Essentials of Business Analytics (MindTap Course List)
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN: 9781305627734
Author: Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher: Cengage Learning
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Chapter 5, Problem 10P

a.

To determine

Check whether A1and A2 are mutually exclusive or not.

 Explain the answer.

a.

Expert Solution
Check Mark

Answer to Problem 10P

Events A1and A2 are mutually exclusive.

Explanation of Solution

Calculation:

The prior probabilities for the events A1and A2 arePA1=0.40and PA2=0.60.

The values of PA1A2=0,PB|A1=0.20,and PB|A2=0.05 .

Mutually exclusive events:

Two or more events are said to be mutually exclusive if they have no element in common. For mutually exclusive events, PAB=0.

Here, PA1A2=0. Therefore events A1and A2 are mutually exclusive.

b.

To determine

Compute the probability valuesPA1BandPA2B.

b.

Expert Solution
Check Mark

Answer to Problem 10P

The probabilities are:

PA1B=0.08¯,PA2B=0.03¯.

Explanation of Solution

Calculation:

The Multiplication Rule:

For any two events A and B, the multiplication rule states that PAB=PB|A×PA.

Required probabilities are:

PA1B=PB|A1×PA1PA2B=PB|A2×PA2

Here, PA1=0.40, PA2=0.60,PB|A1=0.20and PB|A2=0.05.

Substitute these values in the above formula.

Therefore,

PA1B=0.20×0.40=0.08

Thus, PA1B=0.08.

Therefore,

PA2B=0.05×0.60=0.03

Thus, PA2B=0.03.

c.

To determine

Compute the probability valuePB.

c.

Expert Solution
Check Mark

Answer to Problem 10P

The probability value is, PB=0.11¯.

Explanation of Solution

Calculation:

The probability of the event can be obtained as follows:

PB=PA1B+PA2B.

From part (b), PA1B=0.08and PA2B=0.03.

Substitute these values in the above formula.

Therefore,

PB=0.08+0.03=0.11

Thus, PB=0.11¯.

d.

To determine

Compute PA1|Band PA2|B using Bayes’ theorem.

d.

Expert Solution
Check Mark

Answer to Problem 10P

The probability values are:

PA1|B=0.7273¯,PA2|B=0.2727¯.

Explanation of Solution

Calculation:

Bayes Theorem (Two-Event Case):

PA1|B=PA1×PB|A1PA1×PB|A1+PA2×PB|A2=PA1×PB|A1PBPA2|B=PA2×PB|A2PA1×PB|A1+PA2×PB|A2=PA2×PB|A2PB

From part (b), PA1B=0.08and PA2B=0.03.

From part (c), PB=0.11.

Substitute these values in the Bayes’ theorem.

Therefore,

PA1|B=0.080.11=0.72727=0.7373

Thus, PA1|B=0.7273¯.

PA2|B=0.030.11=0.2727

Thus, PA2|B=0.2727¯.

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