Deborah Kellogg buys Breathalyzer test sets for the Denver Police Department. The quality of the test sets from her two suppliers is indicated in the following table:

For example, the probability of getting a batch of tests that are 1% defective from Loomba Technology is .70. Because Kellogg orders 10,000 tests per order, this would mean that there is a .7 probability of getting 100 defective tests out of the 10,000 tests if Loomba Technology is used to fill the order. A defective Breathalyzer test set can be repaired for $0.50. Although the quality of the test sets of the second supplier, Stewart-Douglas Enterprises, is lower, it will sell an order of 10,000 test sets for $37 less than Loomba.
(a) Develop a decision tree.
(b) Which supplier should Kellogguse?

Transcribed Image Text:

Probability for Loomba Technology 70 20 .10 Probability for Stewart-Douglas Enterprises .30 30 40 Percent Defective