Deck 14: Random Variables

Question 1

Which service contract should the restaurant expect to cost more each year? How much more?
With what standard deviation?

Answer 1

Question 2

What is the standard deviation of the number of repairs that may be required during the three-
year term of the lease? On what assumption does your calculation rest? Do you think this
assumption is reasonable?

Answer 2

Question 3

The yearly service contract for the food fryer estimates a mean annual cost of $140 with a
standard deviation of $40.What is the expected value and standard deviation of the total cost
for the service contracts for the freezer and the food fryer?

Answer 3

Question 4

Find the standard deviation of the number of repairs each year.

Question 5

What are the mean and standard deviation of the restaurant's annual expense for the service
contract?

Question 6

How many times should the restaurant expect to have to get this freezer repaired over the
three-year term of the lease?