Question: An office machine costs $10,000 to replace unless a mysterious, hard-to-find problem can be found and fixed. Repair calls from any service technician cost $500

An office machine costs $10,000 to replace unless a mysterious, hard-to-find problem can be found and fixed. Repair calls from any service technician cost $500 each, and you’re willing to spend up to $2,000 to get this machine fixed. You estimate that a repair technician has a 25% chance of fixing it.
(a) Create a probability model for the number of visits needed to fix the machine or exhaust your budget of $2,000. (That is, there can be at most four visits.)
(b) Find the expected number of service technicians you’ll call in.
(c) Find the expected amount spent on this machine. (You must spend $10,000 for a new one if you do not find a vendor that repairs yours.)

Step by Step Solution

3.35 Rating (164 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

a Let X denote the number of service technicians called in until the ma... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

489-M-S-C-R-V (546).docx

120 KBs Word File

Students Have Also Explored These Related Statistics Questions!