Answer to Question #188365 in Statistics and Probability for mmhh

Question

A contractor is uncertain of the precise total costs for either materials or labour for a project. In addition, the total line of credit that banks are ready to make available for financing the project is no more than £260,000. Before accepting the project, the contractor wants to know the probability that the total costs will exceed £260,000. It is believed that material costs can be represented by a normally distributed random variable with mean £100,000 and standard deviation £10,000. Labour costs are £1,500 a day and the number of days needed to complete the project can be represented by a normally distributed random variable with mean 80 and standard deviation 12. 

Assuming that material and labour costs are independent, what are the mean and standard deviation of the total project cost (material plus labour costs)? [10 marks] 

b) What is the probability that the total project cost is greater than £260,000? 

Answer 1

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