What is the expected value of the decision

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Reference no: EM131374934

Randall at Churchill Circuits (CC) has just received an emergency order for one of CC's special-purpose circuit boards. Five are in stock at the moment. However, when they were tested last week, two were defective but were mixed up with the three good ones. There is not enough time to retest the boards before shipment to the customer. Randall can either choose one of the five boards at random to ship to the customer or he can obtain a proven non-defective one from another plant. If the customer gets a bad board, the total incremental cost to CC is S10 000. The incremental cost to CC of getting the board from another plant is S5000.

(a) What is the chance that the customer gets a bad board if Randall sends one of the five in stock?

(b) What is the expected value of the decision to send the customer one of the five boards in stock?

Reference no: EM131374934

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