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Sales delay is the elapsed time between the manufacture of a product and its sale. According to the article 鈥淲arranty Claims Data Analysis Considering Sales Delay鈥 (Quality and Reliability Engr. Intl., \({\rm{2013:113 - 123}}\)), it is quite common for investigators to model sales delay using a lognormal distribution. For a particular product, the cited article proposes this distribution with parameter values \({\rm{\mu = 2}}{\rm{.05 and }}{{\rm{\sigma }}^{\rm{2}}}{\rm{ = 0}}{\rm{.06}}\) (here the unit for delay is months).

a. What are the variance and standard deviation of delay time?

b. What is the probability that delay time exceeds \({\rm{12}}\) months?

c. What is the probability that delay time is within one standard deviation of its mean value?

d. What is the median of the delay time distribution?

e. What is the \({\rm{99th}}\) percentile of the delay time distribution?

f. Among \({\rm{10}}\) randomly selected such items, how many would you expect to have a delay time exceeding \({\rm{8}}\) months?

Short Answer

Expert verified

a) variance: \({\rm{V(X) = 3}}{\rm{.96196}}\)

standard deviation: \({\rm{SD(X) = 1}}{\rm{.99047}}\)

b) \({\rm{P(X > 12) = 0}}{\rm{.0375 = 3}}{\rm{.75\% }}\)

c) \({\rm{P(\mu - \sigma < X < \mu + \sigma ) = 0}}{\rm{.6993 = 69}}{\rm{.93\% }}\)

d) \({\rm{x = }}{{\rm{e}}^{{\rm{2}}{\rm{.05}}}}{\rm{\gg 7}}{\rm{.7679}}\)

e) \({\rm{x\gg 13}}{\rm{.7458}}\)

f) \({\rm{4}}{\rm{.522}}\) items.

Step by step solution

01

Definition of probability

The proportion of the total number of conceivable outcomes to the number of options in an exhaustive collection of equally likely outcomes that cause a given occurrence.

02

Determining the variance and standard deviation of delay time

Given that \({\rm{X}}\)follows a lognormal distribution,

\(\begin{array}{*{20}{c}}{{\rm{\mu = 2}}{\rm{.05}}}\\{{{\rm{\sigma }}^{\rm{2}}}{\rm{ = 0}}{\rm{.06}}}\end{array}\)

The formulas for calculating the mean and variance of \({\rm{X}}\)are as follows:

\(\begin{array}{*{20}{c}}{{\rm{E(X) = }}{{\rm{e}}^{{\rm{\mu + }}{{\rm{\sigma }}^{\rm{2}}}{\rm{/2}}}}}\\{{\rm{V(X) = }}{{\rm{e}}^{{\rm{2\mu + }}{{\rm{\sigma }}^{\rm{2}}}}}\left( {{{\rm{e}}^{{{\rm{\sigma }}^{\rm{2}}}}}{\rm{ - 1}}} \right)}\end{array}\)

Substitute \({\rm{2}}{\rm{.05 for \mu and 0}}{\rm{.06 for }}{{\rm{\sigma }}^{\rm{2}}}\):

\(\begin{array}{*{20}{c}}{{\rm{E(X) = }}{{\rm{e}}^{{\rm{\mu + }}{{\rm{\sigma }}^{\rm{2}}}{\rm{/2}}}}{\rm{ = }}{{\rm{e}}^{{\rm{2}}{\rm{.05 + 0}}{\rm{.06/2}}}}{\rm{\gg 8}}{\rm{.00447}}}\\{{\rm{V(X) = }}{{\rm{e}}^{{\rm{2\mu + }}{{\rm{\sigma }}^{\rm{2}}}}}\left( {{{\rm{e}}^{{{\rm{\sigma }}^{\rm{2}}}}}{\rm{ - 1}}} \right){\rm{ = }}{{\rm{e}}^{{\rm{2(2}}{\rm{.05) + 0}}{\rm{.06}}}}\left( {{{\rm{e}}^{{\rm{0}}{\rm{.06}}}}{\rm{ - 1}}} \right){\rm{\gg 3}}{\rm{.96196}}}\end{array}\)

The square root of the variance is the standard deviation:

\({\rm{SD(X) = }}\sqrt {{\rm{V(X)}}} {\rm{ = }}\sqrt {{\rm{3}}{\rm{.96196}}} {\rm{\gg 1}}{\rm{.99047}}\)

