#### Risk and Uncertainty: Please note that this lecture relates to Chapter 10 of the Course Notes (not chapter 9 as stated in the lecture). The example covered is on page 46 of the Course Notes.

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Tyler says

Sir, for the par b (i) Expected values, why are we taking the profit of the the contract as well and multiplying it by a probability which is for the demand only?

johnmoffat says

Because each of the profits results from each of the different demands.

So the probability of getting each of the profits will be the same as the probability of each of the demands.

Macha says

I had the same question. Thank you very much.

Xiaowen says

Hello Prof Moffat,

i have a bit trouble understanding when we were calculating the expected value, for example, contract 300, if we are sure of this 300 units, why we calculated by 2900*0.2, rather 900+2000*0.2, since it’s the 400 units that are uncertain.

Thanks!

Xiaowen says

just saw the below comment, and did a quick cal for

method in the video : 2900*0.2 +3400*0.3+4400*0.4+5400*0.1 = 4000

however, 400*5*0.2 + 500*5*0.3+700*5*0.4+900*5*0.1 +300*3 = 3900

get more confused……

Xiaowen says

Figured out the problem. it was the math in the video that got a problem. should be 3900. Thanks for the nice lecture!

eniola03 says

Hello John,Thank you very much for your video

It is really helpful but I want to verify on what you said about the possible profit.,you said we shouldn’t calculate all the profit in the exam as it might take our time in the exam. but what if the marks are allocated according to all the possible profit calculated or It doesn’t matter and Like how many do you think we should calculate in the exam?

johnmoffat says

You misunderstood me

You should calculate all possible profits. What I said was that since the same arithmetic keeps repeating, there is no need to spend time showing the workings for all of them (if you can calculate them straight on your calculator).

Show workings for a few of them (to prove you know what you are doing) but you don’t need to show the workings for all to them (unless you need workings for your own benefit).