Wk 3 Discussion - Characterizing Uncertainty [due Day 3]

Wk 3 - Practice: Ch 5, Profitability [due Day Thursday]

Discussion Topic

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Post a total of three substantive responses over two separate days for full participation: includes your initial post and two replies to other students or your faculty member.

Due Day 3 (35 points)

Respond to each of the following questions in a minimum of 175 words.

Many business activities generate random data. An example described in the textbook is the servicing of cars at an oil change shop (LO 6-4). Each vehicle entering the shop can be considered an experiment with random outcomes. A variable of interest in this experiment could be the amount oftimenecessary to service the car. Service time will vary randomly with each vehicle.

(LO 6-4)

We can capture the most relevant characteristics of a random process with a simple probability distribution model. We then analyze the model to make predictions and drive decisions. For instance, we could estimate the number of technicians the oil change shop needs to service the demand on a Saturday afternoon. Discuss the following:

1. What is a random variable? (Refer LO 6-1).

Discrete Variable: Defined at Each Point 0 1 2 3 4 5 Continuous Variable: Defined over an Interval 53 53.5 54 54.5 55Sample Space Set of Real Numbers Interval [0,1] Random Variable, X Probability Distribution, P(X = x) Assigns outcomes from the Assigns random variable sample space to numbers values to a probability o Q Q E Close