what is the probability that the contract will be profitable?

label Mathematics
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Mar 28th, 2015

So long as the cost is  less than $1,000,000 the contractor will make the profit

P( x < 1000000 | mu =830000, sigma =150000) = P( z < 17/15) = P(z < 1.13)= 0.870762 = 0.8708

P ( contract is profitable) = 0.8708

p( contract will be loss) = P( z > 1.13) = 1-0.8708 = 0.1292

Suppose to ensure 0.99 probability of making a profit

z value for 0.99 is 2.33

so revenue must be 830,000+2.33 *150,000 = 1179500

The contractor must renegotiate for $1,179,500 ( instead of $1,000,000) to ensure probability of making a profit 0.99




Mar 28th, 2015

Hi Madhavant, Thank you so much for your help. I have an online quiz which might have 6 to 8 math questions similar to the question you helped before. Do you think you could help me to finish it in an hour. Only answer no solutions. I would like to pay $5 per questions. Looking forward to your reply

Mar 28th, 2015

I am tied up till Monday. If it is after that day , I do not mind.

Mar 28th, 2015

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