Vegetable and Mountain States Potato
[6]
STATISTICS FOR BUSINESS
LIST OF READING MATERIALS
Title
1. Job Applications
2. Managing Risk
3. Cutcraft Cutlery Corporation
4. Compensation for Faculty Members
5. Airline Satisfaction Survey
6. The Avocado
7. The Mountain States Potato Company
8. Edgartown Fisheries
9. Monitor Systems
[7]
JOB APPLICATIONS
A business graduate very much wants to get a job in any one of the top 10 accounting firms.
Applying to any of these companies requires a lot of effort and paperwork and is therefore costly.
She estimates the cost of applying to each of the 10 companies and the probability of getting a job offer there. These data are tabulated below. The tabulation is in the decreasing order of cost.
1. If the graduate applies to all 10 companies, what is the probability that she will get at least one offer? 2. If she can apply to only one company, based on cost and success probability criteria alone, should she apply to company 5? Why or why not?
3. If she applies to companies 2, 5, 8, and 9, what is the total cost? What is the probability that she will get at least one offer?
4. If she wants to be at least 75% confident of getting at least one offer, to which companies should she apply to minimize that total cost? (This is trial-and-error problem.)
5. If she is willing to spend $1,500, to which companies should she apply to maximize her chances of getting at least one job? (This is a trial-and-error problem.)
Company 1 2 3 4 5 6 7 8 9 10
Cost $870 $600 $540 $500 $400 $320 $300 $230 $200 $170
Probability 0.38 0.35 0.28 0.20 0.18 0.18 0.17 0.14 0.14 0.08
[8]
MANAGING RISK
Famous golfer Lee Trevino liked to define risk as betting $20 on 18 holes of golf with three guys you don’t know when you only have $2 in your pocket. Investments can differ widely in their amount of inherent risk. Savings deposits at a bank contain very little risk if they are insured by FDIC. Treasury bills offer a narrow range of potential risk. Small-company
common
STATISTICS FOR BUSINESS
LIST OF READING MATERIALS
Title
1. Job Applications
2. Managing Risk
3. Cutcraft Cutlery Corporation
4. Compensation for Faculty Members
5. Airline Satisfaction Survey
6. The Avocado
7. The Mountain States Potato Company
8. Edgartown Fisheries
9. Monitor Systems
[7]
JOB APPLICATIONS
A business graduate very much wants to get a job in any one of the top 10 accounting firms.
Applying to any of these companies requires a lot of effort and paperwork and is therefore costly.
She estimates the cost of applying to each of the 10 companies and the probability of getting a job offer there. These data are tabulated below. The tabulation is in the decreasing order of cost.
1. If the graduate applies to all 10 companies, what is the probability that she will get at least one offer? 2. If she can apply to only one company, based on cost and success probability criteria alone, should she apply to company 5? Why or why not?
3. If she applies to companies 2, 5, 8, and 9, what is the total cost? What is the probability that she will get at least one offer?
4. If she wants to be at least 75% confident of getting at least one offer, to which companies should she apply to minimize that total cost? (This is trial-and-error problem.)
5. If she is willing to spend $1,500, to which companies should she apply to maximize her chances of getting at least one job? (This is a trial-and-error problem.)
Company 1 2 3 4 5 6 7 8 9 10
Cost $870 $600 $540 $500 $400 $320 $300 $230 $200 $170
Probability 0.38 0.35 0.28 0.20 0.18 0.18 0.17 0.14 0.14 0.08
[8]
MANAGING RISK
Famous golfer Lee Trevino liked to define risk as betting $20 on 18 holes of golf with three guys you don’t know when you only have $2 in your pocket. Investments can differ widely in their amount of inherent risk. Savings deposits at a bank contain very little risk if they are insured by FDIC. Treasury bills offer a narrow range of potential risk. Small-company
common