Question

Problem 1. You plan to go on a month-long hiking trip, mostly in the forest. You know that you will need a bug repellant. But how much depends on the weather and other factors. From previous experience you know the probability distribution of the number B of bug repellant cans that you will need. It is as follows 0 1 2 34 5 6 7 8 9 10 T P(B02 .03 .05 1 2 2 1 1 1 05 .05 You already have 2 cans. You can order more from Amazon, with the cost of $1.20 per can plus $10 shipping and handling per the entire order. If you run out of bug repellant while on the trip, you can buy it at the local stores, but there they cost $5 per can. (If you have some leftovers after you return, you just keep them; cannot sell and do not need to get rid of.) 1.1 (30 points) If you want to minimize the expected amount of money you spend for the repellant, should you order additional cans from Amazon? If so, how many? What is your expected total cost if you make the best decision? 1.2 (20 points) Assuming you made the best decision, what is the probability that your total cost will be greater than $16?

Answer 1