03

Determining the probability that delay time exceeds \({\rm{12}}\) months

Given that \({\rm{X}}\)follows a lognormal distribution,

\(\begin{array}{*{20}{c}}{{\rm{\mu = 2}}{\rm{.05}}}\\{{{\rm{\sigma }}^{\rm{2}}}{\rm{ = 0}}{\rm{.06}}}\end{array}\)

Rule of complements:

\({\rm{P(notA) = 1 - P(A)}}\)

The logarithm of the value reduced by the mean divided by the standard deviation (the standard deviation is the square root of the variance) yields the z-score:

\({\rm{z = }}\frac{{{\rm{lnx - \mu }}}}{{\rm{\sigma }}}{\rm{ = }}\frac{{{\rm{ln12 - 2}}{\rm{.05}}}}{{\sqrt {{\rm{0}}{\rm{.06}}} }}{\rm{\gg 1}}{\rm{.78}}\)

Using the normal probability table in the appendix (and the complement rule), calculate the corresponding probability:

\({\rm{P(X > 12) = P(Z > 1}}{\rm{.78) = 1 - P(Z < 1}}{\rm{.78) = 1 - 0}}{\rm{.9625 = 0}}{\rm{.0375 = 3}}{\rm{.75\% }}\)

04

Determining the probability that delay time is within one standard deviation of its mean value

Given that \({\rm{X}}\)follows a lognormal distribution,

\(\begin{array}{*{20}{c}}{{\rm{\mu = 2}}{\rm{.05}}}\\{{{\rm{\sigma }}^{\rm{2}}}{\rm{ = 0}}{\rm{.06}}}\end{array}\)

The formulas for calculating the mean and variance of \({\rm{X}}\)are as follows:

\(\begin{array}{*{20}{c}}{{\rm{E(X) = }}{{\rm{e}}^{{\rm{\mu + }}{{\rm{\sigma }}^{\rm{2}}}{\rm{/2}}}}}\\{{\rm{V(X) = }}{{\rm{e}}^{{\rm{2\mu + }}{{\rm{\sigma }}^{\rm{2}}}}}\left( {{{\rm{e}}^{{{\rm{\sigma }}^{\rm{2}}}}}{\rm{ - 1}}} \right)}\end{array}\)

Substitute \({\rm{2}}{\rm{.05 for \mu and 0}}{\rm{.06 for }}{{\rm{\sigma }}^{\rm{2}}}\):

\(\begin{array}{*{20}{c}}{{\rm{E(X) = }}{{\rm{e}}^{{\rm{\mu + }}{{\rm{\sigma }}^{\rm{2}}}{\rm{/2}}}}{\rm{ = }}{{\rm{e}}^{{\rm{2}}{\rm{.05 + 0}}{\rm{.06/2}}}}{\rm{\gg 8}}{\rm{.00447}}}\\{{\rm{V(X) = }}{{\rm{e}}^{{\rm{2\mu + }}{{\rm{\sigma }}^{\rm{2}}}}}\left( {{{\rm{e}}^{{{\rm{\sigma }}^{\rm{2}}}}}{\rm{ - 1}}} \right){\rm{ = }}{{\rm{e}}^{{\rm{2(2}}{\rm{.05) + 0}}{\rm{.06}}}}\left( {{{\rm{e}}^{{\rm{0}}{\rm{.06}}}}{\rm{ - 1}}} \right){\rm{\gg 3}}{\rm{.96196}}}\end{array}\)

The square root of the variance is the standard deviation:

\({\rm{SD(X) = }}\sqrt {{\rm{V(X)}}} {\rm{ = }}\sqrt {{\rm{3}}{\rm{.96196}}} {\rm{\gg 1}}{\rm{.99047}}\)

The following is one standard deviation above/below the mean:

\(\begin{array}{*{20}{c}}{{\rm{E(X) - SD(X) = 8}}{\rm{.00447 - 1}}{\rm{.99047 = 6}}{\rm{.014}}}\\{{\rm{E(X) + SD(X) = 8}}{\rm{.00447 + 1}}{\rm{.99047 = 9}}{\rm{.99494}}}\end{array}\)

The logarithm of the value reduced by the mean divided by the standard deviation (the standard deviation is the square root of the variance) yields the z-score:

