Indian Institute of Management Bangalore

Postgraduate Programme in Management

Batch 2011-13
Quantitative Methods I
Mid Term
(For Sections C and D only)
Maximum Time: 2 Hours 30 Minutes Name:
Maximum Marks: 40 Roll No:
This is an open-book, open note (only class notes) test; however,
you are not allowed to share materials with other students.
Use of calculator is permitted, but not computer (laptop). Do not
seek any clarications.
Read all of the following information before starting the test:
To get any credit, you must
circle/clearly indicate your nal answer (in the space, when-
ever provided).
answer all questions in the space provided.
show (in brief ) adequate reasoning, including calculations, if
any, in support of your answers.
state any assumption you make. (Your assumptions need to
be reasonable.)
This test cum answer booklet has 23 pages, including this page.
Space for evaluation only
Question No. 1 2 3 4 5 6 7 8 Total
Maximum
Marks
4 1
+(1+2)
2+1 2+2 1+2+2 5 1+2+2 2+2 2+
(3+2)
40
Students
Score
1. (a) A die is loaded in such a way that an even number is
twice as likely to occur as an odd number. If E is the
event that a number less than 4 occurs on a single toss
of the die, nd P(E). (1 Mark)
QM1 - Mid Term 2
(b) The probability that a person, living in a certain city,
owns a car is estimated to be 0.3. Find the probability
that the tenth person randomly interviewed in that city
is the fth one to own a car. (1 Mark)
QM1 - Mid Term 3
(c) If the probability that an individual suers an adverse
reaction from a particular drug is known to be 0.001, de-
termine the probability that out of 2000 individuals, more
than three individuals will suer an adverse reaction. (1
Mark)
QM1 - Mid Term 4
(d) Suppose you are sampling from a population with popu-
lation variance
2
= 1, 000, 000 You want the standard
deviation of the sample mean to be at most 25. What is
the minimum sample size you should use? (1 Mark)
QM1 - Mid Term 5
(e) A mail-order rm considers three possible foul-ups in
lling an order:
A: The wrong item is sent.
B: Item is lost in transit.
C: The item is damaged in transit.
The individual event probabilities are P(A)= 0.02, P(B)=
0.01, P(C)=0.04.
i. What can you say about the probability that at least
one of these foul-ups occurs for a randomly chosen
order? (1 Mark)
QM1 - Mid Term 6
ii. Assuming the event A is independent of both B and
C and that B and C are mutually exclusive. Find the
probability that at least one of these foul-ups occurs
for a randomly chosen order. (2 Marks)
QM1 - Mid Term 7
2. A prospective purchaser wishes to estimate the mean rupees
amount of sales per customer at a toy store located at an
airlines terminal. Based on the data from other similar air-
ports, the inter quartile range(IQR) of such sales amounts is
estimated to be about IQR=41.00 respectively.
What size of random sample should be collected, as a min-
imum, if the purchaser wants to estimate the mean sales
amount within | 10.00 and with 99 percent condence? (2+1
Marks)
QM1 - Mid Term 8
3. The arithmetic mean of biweekly amount contributed by the
ABC Paint employees to the companys prot-sharing plan
is |5,000, and the standard deviation is .
(a) Given that 75 percent of the contributions lie within |4,000
and |6,000. What is the maximum value of . (2 Marks)
QM1 - Mid Term 9
(b) If the distribution is symmetric, at most what percent of
the contributions above |6,500 when the standard devia-
tion estimated by (a)? (2 Marks)
QM1 - Mid Term 10
4. The joint density function of the random variables X and Y
is
| (x, ) =

lx, 0 < x, < 1; x + < 1

0 otherwise
(a) Calculate k. (1 Mark)
QM1 - Mid Term 11
(b) Show that X and Y are not independent. (2 Marks)
QM1 - Mid Term 12
(c) Find P( X 03|Y = 05 ). (2 Marks)
QM1 - Mid Term 13
5. A fair die has two green faces, two red faces and two blue
faces, and the die is thrown once. Let
X =

1 if a green face is uppermost

0 otherwise,
Y =

1 if a blue face is uppermost

0 otherwise.
Find Cov (X, Y) (5 Marks)
QM1 - Mid Term 14
6. A project consists of three phases to be completed one after
the other. The duration of each phase, in days, is normally
distributed as follows: Duration of Phase I ^(80, 2
2
);
Duration of Phase II ^(102, 3
2
); Duration of Phase III
^(65, 4
2
). The durations are independent.
(a) Find the distribution of the project duration. Report the
mean and the standard deviation. (1 Mark)
QM1 - Mid Term 15
(b) If the project duration exceeds 250 days, a penalty will
be assessed. What is the probability that the project will
be completed within 250 days? (2 Marks)
QM1 - Mid Term 16
(c) If the project is completed within 240 days, a bonus will
be earned. What is the probability that the project will
be completed within 240 days? (2 Marks)
QM1 - Mid Term 17
7. (a) The owner of a self-service carwash has found that cus-
tomers take an average of 8 minutes to wash and dry
their cars. Assuming that the self-service times tend to
be exponentially distributed, what is the probability that
a customer will require more than 10 minutes to complete
the job? Suppose the owner estimated 20 customers in
a particular day, what is the probability that atmost 2
customers will require more than 10 minutes to complete
the job? (2 Marks)
QM1 - Mid Term 18
(b) A pizza delivery services delivers to IIMB hostel. De-
livery times follow a normal distribution with mean 20
minutes and standard deviation 4 minutes. During the
exams week, a student plans to order pizza ten consec-
utive evenings. Assume that these delivery times are in-
dependent each other. What is the probability that the
student will get at least two free pizza. (2 Marks)
QM1 - Mid Term 19
8. A small farmer is trying to gure out whether he should use
the high yielding variety (H) of seeds or the traditional (T)
one. He has some idea that the costs will go up, and that
the high yield will depend on the monsoon since his land is
not irrigated. In addition to seed costs there are additional
costs of fertilizer, and if he uses H, the total cost (of irrigation
and seed, combined) per acre will be Rs.4,000, whereas if he
uses T the total cost will be Rs.2000 per acre. The probability
of excellent monsoon is 0.25, good monsoon has probability
of 0.35, and bad monsoon has a probability of 0.4. If the
monsoon is excellent, H gives a revenue of Rs.10,000, and T
only Rs.4,000. If the monsoon is good, H gives a revenue of
Rs.6,000, and T still gives Rs.4,000. If the monsoon is bad,
H gives zero revenue, and T gives Rs.3,000. All the revenue
gures are per acre and naturally do not take into account
of cost of seed or irrigation.
(a) What would you advise him to do in terms of variety of
seeds to use? Give proper objective quantitative argument
in support of your advice. (2 Marks)
QM1 - Mid Term 20
(b) Someone advises the Government that instead of giving
subsidy, it should invest in better forecasting. He shows
some data that indicates that if the monsoon is excellent,
the forecast is also for excellent rain with probability 0.7,
good rain with probability 0.2, and bad rain with proba-
bility 0.1. If the monsoon is good, the forecast is for excel-
lent rain with probability 0.2, good rain with probability
0.6, and bad rain with probability 0.2. If the monsoon
is bad, the forecast is for excellent rain with probability
0.05, good rain with probability 0.1, and bad rain with
probability 0.85. How should the forecast information be
used optimally? (You may draw the complete decision
tree with all necessary computations in support) What
is the value of this information per acre for the farmer?
(3+2 Marks)
QM1 - Mid Term 21
Scrap Page-1
(please do not remove this page from the test booklet)
QM1 - Mid Term 22
Scrap Page-2
QM1 - Mid Term 23