Unit 4 Discussion: Probability in Managerial Decision-Making 2 After reading the

Question

Unit 4 Discussion: Probability in Managerial Decision-Making 2 After reading the example of where probability values can be used in managerial decision-making to establish a product guarantee, post a comment where you think probability could be used to help solve management questions/problems. Think of something at work, past or present, where you could apply the techniques in the example to assist in making the best decision. If you can't draw on a life experience, then think of a product/issue where this process could be applied. Please explain your answer. Remember to cite your resources and use your own words in your explanation Unit 4 example.pdf

Explanation / Answer

One example of use of a standard normal distribution is as below:

Problem statement: An average light bulb manufactured by the XYZ Corporation lasts 300 days with a standard deviation of 50 days. Assuming that bulb life is normally distributed, what is the probability that an XYZ light bulb will last at most 365 days?

Solution: Given a mean score of 300 days and a standard deviation of 50 days, we want to find the cumulative probability that bulb life is less than or equal to 365 days. Thus, we know the following:

We need to calculate the probability P( X < 365) = P( Z < (365-300)/50 ) = P(Z < 1.3 )

From a standard normal table, P(Z < 1.3 ) = 0.9032

Hence, there is a 90.32 % chance that a light bulb manufactured by XYZ will burn out within 365 days.

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