Question

Groupe ABC makes a variety of baby's and children's clothing. In June 2019, Groupe ABC announced a recall on two models of products after receiving multiple complaints about snaps falling off. The defected products were Girls Coala Sleepwear and Boys Coala Sleepwear. These products were sold in Babycomfy store. Worried parents started returning sleepwear to Babycomfy and Babycomfy started refunding 20 dollars for each sleepwear (The full price parents paid for each sleepwear). An analyst at Babycomfy wants to estimate the amount of money they should pay to the parents. He figures out not all parents are going to return the recalled sleepwear. He observes the pattern of reimbursement and produces the following probability model Event Costs to Babycomfy Probability (event) 0.25 Returning Girls Coala sleepwear Returning Boys Coala sleepwear Not returning these two model of sleepwear 20 20 0.25 0.5 Part 1. Is this probability model valid? Explain. (1 points) Part 2. How much Babycomfy should expect to reimburse for every sleepwear that had been already sold? What is the standard deviation of expected reimbursement costs for each sleepwear? (3 points) Cont' Babycomfy decides to charge Groupe ABC 1.2 times the costs of reimbursement to cover the costs of reimbursement and administrative costs. Part 3. How much Babycomfy is expected to charge Group ABC for each sleepwear? What is the standard deviation of expected costs per sleepwear? (3 points) Cont' being charged higher than An accountant at Group ABC noticed that they are expected. When she looked at the list of returned items, she noticed Babycomfy did not pay attention which items were returned: Babycomfy accepted to reimburse for recalled or not). Within the first month, the all types of sleepwear (whether it was accountant at Groupe ABC calculated the expected daily costs of reimbursement: 3/5 Item Expected costs 1500 CAD Standard deviation All items (Boy and Girl Coala and other models) Boy and Girl Coala 150CAD 1200 CAD 100 CAD Groupe ABC decides to stop reimbursing Babycomfy for the items that were not recalled. They found that when parents are returning recalled items (Boy and Girl Coala), they would insist to return all the other sleepwear (not-recalled ones) as well. b 0 The correlation coefficient between returning recalled item and not-recalled items is 0.3. Part 4. What is the expected value of the daily reimbursement costs that Groupe ABC ebon does not accept? What is the standard deviation? (3 points)

Answer 1

Jum f the probabililies O.250.2540.5 hence the psbabijity model is valid. 2) Reimbune every Aleep Ovey 20 X 0.25-+ 20 x0.2 5 t oxo.C Meam and 33 =o . - X,. = 5 and tardard deviation (o 0-+(r°0" 3-1 8.66 S 3) since rimbusaement chages Baby com y charge ABC hence Ahould 12 for ach reimburnunu here SX1.2 X, and xg = ° C12-6 +CI2-0 0.39