What is a random variable

Reference no: EM132589104

Many business activities generate data that can be thought of as random. An example described in the textbook is the servicing of cars at an oil change shop. Each car entering the shop can be considered an experiment with random outcomes. A variable of interest in this experiment could be the amount of time necessary to service the car. Service time will vary randomly with each car.

We can often capture the most relevant characteristics of a stochastic process with a simple probability distribution model. We can then analyze the model to make predictions and drive decisions. For instance, we could estimate the number of technicians the oil change shop needs to service demand on a Saturday afternoon. Discuss the following:

Question 1: What is a random variable?

Question 2: How would you differentiate a discrete from a continuous random variable?

A laptop manufacturing company has implemented a 2-step process to test the quality of each production batch. In the first step, a technician randomly selects 15 laptops from the batch and determines whether they meet specifications. The batch is considered acceptable provided no more than 1 laptop fails to meet specifications. Otherwise, the entire batch must be tested in the second step. Historical data shows that 95% of the laptops produced adhere to specifications. Discuss the following:

Question 3: What are the 4 characteristics of a binomial experiment?

Question 4: Can we use a binomial distribution to model this process?

Question 5: What is the probability that the entire batch unnecessarily has to be tested if in fact 95% of its laptops conform to specifications? (Hint: Use Excel's =BINOMDIST() function to find the probability.)

Question 6: What is the probability that the batch is incorrectly accepted if only 75% of its laptops conform to specifications?

Reference no: EM132589104

Questions Cloud

What is the concept of operating leverage : What is the concept of operating leverage? Describe a scenario where a high degree of operating leverage would be positive for a company

Describe the variables in study : Briefly tell what type of study you would do, what type of data you would collect, and summarize how you would collect and analyze the data

Future of open-door policy in community colleges : What issues does the scenario create? What leadership competencies are involved? Who should be involved in addressing the situation?

Identified company does the branding well : Identify the company and how they have "branded" their uniqueness. Discuss two ways in which the identified company does this branding well

What is a random variable : What is the probability that the entire batch unnecessarily has to be tested if in fact 95% of its laptops conform to specifications?

Effective communication : Your class requires you to use a program that you must download on your computer. why is effective communication important in linking you to these resources?

What are the implications of guanxi networks : An important Chinese cultural issue is the avoidance of loss of face. Discuss its implications for selling in China.What are the implications of Guanxi networks

What is the amount of consolidated sales at the end of year : At the end of the year, 50% of the inventory that Rose sold to Hayley remained in Hayley's inventory, What is the amount of consolidated sales at end of year

Explain how company has done to the industry averages : Make sure to justify the ratios that you choose for your analysis. Compare how your company has done to the industry averages.

User Account

All Pages