Homework Soursefifteen freestanding ranges with smooth tops are available f
fifteen freestanding ranges with smooth tops are available for sale in a wholesale appliance dealer\'s warehouse . the ranges sell for $550 each, but a double-your-money-back guarantee is in effect for any defective range that a customer might purchase. Find the expected net revenue for the seller if the probability of any one range being defective is 0.06(Assume that the quality of any one range is independent of the quality of the others.)
The answer should be 7260 .. How ?
fifteen freestanding ranges with smooth tops are available for sale in a wholesale appliance dealer\'s warehouse . the ranges sell for $550 each, but a double-your-money-back guarantee is in effect for any defective range that a customer might purchase. Find the expected net revenue for the seller if the probability of any one range being defective is 0.06(Assume that the quality of any one range is independent of the quality of the others.)
The answer should be 7260 .. How ?
The answer should be 7260 .. How ?
Solution
Solution :
First , we calculate earnings for not defective ones :
= 550 *15 * (1-0.06)
= 550 *15 * (0.94)
= 7755
Next , we calculate for defective ones :
= 550 *15 * (0.06)
= 495
Hence ,
Net revenue generated = 7755 - 495 = 7260 Answer
