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Evgesh-ka [11]
2 years ago
8

A certain federal agency employs three consulting firms (A, B and C) with probabilities 0.4, 0.35 and 0.25 respectively. From pas

t experience it is known that the probability of cost overruns for the firms are 0.05, 0.03, and 0.15, respectively.
a. Suppose a cost overrun is experienced by the company. What is the probability that the consulting firm involved is company A?

b. Are the events selecting company A, and incurring in cost overruns independent?
Mathematics
1 answer:
Marizza181 [45]2 years ago
8 0

Answer:

(a) 0.29412 .

(b) No, the events selecting company A and incurring in cost overruns are not independent.

Step-by-step explanation:

We are given that a certain federal agency employs three consulting firms (A, B and C) with probabilities 0.4, 0.35 and 0.25 respectively i.e.;

 P(A) = 0.4        P(B) = 0.35          P(C) = 0.25

Also, From past experience it is known that the probability of cost overruns for the firms are 0.05, 0.03, and 0.15, respectively which means;

Let CO = Event of cost overruns

P(CO/A) = 0.05 - It means probability of cost overruns given the consulting firm involved was A.

Similarly, P(CO/B) = 0.03      P(CO/C) = 0.15

(a) Probability that the consulting firm involved is company A given a cost overrun is experienced by the company is given by, P(A/CO);

We will use Bayes' theorem here calculating the above probability ;

           P(A/CO) = \frac{P(A)*P(CO/A)}{P(A)*P(CO/A) + P(B)*P(CO/B) + P(C)*P(CO/C)}

                          = \frac{0.4*0.05}{0.4*0.05 + 0.35*0.03 + 0.25*0.15} = 0.29412 .

(b) No, the events selecting company A and incurring in cost overruns are not independent because the cost overruns happens only when the consulting firm is involved and also the cost overruns will differ as we move towards another consulting firm so the chances of cost overruns will depend on the fact that which consulting firm has been involved.

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Step-by-step explanation:

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Now, the probability of an event is equal to the integral of the density probability function:

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It's useful to draw a diagram here, I have attached one in which you can see the integration region.

You can see there a box, that represents all possible outcomes for Y and X. There's a diagonal coming from the box's upper right corner, that diagonal represents the cases in which both X and Y arrive at the same time, under that line we have that Y arrives before X, that is our integration region.

Let's set up the integration:

\iint_A f_{X,Y} (x,y) dx\, dy\\\\\iint_A f_{X} (x) \, f_{Y} (y) dx\, dy\\\\2 \iint_A  dx\, dy

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2 \iint_A  dx\, dy= 2 \times \frac{0.5 \times 0.5 }{2} \\\\2 \iint_A  dx\, dy= \frac{1}{4}

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Step-by-step explanation:

*Make sure calculator is on degree mode*

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