Question

Problem 1. (25 points) An equipment proposal from two vendors A1 and A2 have been receixed from a local company. The quality of these equipment have been varying and consequently the cost of manufacturing the product using these two different equipment has also varied. The varying costs based on the probabilities of defects are given in table below. Determine the expected manufacturing cost for each vendor and select the better vendor. Vendor A1 0.15 0.20 0.10 0.05 0.50 $20 25 15 10 40 Prob Defect. Mfg. Cost Prob Defect Mfg. Cost Vendor A2 0.15 0.10 0.20 0.30 0.25 $19 14 25 32 30

Answer 1

solution- In order to identify the better vendors, we have to determine the tofel expected manufacturing lost of les each vendor. Wendoront Expected lost = probability xxm fg-lost- 3. Vendor (A) vendor (b) Az Probability mfg. lost (8) Expected cost($) 3 probability mfg- lost 19 Expected lost 0.15 20 0.15 2.85 0-20 25 5 0:10 14 1.40 0.10 15 1.5 0. 20 25 5 10 0.05 05. 0.30 32 git ro 30 7.5 ЧО Total Exp. Total enp. lost → $30 lost $26.35 Tofal Expected manufacturing lost for Vendora, = $30 Tofal Expected manufacturing lost for reader A2= $26.35 since, total expected manufacturing lost for Vendorf, is greater than Vendor Az. Therefore rendor Az is better because it has lower tofal enfeks manufacturing lost- CS Scanned with CamScanner