Jon Cryer wrote: > This is quite a silly problem. No wonder statistics (for business) > gets so little respect. This is time series or process data--not a random > sample > from some fixed population. There is no information about the stability > of the process over time. Very few business processes are stable over five > years. > Why can't we teach meaningful statistics? > But suppose there is a little bit sense in the problem described. Is my solution correct or wrong? Thanks in advance Jan > > Jon Cryer > > At 05:14 PM 12/13/00 +0100, you wrote: > >I have some difficulties with following problem > >(I need the solution urgently for tomorrow): > > > >Production levels for Giles Fashion vary greatly according to consumer > >acceptance of the latest styles. Therefore, the company's > >weekly orders of wool cloth are difficult > >to predict in advance. On the basis of 5 years data, the following > >probability distribution for the company's weekly demand for wool > >has been computed: > > > >Amount of wool (lb) Probability > >2500 0.30 > >3500 0.45 > >4500 0.20 > >5500 0.05 > > > >>From these data, the raw-materials purchaser computed the > >expected number of pounds required. Recently, she noticed > >that the company's sales were lower in the last year than in years > >before. > >Extrapolating, she observed that the company will be lucky > >if its weekly demand averages 2,500 this year. > > > >(a) What was the expected weekly demand for wool based > >on the distribution from past data? > > > >(b) If each pound of wool generates $5 in revenue and costs $4 to > >purchase, ship, and handle, how much would Giles Fashion stand > >to gain or lose each week if it orders wool based on the past > >expected value and company's demand is only 2,500? > > > >(End of the text of the problem.) > > > >Possible solution (in my opinion): > > > >I. > >(a) I fink is obvious: If X means company's weekly demand for wool > >(lb), then the expected weekly demand for wool based on the > >distribution from past data =E(X) = > >0.3*2500+0.45*3500+0.20*4500+0.05*5500= > >= 3500. Am I right? > > > >(b) > >Actually I am not sure what company's weekly demand for > >wool in the past data (table of probability distr.) means. > >It is the amount of wool which company bought weekly > >or is the amount of wool which company sold (in it's products) > >weekly? > >The last sentence make difference between > >company's orders (it orders wool based...) and company's demand > >( and company's demand is only 2,500) > >(I think but I am not sure, it's actually company's weekly demand for > >wool). > >So In my opinion company's weekly demand for wool means: > >the amount of wool which company sold (in it's products) weekly? > >Am I right? > > > >I am not sure what the last sentence means. > >Does it mean that the company orders weekly > >3500 lb of wool ( it orders wool based on the past > >expected value and the past expected value = 3500 from (a)) > >and it sells weekly 2500 lb in their products > >(and company's demand is only 2,500)? > > If so the solution seems to be: > >The company should expect to gain weekly: 2500*1$-1000*4$=-1500$ > >so in fact it should expect to lose weekly 1500$. > >-- > > > >Am I right? > > > >Maybe I should consider that the company's weekly demand > >is 2500 lb but it orders are: > > > >Amount of wool (lb) Probability > >2500 0.30 > >3500 0.45 > >4500 0.20 > >5500 0.05 > > > >(Loss | Orders=2500 ) 0$ -1500$ ... > >probability 0.30 0.45 > > > >E(Loss | Orders=2500 ) = 0*0.3+(-1500)*0.45+ ... > > > > > >Please somebody correct me if I am wrong. > > > >Jan > > > > > > > >================================================================= > >Instructions for joining and leaving this list and remarks about > >the problem of INAPPROPRIATE MESSAGES are available at > > http://jse.stat.ncsu.edu/ > >================================================================= > > > > > ___________ > ----------------------------------------------- | \ > Jon Cryer, Professor [EMAIL PROTECTED] ( ) > Dept. of Statistics www.stat.uiowa.edu/~jcryer \ \_University > and Actuarial Science office 319-335-0819 \ * \of Iowa > The University of Iowa dept. 319-335-0706 \ /Hawkeyes > Iowa City, IA 52242 FAX 319-335-3017 |__________ ) > ----------------------------------------------- V > > ================================================================= > Instructions for joining and leaving this list and remarks about > the problem of INAPPROPRIATE MESSAGES are available at > http://jse.stat.ncsu.edu/ > ================================================================= ================================================================= Instructions for joining and leaving this list and remarks about the problem of INAPPROPRIATE MESSAGES are available at http://jse.stat.ncsu.edu/ =================================================================
