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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
avatar+13749 
+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
avatar+13749 
+2

So(I think  cheeky) 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

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