Deborah Kellogg buys Breathalyzer test sets for the Winter Park Police Department. The quality of the test sets from her two suppliers is indicated in the following table: Percent Defective Probability for Winter Park Probability for Dayton 1% 3% 5% .70 .20 .10 .30 .30 .40 Kellogg orders 10,000 tests per order. A defective Breathalyzer test set can be repaired for $0.50. When determining the costs for each branch (Decision Tree), utilize the number per order (*) the percent defective (*) the repair cost. a. What is the EMV for Winter Park? $ [Select] b. What is the EMV for Dayton? $$127 c. What choice should Deborah Kellogg make? [Select]
Deborah Kellogg buys Breathalyzer test sets for the Winter Park Police Department. The quality of the test sets from her two suppliers is indicated in the following table: Percent Defective Probability for Winter Park Probability for Dayton 1% 3% 5% .70 .20 .10 .30 .30 .40 Kellogg orders 10,000 tests per order. A defective Breathalyzer test set can be repaired for $0.50. When determining the costs for each branch (Decision Tree), utilize the number per order (*) the percent defective (*) the repair cost. a. What is the EMV for Winter Park? $ [Select] b. What is the EMV for Dayton? $$127 c. What choice should Deborah Kellogg make? [Select]
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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![**Analyzing Supplier Quality and Cost for Breathalyzer Test Sets**
Deborah Kellogg buys Breathalyzer test sets for the Winter Park Police Department. The quality of the test sets from her two suppliers is indicated in the following table:
| Percent Defective | Probability for Winter Park | Probability for Dayton |
|-------------------|-----------------------------|------------------------|
| 1% | 0.70 | 0.30 |
| 3% | 0.20 | 0.30 |
| 5% | 0.10 | 0.40 |
Kellogg orders 10,000 tests per order. A defective Breathalyzer test set can be repaired for $0.50.
When determining the costs for each branch (Decision Tree), utilize the number per order (*) the percent defective (*) the repair cost.
### Questions:
1. **What is the EMV for Winter Park?**
- Calculation:
- (0.70 * (10,000 * 0.01 * $0.50)) + (0.20 * (10,000 * 0.03 * $0.50)) + (0.10 * (10,000 * 0.05 * $0.50))
- EMV for Winter Park: $ [Select]
2. **What is the EMV for Dayton?**
- EMV for Dayton: $127
3. **What choice should Deborah Kellogg make?**
- [Select]
### Detailed Explanation
In the table provided, the 'Percent Defective' column lists the percentage of defective Breathalyzer test sets expected from each supplier. 'Probability for Winter Park' and 'Probability for Dayton' indicate the likelihood of each percentage of defective tests.
Kellogg must assess the expected monetary value (EMV) for each supplier to determine the most cost-effective option. The EMV calculation involves three steps:
- Identifying the number of defective tests expected based on the given percentages.
- Calculating the cost to repair these defective tests at $0.50 each.
- Multiplying these costs by their respective probabilities.
From these calculations, Deborah Kellogg can ascertain which supplier provides the least expensive option when considering the potential defect rates and associated repair costs.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffeeb79a1-23ea-4f54-b610-a8910f30c066%2Fc24c7296-6c57-4a7c-8136-3e9932bc147e%2Fc2warsn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Analyzing Supplier Quality and Cost for Breathalyzer Test Sets**
Deborah Kellogg buys Breathalyzer test sets for the Winter Park Police Department. The quality of the test sets from her two suppliers is indicated in the following table:
| Percent Defective | Probability for Winter Park | Probability for Dayton |
|-------------------|-----------------------------|------------------------|
| 1% | 0.70 | 0.30 |
| 3% | 0.20 | 0.30 |
| 5% | 0.10 | 0.40 |
Kellogg orders 10,000 tests per order. A defective Breathalyzer test set can be repaired for $0.50.
When determining the costs for each branch (Decision Tree), utilize the number per order (*) the percent defective (*) the repair cost.
### Questions:
1. **What is the EMV for Winter Park?**
- Calculation:
- (0.70 * (10,000 * 0.01 * $0.50)) + (0.20 * (10,000 * 0.03 * $0.50)) + (0.10 * (10,000 * 0.05 * $0.50))
- EMV for Winter Park: $ [Select]
2. **What is the EMV for Dayton?**
- EMV for Dayton: $127
3. **What choice should Deborah Kellogg make?**
- [Select]
### Detailed Explanation
In the table provided, the 'Percent Defective' column lists the percentage of defective Breathalyzer test sets expected from each supplier. 'Probability for Winter Park' and 'Probability for Dayton' indicate the likelihood of each percentage of defective tests.
Kellogg must assess the expected monetary value (EMV) for each supplier to determine the most cost-effective option. The EMV calculation involves three steps:
- Identifying the number of defective tests expected based on the given percentages.
- Calculating the cost to repair these defective tests at $0.50 each.
- Multiplying these costs by their respective probabilities.
From these calculations, Deborah Kellogg can ascertain which supplier provides the least expensive option when considering the potential defect rates and associated repair costs.
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