How is the probability of the Iowa Energy scoring more points that the Maine Red Claws affected? If
required, round your answer to three decimal places.

Problem 16-03
Grear Tire Company has produced a new tire with an estimated mean lifetime mileage of 36,500 miles.
Management also believes that the standard deviation is 5000 miles and that tire mileage is normally
distributed. To promote the new tire, Grear has offered to refund some money if the tire fails to reach
30,000 miles before the tire needs to be replaced. Specifically, for tires with a lifetime below 30,000
miles, Grear will refund a customer $1 per 100 miles short of 30,000.
a.
For each tire sold, what is the expected cost of the promotion? If required, round your
answer to two decimal places.

b.
What is the probability that Grear will refund more than $50 for a tire? If required,
round your answer to three decimal places.

c.
What mileage should Grear set the promotion claim if it wants the expected cost to be
$2.00? If required, round your answer to the hundreds place.

Problem 16-07 (Algorithmic)
Baseball's World Series is a maximum of seven games, with the winner being the first team to win four
games. Assume that the Atlanta Braves are playing the Minnesota Twins in the World Series and that
the first two games are to be played in Atlanta, the next three games at the Twins' ballpark, and the
last two games, if necessary, back in Atlanta. Taking into account the projected starting pitchers for
each game and the home field advantage, the probabilities of Atlanta winning each game are as
follows:
Game
1
2
3
4
5
6
7
Probability of Win
0.46
0.52
0.45
0.55
0.43
0.41
0.6
a.
Set up a spreadsheet simulation model in whether Atlanta wins each game is a random
variable. What is the probability that the Atlanta Braves win the World Series? If required, round
your answer to two decimal places.

b.
What is the average number of games played regardless of winner? If required, round
your answer to one decimal place.

Problem 16-05
To generate leads for new business, Gustin Investment Services offers free financial planning seminars
at major hotels in Southwest Florida. Gustin conducts seminars for groups of 25 individuals. Each
seminar costs Gustin $3800, and the average first-year commission for each new account opened is
$5800. Gustin estimates that for each individual attending the seminar, there is a 0.01 probability that
he/she will open a new account.
a.
Determine the equation for computing Gustin’s profit per seminar, given values of the relevant
parameters. Round your answers to the nearest dollar.