Standard Normal. A leading company in the freight forwarding business offers Overnight Letter delivery service with a record of on-time delivery for 99% of shipped parcels. The price of this service is $15. Express Mail, offered by a leading competitor for $10, has an on-time delivery record of 95%.
A. Calculate the cost incurred due to late delivery that would make shippers indifferent to these deliver service alternatives.
B. Which delivery alternative is preferred if a $100 cost would be incurred due to late delivery?

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The Answer of Standard Normal. A leading company in the freight forwarding business offers Overnight Letter delivery service with a record of on-time delivery for 99% of shipped parcels. The price of this service is $15. Express Mail, offered by a leading competitor for $10, has an on-time delivery record of 95%.
A. Calculate the cost incurred due to late delivery that would make shippers indifferent to these deliver service alternatives.
B. Which delivery alternative is preferred if a $100 cost would be incurred due to late delivery?