[Recommended] Problem 5 – Page

[Recommended] Problem 5 – Page

5-Perform a sensitivity analysis on the probability of a great market. To do this, enter formulas in cells B9 and B10 (see Figure 9.4) to ensure that the probabili- ties of “fair” and “awful” remain in the same ratio, 35 to 20, and that all three probabilities continue to sum to 1. Then let the probability of “great” vary from 0.25 to 0.50 in increments of 0.05. Is it ever best to abandon the product in this range?

39-Yearly automobile inspections are required for resi- dents of the state of Pennsylvania. Suppose that 12% of all inspected cars in Pennsylvania have problems that need to be corrected. Unfortunately, Pennsylvania state inspections fail to detect these problems 20% of the time. On the other hand, assume that an inspection never detects a problem when there is no problem. Consider a car that is inspected and is found to be

free of problems. What is the probability that there is indeed something wrong that the inspection has failed to uncover?

  • Problem 5 – Page 471
  • Problem 39 – Page 502

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