# On the basis of past data, the owner of an automobile dealership finds that, on average, 8.5

## Question:

a. On the first Saturday in February, the dealership will open at9 a.m. Find the probability that the time until the first sale is more than two hours, PE (T ≥ 2 hours | m = 8.5 cars per 10 hours).

b. Find the probability that the number of sales before 11 a.m. is equal to zero, PP (X = 0 in 2 hours | m = 8.5 cars per 10 hours). Compare your answer with that from part a. Can you explain why the answers are the same?

c. The owner of the dealership gives her salespeople bonuses, depending on the total number of cars sold. She gives them $200whenever exactly 13 cars are sold on a given day, $300 whenever14 cars are sold, $500 whenever 15 cars are sold, and $700whenever 16 or more cars are sold. On any given Saturday or Sunday in January or February, what is the expected bonus that the dealer will have to pay?

d. Consider the bonus scheme presented in part c. February contains exactly four Saturdays and four Sundays. What is the probability that the owner will have to pay the $200 bonuses exactly twice in those days?

Dealer

A dealer in the securities market is an individual or firm who stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price). A dealer seeks to profit from the spread between the...

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## Making Hard Decisions with decision tools

**ISBN:** 978-0538797573

3rd edition

**Authors:** Robert Clemen, Terence Reilly