3. In a manufacturing process, lots having 10%, 12%, 14% or 16 defectives are produced according to the respective probabilities 0.2, 0.35, 0.15 and 0.3. Three customers have contracts to receive lots from the manufacturer. The contracts specify that the percentages of defectives in lots shipped to customers A, B and C should not exceed 10, 12 and 14, respectively. If a lot has a higher percentage of defectives that stipulated, a penalty of $ 200 per percentage point is incurred. On the other hand, supplying better quality than required costs the manufacturer $150 per percentage point. If the lots are not inspected prior to shipment, which customer should have the highest priority for receiving the order?

A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
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3. In a manufacturing process, lots having 10%, 12%, 14% or 16 defectives are
produced according to the respective probabilities 0.2, 0.35, 0.15 and 0.3. Three customers
have contracts to receive lots from the manufacturer. The contracts specify that the
percentages of defectives in lots shipped to customers A, B and C should not exceed 10, 12
and 14, respectively. If a lot has a higher percentage of defectives that stipulated, a penalty
of $ 200 per percentage point is incurred. On the other hand, supplying better quality than
required costs the manufacturer $150 per percentage point. If the lots are not inspected
prior to shipment, which customer should have the highest priority for receiving the order?
Transcribed Image Text:3. In a manufacturing process, lots having 10%, 12%, 14% or 16 defectives are produced according to the respective probabilities 0.2, 0.35, 0.15 and 0.3. Three customers have contracts to receive lots from the manufacturer. The contracts specify that the percentages of defectives in lots shipped to customers A, B and C should not exceed 10, 12 and 14, respectively. If a lot has a higher percentage of defectives that stipulated, a penalty of $ 200 per percentage point is incurred. On the other hand, supplying better quality than required costs the manufacturer $150 per percentage point. If the lots are not inspected prior to shipment, which customer should have the highest priority for receiving the order?
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