Question

A construction company has to complete a project no later than 4 months from now or there will be significant cost overruns. The manager of the construction company believes that there are four possible values for the random variable X, the number of months from now it will take to complete this project: 2, 2.5, 3, and 3.5. It is currently believed that the probabilities of these four possibilities are .4, .3, .2, and .1, respectively. What is the expected completion time (in months) of this project from now?

Answer 1

The expected completion time of this project from now is 2.5 months.

Explanation:

To find the expected completion time for the project, we multiply each projection by it's probability.

We have that:

0.4 = 40% probability it takes 2 months to complete the project.

0.3 = 30% probability that it takes 2.5 months to complete the project.

0.2 = 20% probability it takes 3 months to complete the project.

0.1 = 10% probability it takes 3.5 months to complete the project.

What is the expected completion time (in months) of this project from now?

E = 0.4*2 + 0.3*2.5 + 0.2*3 + 0.1*3.5 = 2.5

The expected completion time of this project from now is 2.5 months.