{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Solutions_to_Assignment_4

# Solutions_to_Assignment_4 - 1 Assignment 4 STAT220-Winter...

This preview shows pages 1–2. Sign up to view the full content.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 Assignment 4, STAT220-Winter 2011 Instructor: Kamyar Moshksar Due on March 11th, 2011 Problem 1- A manufacturer of car radios ships them to retailers in cartons of n radios. The profit per radio is is \$59.5, less shipping cost of \$25 per carton, so the profit is \$(59.5 n-25) per carton. To promote sales by assuring high quality, the manufacturer promises to pay the retailer \$200 X 2 if X radios in the carton are defective (The retailer is responsible to repair those defective radios.). Suppose radios are produced independently and that %5 of radios are defective. How many radios should be packed per carton to maximize expected net profile per carton? Solution: The expected net profit is E (59 . 5 n- 25- 200 X 2 ) = 59 . 5 n- 25- 200 E ( X 2 ) . We know X ∼ Bi( n,p ) where p = 0 . 05 . So, E ( X 2 ) = V ar ( X ) + ( E ( X )) 2 = np (1- p ) + ( np ) 2 = 0 . 0475 n + 0 . 0025 n 2 . Hence, Expected Net Profit = 50 n- 25- . 5 n 2 ....
View Full Document

{[ snackBarMessage ]}

### Page1 / 3

Solutions_to_Assignment_4 - 1 Assignment 4 STAT220-Winter...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online