Q2. (Learning Outcome 3) For an electronics plant, the maximum number of fire incidents
occurring every quarter was reported to be 5. Assume that the fire incidents occur independently
every quarter. The probability of quartly fire inccidents is listed as below:
No. of Fire Incidents
per Quarter
Probability
1
2
3
4
5
0.2
0.05
0.004
0.001
0.0001
a) What is the expected mean and standard deviation of quartly fire inccidents?
b) What is the probability that at least 2 fire incidents will occur in next quarter given that
no fire incidents occur in this quarter?
c) To control the fire incident rate, a penalty of $50,000 per fire incident will be incurred
when 3 or less fire incident occur in a quarter and a severe penalty of $300,000 in total
will be incurred when 4 accidents occur and the highest penalty of $800,000 in total will
be incurred when 5 accidents occur in a quarter. How much will be expected to pay for
the penalty annually?