A process may go wrong in two ways, call them A or B Both these ways are equally likely If the cause is A then it causes a loss of Rs 100,000 to the company if it is not repaired If it is repaired, there is 60 chance of restricting the loss to Rs 40,000 and a 40 chance of restricting the loss to Rs 70,000 If the cause is B then the repairing operation has no effect and the loss to the company would be Rs 80,000 Repairing costs Rs 25,000 If the cause of the process going wrong is A, and the process is repaired, then what would the net loss to the company If the process goes wrong, does it make sense to go for repairs What is the maximum value of the probability of the process going wrong because of A for which will your answer to the second part remain the same (Currently that value is 50 ) Suppose there is a test that can identify whether the cause of the process fault is A or B What is the maximum amount of money that you would pay for the test

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Question: A process may go wrong in two ways, call them A or B. Both these ways are equally likely. If the cause is A then

A process may go wrong in two ways, call them A or B. Both these ways are equally likely. If the cause is A then it causes a loss of Rs.100,000 to the company if it is not repaired. If it is repaired, there is 60% chance of restricting the loss to Rs.40,000 and a 40% chance of restricting the loss to Rs.70,000. If the cause is B then the repairing operation has no effect and the loss to the company would be Rs.80,000. Repairing costs Rs.25,000.

If the cause of the process going wrong is A, and the process is repaired, then what would the net loss to the company?
If the process goes wrong, does it make sense to go for repairs?
What is the maximum value of the probability of the process going wrong because of A for which will your answer to the second part remain the same? (Currently that value is 50%)
Suppose there is a test that can identify whether the cause of the process fault is A or B. What is the maximum amount of money that you would pay for the test?

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