ((no. of faulty conatiner) > 4) / total freq.

= 9/120 = 3/40 = 0.075

P(penalty) = 0.075

2.

P(no penalty) = sum of freq ((no. of faulty conatiner) <= 4) / total freq.

= 111/120 = 0.925

3.

P(penalty<=15000$) = sum of freq ((no. of faulty conatiner) <10) / total freq.

= 117/120 = 39/40 = 0.975

4.

P(penalty >= 15000$) = sum of freq ((no. of faulty conatiner) >= 7) / total freq.

= 7/120 = 0.05833

P.S. (please upvote if you find the answer satisfactory)

A construction company buys screws in bulk. A new supplier
approaches the company with an extremely low price, but
acknowledges that they are still scaling up their production. Their
most recent production run was 100,000 screws and data from their
quality control process indicate that 0.3% of the screws have
production faults.
a) What is the probability that a box of 1200 screws has exactly
1 faulty screw?
b) What is the probability that a small order of 4800 screws...

You have a contract with an auto parts supplier to provide spark
plugs, and you guarantee no more than 2% will be faulty. You
believe your manufacturing process works and the error rate is
actually 1% or even less.
Your customer just returned a shipment, saying that they
selected 20 at random and found 2 faulty, an error rate of 10%.
Was the customer justified in returning the shipment (and not
paying)? You ask your chief statistician the probability that...

A Colorado company imports copper from
The Copper Co., a reliable and long time supplier based in
Peru. Payment is in Peru sol (symbol is "S/"), with a
current exchange rate of S/4.00/$; The company is concerned that
changes in the exchange rate could have cause its costs to rise.
Given that trading partners want to continue their longtime
relationship, they agree on a risk sharing arrangement. As long as
the spot rate on the date of an invoice is between...

Suppose Tori has an unfair coin which lands on Tails with
probability 0.28 when flipped. If she flips the coin 10 times, find
each of the following:
The mean number of Tails
P(Less than or equal to 2 Tails)
P(No more than 3 Tails)
P(No Tails)
P(At least 1 Tail)
P(Exactly 1 Tail)
P(Exactly 4 Tails)
P(At least 5 Tails)
P(More than 3 Tails)
The standard deviation of the number of Tails
1.
0.1798
2.
0.7021
3.
2.8
4.
0.1181...

2. Consider a ten-sided die of which the sides display the
numbers 1, 2, 3, and 4 according to this table:
side of die 1 2 3 4 5 6 7 8 9 10 number displayed 1 1 1 1 2 2 2 3 3
4
Rolling two such dice is an experiment with the sample space S =
(1,1) (1,2) (1,3) (1,4) (2,1) (2,2) (2,3) (2,4) (3,1)
(3,2) (3,3) (3,4) (4,1) (4,2) (4,3)...

a company is considering investing in a project. The project
will require a 10% rate return. The project will require $65,000
investment and provides the following returns:
year 1: $20,000
year 2: $20,000
year 3: $20,000 year
4: $25,000
I)Given that the company needs to make at least 10%
return on its project what is the projects NPV for the return on
its investment?
A) $85,000
B) $20,000
C) Less than $2,000 but more than $1,000
D) less then $1,000...

1.A company has two locations where it employs workers doing the
same job and working the same hours. Other things the same most
workers would prefer to live in location A, but location A has a
higher cost of living than location B.
a.
The company likely needs to pay workers in location A more.
2.
The government is proposing switching from a progressive tax
system in which families pay 15% of the first $50,000 earned, 25%
of the next...

. Brilliant Toothpaste Company has been having a problem with
some of the tubes of toothpaste leaking. The tubes are packed in
containers with 100 tubes each. Fifteen containers of toothpaste
have been samples. The following number of tubes were found to have
leaks:
Sample Number of leaky tubes
1 4
2 8
3 12
4 11
5 12
6 6
7 10
8 9
9 5
10 8
11 6
12 8
13 9
14 7
15 11
Calculate...

Ross Co., Westerfield, Inc., and Jordan Company announced a new
agreement to market their respective products in China on July 18
(7/18), February 12 (2/12), and October 7 (10/7), respectively.
Given the information below, calculate the cumulative abnormal
return (CAR) for these stocks as a group. Assume all companies have
an expected return equal to the market return. (A negative
value should be indicated by a minus sign. Leave no cells blank -
be certain to enter "0" wherever required....

Suppose you have an agreement from a bank for a $10 million loan
which begins in January 2011 and runs through June 2011. According
to the loan contract, you are to pay LIBOR + 100 basis points. For
example if LIBOR is 4%, you pay 5%. The interest rate on the loan
will be 4 based on the 3-month LIBOR rate in January 2011. You
would like to hedge your interest cost using the Eurodollar futures
market. Suppose February 2010...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 37 minutes ago

asked 43 minutes ago

asked 55 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago

asked 3 hours ago