Homework 3 Solution
Contract Extensions
High Tech Defense Company has been awarded three fixed price contracts with
competitive contract extensions in the amount of $50 million, $80 million, and
$20 million. The associated probabilities for winning the contract extensions are
estimated based on past performance to be ¾, ¼, and ½, respectively.
a)Determine and plot the probability mass function and probability distribution
function of the contract extension awards amount (in millions of dollars).
b)
What is the probability of being awarded contract extensions of at least
$100 million?
c)
What is expected amount of contract extension awards (in millions of
dollars) and what is the standard deviation?
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Homework 3 Solution
Let
C
1
= contract 1 was won
C
1
´
= contract 1 was not won
C
2
= contract 2 was won
C
2
´
= contract 2 was not won
C
3
= contract 3 was won
C
3
´
= contract 3 was not won
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 Spring '08
 Dr.Stracer
 Standard Deviation, Probability theory, Cumulative distribution function, contract extensions, High Tech Defense Company

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