If you randomly sample 200 of Sleaze\'s invoices, what is the probability that y

Question

If you randomly sample 200 of Sleaze's invoices, what is the probability that you will find at least 15 invoices that overcharge the customer? What is the probability you won't find any that undercharge the customer? Find an integer, k, such that the probability is at least 0.99 that you will find at least k invoices that overcharge the customer. (Hint: Use trial and error with the BINOMDIST function to find k.) Suppose that when Sleaze overcharges Medicare, the distribution of the amount overcharged (expressed as a percentage of the correct billing amount) is normally distributed with mean 15% and standard deviation 4%. What percentage of overbilled invoices are at least 10% more than the legal billing amount? What percentage of all invoices are at least 10% more than the legal billing amount? If your auditing company samples 200 randomly chosen invoices, what is the probability that it will find at least five where Medicare was overcharged by at least 10%?

Explanation / Answer

Answer:- A company is running an audit on the Sleaze Company as Sleaze has a bad habit of overcharging its customers where audit has to check whether the billing amount on its invoices are correct.
-It is assumed that each invoice is for too high an amount with probability 0.06 for too low an amount with the probability 0.01 (such that the probability of correct billing is 0.93 and the probability of incorrect billing is 0.07).

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