Question
In: Statistics and Probability
Suppose you work for a company that manufactures electronics. The development analysts estimate that 2% of...
Suppose you work for a company that manufactures electronics.
The development analysts estimate that 2% of their flagship product
will fail within 2 years of the purchase date, with a replacement
cost of $ 1300.
A newly hired associate at the company proposes to charge $ 20 for
a 2 year warranty.
a. Compute the expected value of this proposal. Let X be the amount
profited or lost (by the company) on the warranties and P(X) is the
probability. E=
b. Interpret the expected value in complete sentences. (See Example
4.3 in the textbook for an example of this)
c. Write your review of the proposal and address it to VP of
marketing and promotions. Include the following in your essay:
Would the proposal benefit the company? Why or why not? Include the
new proposed cost, new expected value, interpretation of the new
expected value, and explanation of how the new cost was chosen.
Solutions
Expert Solution
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orchestra answered 2 years agoRelated Solutions
Suppose you work for a company that manufactures electronics. The development analysts estimate that 4% of...
Suppose you work for a company that manufactures electronics.
The development analysts estimate that 4% of their flagship product
will fail within 2 years of the purchase date, with a replacement
cost of $ 1800.
A newly hired associate at the company proposes to charge $ 67 for
a 2 year warranty.
a. Compute the expected value of this proposal. Let X be the amount
profited or lost (by the company) on the warranties and P(X) is the
probability. E=E=...
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Suppose you collected data from 1986 to 2005 to estimate the
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QX = b0 +
b1 PX + b2 PR +
b3 M
Assume R is a substitute and X is a
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Dependent Variable: QX
Method: Least Squares
Date: 07/23/06 Time: 11:10
Sample: 1 20
Included observations: 20
Variable
Coefficient
Std. Error
t-Statistic
P-Value
C
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1.784179
11.0846
0.0000
PX
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2.303381
-5.987587
0.0000
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