Question

Solution Procedure: In solving these problems and subsequent ones, use the following procedure: (1) Define the events of interest. (2) Write down the information given. (3) Write down the question. (4) Use the appropriate rule to answer the question.

Caribbean import export headquartered in Barbados has a .45 chance of conducting a deal to export flavoured rum to the USA. If its major competitor in Trinidad West Indies commodity does not bid for the contract and a .25 probability of success if it competitor bids. It is estimated that its competitor will submit a bid for the contract with probability .40.what is the probability of Caribbean import export getting the deal

Answer 1

(1)

Events of Interest -

D - Caribbean import export gets the deal

B - Trinidad West Indies commodity (Major Competitor) Bids

~B - Trinidad West Indies commodity (Major Competitor) does not bids

(2)

Information given -

P(D | ~B) = 0.45

P(D | B) = 0.25

P(B) = 0.40

P(~B) = 1 - P(B) = 1 - 0.40 = 0.60

(3)

We nee to find P(D) = probability of Caribbean import export getting the deal

(4)

By law of total probability,

P(D) = P(B) P(D | B) + P(~B) P(D | ~B)

= 0.40 * 0.25 + 0.60 * 0.45

= 0.37