Find k invoices that overcharge the customer

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Reference no: EM13116390

Our business is doing an audit on the shell company. Because shell has a habit of overcharging its customers, the focus of your audit is on checking whether the billing amounts on its invoices are correct. Assume that each invoice is for too high an amount with probability 0.06 and for too low an amount with probability 0.01 (so that the probability of a correct billing is 0.93). Also assume that the outcome for any invoice is probabilistically independent of the outcomes of other invoices.

Find an integer k that the probability is at least .99 that you will find k invoices that overcharge the customer. Hint: use trial and error with the BInomdist function to find k.

Reference no: EM13116390

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