Competency 2 Statement

Utilizing statistical probability models, evaluate and analyze business data under uncertainty conditions. Reflect on hypotheses and draw conclusions based on samples of data given below.

Consider the following:

Many business activities generate data that can be thought of as random. For example, servicing cars at an oil change shop. Each car entering the shop can be considered an experiment with random outcomes. A variable of interest in this experiment could be the amount of time necessary to service the car. Service time will vary randomly with each car.Often, we can capture the most relevant characteristics of a stochastic process with a simple probability distribution model. We can then analyze the model to make predictions and drive decisions. For instance, we could estimate the number of technicians the oil change shop needs to service demand on a Saturday afternoon.

Reflect to the following questions:

• What is a random variable?
• How would you differentiate a discrete from a continuous random variable?