KK accounting firm has noticed that of companies it audits, 85% show no inventory shortages, 10%...

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KK accounting firm has noticed that of companies it audits, 85% show no inventory shortages, 10% show small inventory shortages and 5% shows large inventory shortages. KK firm has devised a new accounting test for which it believes the following probability hold: P (Company will pass test/no shortage) = 0.90 P (Company will pass test/small shortage) 0.50 P (Company will pass test/large shortage)=0.20 Required: Using Bayes theorem or otherwise i) ii) Determine the probability if a company being audited fails this test, it has large inventory shortage If a company being audited passes this test, what is the probability of no inventory shortage? (6 Marks) (7 Marks) KK accounting firm has noticed that of companies it audits, 85% show no inventory shortages, 10% show small inventory shortages and 5% shows large inventory shortages. KK firm has devised a new accounting test for which it believes the following probability hold: P (Company will pass test/no shortage) = 0.90 P (Company will pass test/small shortage) 0.50 P (Company will pass test/large shortage)=0.20 Required: Using Bayes theorem or otherwise i) ii) Determine the probability if a company being audited fails this test, it has large inventory shortage If a company being audited passes this test, what is the probability of no inventory shortage? (6 Marks) (7 Marks)

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The detailed answer for the above question is provided below i Using Bayes Theorem P La... View the full answer