\(\begin{array}{*{20}{c}}{{\rm{z = }}\frac{{{\rm{lnx - \mu }}}}{{\rm{\sigma }}}{\rm{ = }}\frac{{{\rm{ln9}}{\rm{.99494 - 2}}{\rm{.05}}}}{{\sqrt {{\rm{0}}{\rm{.06}}} }}{\rm{\gg 1}}{\rm{.03}}}\\{{\rm{z = }}\frac{{{\rm{lnx - \mu }}}}{{\rm{\sigma }}}{\rm{ = }}\frac{{{\rm{ln6}}{\rm{.014 - 2}}{\rm{.05}}}}{{\sqrt {{\rm{0}}{\rm{.06}}} }}{\rm{\gg - 1}}{\rm{.04}}}\end{array}\)

Using the normal probability table in the appendix, calculate the corresponding probability:

\(\begin{array}{*{20}{c}}{{\rm{P(\mu - \sigma < X < \mu + \sigma ) = P(6}}{\rm{.014 < X < 9}}{\rm{.99494) = P( - 1}}{\rm{.04 < Z < 1}}{\rm{.03)}}}\\{{\rm{ = P(Z < 1}}{\rm{.03) - P(Z < - 1}}{\rm{.04) = 0}}{\rm{.8485 - 0}}{\rm{.1492 = 0}}{\rm{.6993 = 69}}{\rm{.93\% }}}\end{array}\)

05

Determining the median of the delay time distribution

Given that \({\rm{X}}\)follows a lognormal distribution,

\(\begin{array}{*{20}{c}}{{\rm{\mu = 2}}{\rm{.05}}}\\{{{\rm{\sigma }}^{\rm{2}}}{\rm{ = 0}}{\rm{.06}}}\end{array}\)

The median has the property that the \({\rm{50\% }}\)of the values are less than it.

\({\rm{P(X < MEDIAN) = 50\% = 0}}{\rm{.50}}\)

Determine the z-score that corresponds to a probability of \({\rm{0}}{\rm{.50}}\) in the normal probability table in the appendix:

\({\rm{z = 0}}\)

The appropriate number is the mean multiplied by the standard deviation and the z-score:

\({\rm{lnx = \mu + z\sigma = 2}}{\rm{.05 + 0}}\sqrt {{\rm{0}}{\rm{.06}}} {\rm{ = 2}}{\rm{.05}}\)

Take each side of the previous equation's exponential:

\({\rm{x = }}{{\rm{e}}^{{\rm{lnx}}}}{\rm{ = }}{{\rm{e}}^{{\rm{2}}{\rm{.05}}}}{\rm{\gg 7}}{\rm{.7679}}\)

06

Determining the \({\rm{99th}}\) percentile of the delay time distribution

Given that \({\rm{X}}\)follows a lognormal distribution,

\(\begin{array}{*{20}{c}}{{\rm{\mu = 2}}{\rm{.05}}}\\{{{\rm{\sigma }}^{\rm{2}}}{\rm{ = 0}}{\rm{.06}}}\end{array}\)

The \({\rm{99\% }}\)of the values are below \({{\rm{P}}_{{\rm{99}}}}\), which makes the 99th percentile \({{\rm{P}}_{{\rm{99}}}}\)

\({\rm{P}}\left( {{\rm{X < }}{{\rm{P}}_{{\rm{99}}}}} \right){\rm{ = 99\% = 0}}{\rm{.99}}\)

Determine the z-score that corresponds to a probability of \({\rm{0}}{\rm{.99}}\) in the normal probability table in the appendix:

\({\rm{z = 2}}{\rm{.33}}\)

The appropriate number is the mean multiplied by the standard deviation and the z-score:

\({\rm{lnx = \mu + z\sigma = 2}}{\rm{.05 + 2}}{\rm{.33}}\sqrt {{\rm{0}}{\rm{.06}}} {\rm{\gg 2}}{\rm{.62073}}\)

Take each side of the previous equation's exponential:

\({\rm{x = }}{{\rm{e}}^{{\rm{lnx}}}}{\rm{ = }}{{\rm{e}}^{{\rm{2}}{\rm{.62073}}}}{\rm{\gg 13}}{\rm{.7458}}\)

07

Determining the delay time exceeding \({\rm{8}}\) months

Given that \({\rm{X}}\)follows a lognormal distribution,

\(\begin{array}{*{20}{c}}{{\rm{\mu = 2}}{\rm{.05}}}\\{{{\rm{\sigma }}^{\rm{2}}}{\rm{ = 0}}{\rm{.06}}}\end{array}\)

