Question

Alpha Corporation is considering two suppliers to secure the large amounts of steel rods that it uses. Company A produces rods with a mean diameter of 8 mm and a standard deviation of .15 mm and sells 10,000 rods for $400. Company B produces rods with a mean diameter of 8 mm and a standard deviation of .12 mm and sells 10,000 rods for $460. A rod is usable only if its diameter is between 7.8 mm and 8.2 mm. Assume that the diameters of the rods produced by each company have a normal distribution. Which of the two companies should Alpha Corporation use as a supplier? Justify your answer with appropriate calculations.


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  • CreatedAugust 25, 2015
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