The weekly amount spent by an event management company for travel has approximately a normal distribution with a mean of $2,500 and a standard deviation of $400. If $3,000 is budgeted to cover next week’s travel expenses. What is the probability that the actual expenses will exceed the budgeted amount? b. how much should be budgeted each week so that the probability is only 0.05 that the actual expense will exceed the budgeted amount?
Continuous Probability Distributions
Probability distributions are of two types, which are continuous probability distributions and discrete probability distributions. A continuous probability distribution contains an infinite number of values. For example, if time is infinite: you could count from 0 to a trillion seconds, billion seconds, so on indefinitely. A discrete probability distribution consists of only a countable set of possible values.
Normal Distribution
Suppose we had to design a bathroom weighing scale, how would we decide what should be the range of the weighing machine? Would we take the highest recorded human weight in history and use that as the upper limit for our weighing scale? This may not be a great idea as the sensitivity of the scale would get reduced if the range is too large. At the same time, if we keep the upper limit too low, it may not be usable for a large percentage of the population!
The weekly amount spent by an
- What is the
probability that the actual expenses will exceed the budgeted amount?
b. how much should be budgeted each week so that the probability is only 0.05 that the actual expense will exceed the budgeted amount?
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