Question

The weekly amount of money spent on maintenance and repairs by a company was observed, over a long period of time, to be approximately normally distributed with mean $490 and standard deviation $10. How much should be budgeted for weekly repairs and maintenance so that the probability the budgeted amount will be exceeded in a given week is only 0.1?

Answer 1

`z=1.28<(a-490)/(10)`

And if we solve for a we got

`a=490 +1.28*10=502.8`

So the value of height that separates the bottom 90% of data from the top 10% is 502.8.

Explanation:

Previous concepts

Normal distribution, is a "probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean".

The Z-score is "a numerical measurement used in statistics of a value's relationship to the mean (average) of a group of values, measured in terms of standard deviations from the mean".

Solution to the problem

Let X the random variable that represent the weeknly amount of a population, and for this case we know the distribution for X is given by:

`X \sim N(490,10)`

Where
`\mu=490` and
`\sigma=10`

And the best way to solve this problem is using the normal standard distribution and the z score given by:

`z=(x-\mu)/(\sigma)`

For this part we want to find a value a, such that we satisfy this condition:

`P(X>a)=0.1` (a)

`P(X<a)=0.9` (b)

Both conditions are equivalent on this case. We can use the z score again in order to find the value a.

As we can see on the figure attached the z value that satisfy the condition with 0.9 of the area on the left and 0.1 of the area on the right it's z=1.28. On this case P(Z<1.28)=0.9 and P(z>1.28)=0.1

If we use condition (b) from previous we have this:

`P(X<a)=P((X-\mu)/(\sigma)<(a-\mu)/(\sigma))=0.9`

`P(z<(a-\mu)/(\sigma))=0.9`

But we know which value of z satisfy the previous equation so then we can do this:

`z=1.28<(a-490)/(10)`

And if we solve for a we got

`a=490 +1.28*10=502.8`

So the value of height that separates the bottom 90% of data from the top 10% is 502.8.