Rule of complements:

\({\rm{P(notA) = 1 - P(A)}}\)

The logarithm of the value reduced by the mean divided by the standard deviation (the standard deviation is the square root of the variance) yields the z-score:

\({\rm{z = }}\frac{{{\rm{lnx - \mu }}}}{{\rm{\sigma }}}{\rm{ = }}\frac{{{\rm{ln8 - 2}}{\rm{.05}}}}{{\sqrt {{\rm{0}}{\rm{.06}}} }}{\rm{\gg 0}}{\rm{.12}}\)

Using the normal probability table in the appendix (and the complement rule), calculate the corresponding probability:

\({\rm{P(X > 8) = P(Z > 0}}{\rm{.12) = 1 - P(Z < 0}}{\rm{.12) = 1 - 0}}{\rm{.5478 = 0}}{\rm{.4522 = 45}}{\rm{.22\% }}\)

We can infer that these \({\rm{10 }}\) objects are independent because they were chosen at random. Then we should expect \({\rm{45}}{\rm{.22\% }}\)of the \({\rm{10 }}\) products to take longer than \({\rm{8}}\) months:

\({\rm{45}}{\rm{.22\% \times 10 = 0}}{\rm{.4522 \times 10 = 4}}{\rm{.522}}\)

As a result, we predict \({\rm{45}}{\rm{.22\% }}\)of the \({\rm{10 }}\)goods to take longer than 8 months.

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Most popular questions from this chapter

The accompanying observations are precipitation values during March over a \(30\)-year period in Minneapolis-St. Paul.

\(\begin{array}{*{20}{l}}{.77\;\;1.20\;\;3.00\;\;1.62\;\;2.81\;\;2.48}\\{1.74\;\;.47\;\;3.09\;\;1.31\;\;1.87\;\;\;\;.96}\\{.81\;\;1.43\;\;1.51\;\;\;\;.32\;\;1.18\;\;1.89}\\{1.20 3.37\;\;2.10\;\;\;\;.59\;\;1.35\;\;\;\;.90}\\{1.95 2.20\;\;\;\;.52\;\;\;\;\;.81\;\;4.75\;\;2.05}\end{array}\)

a. Construct and interpret a normal probability plot for this data set. b. Calculate the square root of each value and then construct a normal probability plot based on this transformed data. Does it seem plausible that the square root of precipitation is normally distributed? c. Repeat part (b) after transforming by cube roots.

The accompanying normal probability plot was constructed from a sample of \({\rm{30}}\) readings on tension for mesh screens behind the surface of video display tubes used in computer monitors. Does it appear plausible that the tension distribution is normal?

Let X= the time between two successive arrivals at the drive-up window of a local bank. If X has an exponential distribution with \({\rm{\lambda = I}}\) (which is identical to a standard gamma distribution with \({\rm{\alpha = 1}}\) ), compute the following:

a. The expected time between two successive arrivals

b. The standard deviation of the time between successive arrivals

c. \({\rm{P(X}} \le {\rm{4)}}\)

d. \({\rm{P(2}} \le {\rm{X}} \le {\rm{5)}}\)

The error involved in making a certain measurement is a continuous rv \({\rm{X}}\) with pdf

\({\rm{f(x) = \{ }}\begin{array}{*{20}{c}}{{\rm{.09375(4 - }}{{\rm{x}}^2})}&{{\rm{ - 2}} \le {\rm{x}} \le {\rm{2}}}\\{\rm{0}}&{{\rm{otherwise}}}\end{array}\)

a. Sketch the graph of \({\rm{f(x)}}\).

b. Compute \({\rm{P(X > 0)}}\).

c. Compute \({\rm{P( - 1 < X < 1)}}\).

d. Compute \({\rm{P(X < - }}{\rm{.5 or X > }}{\rm{.5)}}\).

When circuit boards used in the manufacture of compact disc players are tested, the long-run percentage of defectives is\({\rm{5\% }}\). Suppose that a batch of \({\rm{250}}\) boards has been received and that the condition of any particular board is independent of that of any other board.

a. What is the approximate probability that at least \({\rm{10\% }}\) of the boards in the batch are defective?

b. What is the approximate probability that there are exactly \({\rm{10}}\) defectives in the batch?

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