Related to Z score

Question

A construction company builds triplexes and quadruplexes apartments for investors. It follows a normal distribution.

The mean time build triplex is 500days and standard dev is 100days. Recently the president of this company signed a contract to complete triplex in 625 days. Failure will lead to 10K$ fine. What is the probability that the company will not have to pay the penalty fees? Also approx how many penalty fee will it have to pay, if total triplexes to be build is 50?

Answer 1

Azhad

For the first we need the probability that X < 625

When X = 625, Z = (625-500)/100 = 1.25

So using an area / Z table when Z=1.25, area to left of X=625 under the standard normal is 0.8944.

so this is the probability of no penalty

Probability of penalty = 1 - 0.8944 = 0.1056

so with 50 condos. penalty approx 0.1056 x 50 = 5.28 times (round to 5 ). So 5 times.

Mike