Question

A company makes wireless routers. Their profit from each sale is $86.5. Every router that is returned as faulty results in a loss of $10.5. These routers cannot be resolved and therefore are scrapped. If 2% are faulty, what is the profit(or loss) the company can expect to make from selling 96.0 units

Answer 1

Answer:

The expected profit is $8,117.57

Explanation:

The computation of the profit or loss that the company could expect is given below:

The Probability of non-faulty router is

= 1 - 0.02

= 0.98

Now  

Expected profit/loss is

= 96 × (0.98 × 86.5 - 0.02 × 10.6)

= $8,117.57

hence, The expected profit is $8,117.57