Company expected profit for sales of boxes

Reference no: EM131064364

a. Items are packed into boxes of 1000, and each item has a probability of 0.001 of having some type of fault. What is the probability that a box will contain fewer than three defective items?

b. If the company sells 100 000 boxes per year and guarantees fewer than three defectives per box, what is the expected number of guarantee claims?

c. Replacement of a box returned under the guarantee costs £150. What is the expected cost of guarantee claims?

d. Boxes sell at £100 but cost £60 to produce and distribute. What is the company's expected profit for sales of boxes?

Reference no: EM131064364

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