Question

McBurger, Inc., wants to redesign its kitchens to improve productivity and quality. Three​ designs, called designs​ K1, K2, and​ K3, are under consideration. No matter which design is​ used, daily production of sandwiches at a typical McBurger restaurant is for 500 sandwiches. A sandwich costs

$1.40 to produce.​ Non-defective sandwiches​ sell, on the​ average, for $ 2.75 per sandwich. Defective sandwiches cannot be sold and are scrapped.

The goal is to choose a design that maximizes the expected profit at a typical restaurant over a​ 300-day period. Designs​ K1, K2, and K3 cost $115,000​,

$120,000, $140,000​, respectively.

Under design​ K1, there is a .80 chance that 90 out of each 100 sandwiches are​ non-defective and a .20 chance that 70 out of each 100 sandwiches are​ non-defective. Under design​ K2, there is a .85 chance that 90 out of each 100 sandwiches are​ non-defective and a .15 chance that 75 out of each 100 sandwiches are​ non-defective. Under design​ K3, there is a .90 chance that 95 out of each 100 sandwiches are​ non-defective and a .10 chance that 80 out of each 100 sandwiches are​ non-defective.

The expected profit level of design K1 is ​$ _____

The expected profit level of design K2 is ​$ _____

The expected profit level of design K3 is ​$ _____

(Enter your responses as a real number rounded to two decimal places)

Answer 1

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