Question: King electronics offers two design options for high quality monitors through the use of CAD workstations. The production process is 100,000 units. Design option A
King electronics offers two design options for high quality monitors through the use of CAD workstations. The production process is 100,000 units. Design option A has 0.9 probability of producing 60 good monitors per 100 and 0.1 probability of producing 65 good monitors per 100. This design costs $ 100,000.
Design option B has 0.8 probability of producing 64 good units per 100 and 0.2 probability of producing 59 good units per 100. This design will cost $ 130,000.
Good or bad, each monitor costs $ 75. A good monitor sells for $ 150. Bad monitors will be destroyed and there is no refund. We do not consider the cost of demolition in this exercise. Determine the best option for the company about which design model is best?
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