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In: Statistics and Probability

Your boss was so happy to learn that you just completed a lecture on the applications...

Your boss was so happy to learn that you just completed a lecture on the applications of probability distributions in decision making last night. She called you to her office and asked you to help her decide which of the two comparable supercomputers A or B she should purchase.

Supercomputer A costs $14,000 and supercomputer B costs $14,800. Your company replaces supercomputers every three years. The repair contract for supercomputer A costs $70 per month and covers and unlimited number of repairs. The repair contract for supercomputer B costs $200 per repair. Based on past performance, the distribution of the number of repairs over any one-year period for supercomputer B is shown below:

Your boss asked that you give a recommendation based on the overall cost as to which supercomputer A or B along with its repair contract should be purchased. What would your recommendation be? Give a statistical justification to support your recommendation.

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Expert Solution

orchestra answered 1 year ago
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