Exhibit 5-1
The following represents the probability distribution for the daily demand of computers at a local store.
-Refer to Exhibit 5-1. The expected daily demand is
A)1.0
B)2.2
C)2, since it has the highest probability
D)of course 4, since it is the largest demand level

Question

Exhibit 5-1
The following represents the probability distribution for the daily demand of computers at a local store. 
-Refer to Exhibit 5-1. The expected daily demand is
A)1.0 
B)2.2 
C)2, since it has the highest probability 
D)of course 4, since it is the largest demand level

Quizplus · Accepted Answer

The expected daily demand is calculated by multiplying each demand level by its corresponding probability, and then summing up these values. Therefore, the expected daily demand is (0 x 0.1) + (1 x 0.2) + (2 x 0.4) + (3 x 0.2) + (4 x 0.1) = 2.2. Therefore, the best choice is B. Choice C is incorrect because the fact that 2 has the highest probability does not necessarily mean that it is the expected value. Choice D is incorrect because the largest demand level does not have a higher weighting in the calculation of the expected value.

Exhibit 5-1 The Following Represents the Probability Distribution for the Daily Demand