A company make widgets. One of every 70 widgets is faulty and has to be fixed....
A company make widgets. One of every 70 widgets is faulty and has to be fixed. The company makes a $4 profit for each widget sold, but loses $72 for each faulty widget they have to fix. Find the expected value of each widget.
Homework Answers
since One of every 70 widgets is faulty and has to be fixed so
let P(faulty widget )= P(F) = 1/70
P( not faulty widget ) = P(NF) = 1-(1/70)= 69/70
let x is the company makes a $4 profit for each widget and y is loses $72 for each faulty widget
expected value of each widget = x *P(NF) + y*P(F) = 4*[69/70] + (-72)*[1/70] = 204/70= 2.9143
the expected value of each widget is 2.9143
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