5-62SE

a.

The given data tabulates number of snack items and number of items regarding material
purchased by the most recent 600 customers. It is required to develop a bivariate
probability distribution for a randomly selected customer purchase.

Divide value in each cell by the total number of purchases. The bivariate empirical
discrete probability distribution is as follows:

0 1 2 Total
0 0.000 0.1 0.03 0.13
1 0.4 0.15 0.05 0.6
2 0.2 0.05 0.02 0.27
Total 0.6 0.3 0.10 1.00
Table 5a-62SE probability distribution.

It is known that for the bivariate probability distribution, x denotes number of snack items
and y denote number of reading materials for a randomly selected customer purchase.
Therefore, look into cell (1,2) which denote the probability that customer purchase
consist of 1 item of reading material and 2 snack items.

Therefore, the required answer is: 0.05 .

Equivalently, look into cell (0,1) which denote the probability that customer purchase one
snack item only.

Therefore, the required answer is: 0.1 .

The probability f ( x  0, y  0)  0 implies that customer has not purchased any snack
item or reading material.

b.

The marginal distribution of snack items are shown in the last column of the table
corresponding to Total. The expected value for snack items is as follows:

E ( x)  0.13  0   0.6 1  0.27  2 

= 1.14

Therefore, the required answer is: 1.14 .

The variance for snack items is as follows:

Var ( x)  0.13  0  1.14   0.6 1  1.14   0.27  2  1.14 

2 2 2

= 0.3804

Therefore, the required answer is: 0.3804 .

c.

The marginal distribution of reading material are shown in the last row of the table
corresponding to Total. The expected value for reading material is as follows:

E ( y )  0.6  0   0.3 1  0.10  2 

= 0.5

Therefore, the required answer is: 0.5 .

The variance for reading material is as follows:

Var ( y )  0.6  0  0.5   0.3 1  0.5   0.10  2  0.5 

2 2 2

= 0.45

Therefore, the required answer is: 0.45 .

d.

Define s  x  y , where, x denote the number of snack item purchased and y denote
number of reading material purchased, and the total of these two denote total number of
items. The probability distribution for x  y is as follows:

S f (s)
0 0.00
1 0.5
2 0.35
3 0.1
4 0.02
Table 5d-62SE probability distribution for x y.
Table 5d-62SE probability distribution for x y. See that
f (s  2)  f  s  2  f (s  2) . The rest of the calculations are done accordingly.

Use Excel formula =Sum to calculate the expected value and variance of x  y . The
following screen shot in Excel shows the expected value, E  x  y  and variance,
V  x  y .

Figure 5d’-62SE expected value and variance of x  y .

Figure 5d’-62SE shows the expected value, variance in highlighted cells.

Therefore, the required answers are 1.58 and 0.55 respectively.

e.

The formula for computing covariance for random variables x and y is given as follows:

 xy  Var  x  y   Var  x   Var ( y )  / 2 (1)

Where, Var  x  y  is variance of x  y , Var  x  is variance of x, and Var ( y ) is variance

of y.

From information,

Var  x  y   0.55,Var ( x)  0.3804,Var ( y)  0.45

Substitute the values in equation (1) and obtain the required covariance. Therefore, the
covariance is as follows:

 xy   0.55  0.3804  0.45 / 2

= -0.1402

Therefore, the required answers is: 0.1402 . The negative sign of the value indicate that
variables x and y are negatively related. In other words, there is negative relationship
between number of snack item purchased and number of reading material purchased.

The correlation coefficient between random variable x and y is as follows:

 xy
 xy  (2)
 x y

Where,  xy is the covariance of random variable x and y;  x is standard deviation of x,

 y is standard deviation of y.

Substitute the values in the equation (2) and obtain the required value.

 xy
 xy 
 x y
0.1402
=-
0.3804 0.45
= -0.3389

Therefore, the required answers is: 0.3389 . The value of correlation coefficient is far
from -1, which implies a weak, negative relationship between the variables.