Suppose that for a particular piece of machinery, the frequency distribution of monthly breakdowns is as follows: $$\begin{array} { c c }
\hline \text { Number of Breakdowns } & \text { Prob. } \
0 & 0.50 \
1 & 0.25 \
2 & 0.10 \
3 & 0.10 \
4 & 0.05
\end{array}$$
The cost of a breakdown is $2,000, and the cost of a preventive maintenance program is $2,000 per month. If the preventive maintenance program is adopted, the probability of a machine breakdown is negligible. How much better off per month would the firm be if it adopted preventive maintenance?
A) $100 worse off
B) $200 worse off
C) $100 better off
D) $200 better off
E) $2,000 better off

Question

Suppose that for a particular piece of machinery, the frequency distribution of monthly breakdowns is as follows: $$\begin{array} { c c } 
\hline \text { Number of Breakdowns } & \text { Prob. } \
0 & 0.50 \
1 & 0.25 \
2 & 0.10 \
3 & 0.10 \
4 & 0.05
\end{array}$$
The cost of a breakdown is $2,000, and the cost of a preventive maintenance program is $2,000 per month. If the preventive maintenance program is adopted, the probability of a machine breakdown is negligible. How much better off per month would the firm be if it adopted preventive maintenance?
A) $100 worse off
B) $200 worse off
C) $100 better off
D) $200 better off
E) $2,000 better off

Quizplus · Accepted Answer

The Answer of Suppose that for a particular piece of machinery, the frequency distribution of monthly breakdowns is as follows: $$\begin{array} { c c } 
\hline \text { Number of Breakdowns } & \text { Prob. } \
0 & 0.50 \
1 & 0.25 \
2 & 0.10 \
3 & 0.10 \
4 & 0.05
\end{array}$$
The cost of a breakdown is $2,000, and the cost of a preventive maintenance program is $2,000 per month. If the preventive maintenance program is adopted, the probability of a machine breakdown is negligible. How much better off per month would the firm be if it adopted preventive maintenance?
A) $100 worse off
B) $200 worse off
C) $100 better off
D) $200 better off
E) $2,000 better off

Suppose That for a Particular Piece of Machinery, the Frequency