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A company manufactures chairs at a cost of $70 each. The following are probabilities of defective chairs in a given production run: probability of 1% defective chairs: 40%; probability of 2% defective chairs: 35%; probability of 3% defective chairs: 25%. When a defective chair is detected, it must be removed from the assembly line and replaced. This process adds an extra $10 to the cost of the replaced chair. What is the expected cost to the company of a batch of 500 chairs?

500 x 70= 35,000 5 defective chairs is 5x60= 300

10 chairs 10 x 60= 600 15 defective chairs = 900

So with that I got 35,300 + 35,600+ 35,900= 107100 then divide that by three = 35,700

My answer is wrong.

35,902.50 is the correct answer

Guest Feb 26, 2018

edited by
Guest
Feb 26, 2018

#1**+1 **

I do not know the answer yet, but to start off....why did you multiply the cost of the defective chairs x 60 instead of 10? Each defective chair adds $10 to the cost soooooo 500 x 70 + 10(#defective chairs) = total cost

ElectricPavlov Feb 26, 2018

#2**+2 **

So(**I think **) the cost of the 500 chairs would be

500 * $70 + $ 10 * { .01(500)(.4) + .02(500)(.35) + .03(500)(.25) } = $ 35,092.50

(are you sure about your posted 'correct' answer?....my answer has the '0' and '9' transposed...hmmmmm)

ElectricPavlov Feb 26, 2018