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Problem: Holiday Trees Case Profits & Distribution
Case: HOLIDAY TREE SERVICES, INC. Using MS Excel and the data given in the case:
1. Create a histogram of the weekly operating profits from the prior year of operation, using 6 equal-sized bins. What is the mode on the histogram? How would you define it? Which probability distribution does the histogram resemble? (You may wish to use the Excel file Holiday Tree's Case.xls at the Gateway website.)
2. What was the average weekly profit for the prior 12-month period? Determine and define the variance and standard deviation of weekly profit.
3. How confident are you of this estimate? Calculate a 99% confidence interval for weekly profits, assuming that sigma is unknown. What does this tell you about weekly profits?
4. Based on the above, what is the expected exposure on the lost profits claim?
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