Calculate expected value of total dollar amount of losses

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Question - On Monday, ABC Produce is expecting to receive Package A containing $8,000 worth of food. Based on past experience with the delivery service, the manager estimates that this package has a chance of 7% being lost in shipment.

On Tuesday, ABC Produce expects Package B to be delivered. Package B contains $6,000 worth of food. This package has a 9% chance of being lost in shipment.

a. Construct [in table form] the probability distribution for total dollar amount of losses for Packages A and B. Please do NOT discuss Package A and Package B separately.

In the table, make sure you include three columns:

1) Column 1 - The possible events for Packages A and B

2) Column 2 - For each of the possible event, what is the total dollar amount of losses involved. Please note that this asks about total dollar amount of losses, not number of losses.

3) Column 3 - For each of the possible outcomes, derive the probability of the outcome occurring. Show your work.

b. Calculate the expected value of total dollar amount of losses. Show all work.

c. Calculate the variance for the total dollar amount of losses. Show all work.

Reference no: EM133184765

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