Allocating Identical Units
A fund manager must allocate exactly $50 million among five labelled asset classes (equity options, commodity futures, fixed income, FX, and cryptocurrencies), in whole-million increments, with no restriction on how much (including zero) goes to each class. For example, one allocation (in millions) is . In how many ways can the $50 million be allocated?
Work it out, then compare with the answer.
SolutionShow the worked solution
Write for the number of millions placed in class . An allocation is then a solution in non-negative integers of
Each solution matches exactly one row of stars and bars. The stars before the first bar count . The stars between the first and second bars count , and so on. Adjacent bars, or a bar at either end, give a zero allocation. The example is twenty-five stars, a bar, fifteen stars, a bar, five stars, a bar, five stars and a final bar.
Conversely, every row of symbols with exactly bars gives one allocation. So we only need to choose which of the positions hold bars:
Generalisation. identical units can be placed in labelled boxes in ways.
Variations
The same idea with a twist. Each solution gives only the changed step.
A fund manager must allocate exactly $75 million among five labelled asset classes (equity options, commodity futures, fixed income, event contracts, and cryptocurrencies), in whole-million increments, with each class receiving at least $5 million. In how many ways can the $75 million be allocated?
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Solution
First give each class its $5 million floor. That uses $25 million and leaves $50 million with no restriction. Write , so that . This is exactly the main problem:
In how many ways can be written as an ordered sum of three positive integers?
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Solution
Put . Then , and stars and bars gives
A babysitter has identical units of food to distribute among children, but decides to give food to only of them, leaving the other with none. In how many ways can she choose which children receive food and distribute the units among them so that each of those receives at least unit?
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Solution
There are ways to choose the four children who are fed.
For those four, give each child one unit first. The remaining units are then distributed freely among children, in ways.
The two choices are independent, so the total is
How many solutions in odd non-negative integers (i.e. positive odd integers) are there to ? Writing the count as with , find .
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Solution
Write each odd variable as with . The equation becomes , that is,
Stars and bars gives solutions. In this form and , which satisfies . Hence
A teacher buys chicken nuggets to split among four students, Alice, Bob, Carol, and Dave. Bob, Carol, and Dave each want at least nuggets, and Alice wants at least nuggets; separately, each student is “satisfied” with the split as long as they receive at least nuggets. The teacher partitions the nuggets into four (possibly empty before accounting for the -nugget floor) piles, one per student, with every valid partition equally likely. Given that every student receives at least nuggets, what is the probability that Bob, Carol, and Dave each have at least and Alice has at least ? Express the probability as and find the minimum possible value of .
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Solution
Every ordered split of into non-negative parts is equally likely. The desired event (Alice , the others ) is contained in the conditioning event (everyone ). The conditional probability is therefore a ratio of two counts.
- Everyone at least . Remove nuggets, leaving to share freely: splits.
- The desired event. Remove nuggets, leaving to share freely: splits.
So
Using the smaller lower index in each binomial gives . Then
Fix an integer and let be independent, each uniform on . Let . Find , or state that it does not exist.
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Solution
Every non-negative solution of automatically has each . So the favourable outcomes are all of these solutions, and there are of them. Out of equally likely triples,
Multiplying by ,
So the limit exists and