A mining company have applied for the drilling rights at three sites A, B and C. Based on past experience they have estimated the chances of getting the rights to each one as follows: P(A) = 0.35 P(B) = 0.3 P(C) = 0.4
The predicted revenues from each site follow a Normal Distribution with the following parameters Site A: Mean = 900,000, Std Dev = 320,000 Site B: Mean = 900,000, Std Dev = 360,000 Site C: Mean = 900,000, Std Dev = 218,000 Each site will have fixed costs of €500,000
They know that the average number of accidents on this type of mining site is .5 and follows a Poisson Distribution. They estimate the cost of an accident will be approximately €500,000.
Provide some statistics to help the company estimate how much money they can expect from the venture and if they should proceed with it. Justify your answer and identify any assumptions you made in your discussions.
