Mali company has a contract to sell 350 bikes to a customer for $200 each and the customer has the right to return the bikes within 30 days for a full refund. Based on past experience the Mali places the following probabilities on the number of bikes the customer is expected to return: Number of bikes returned Probability of outcome 0 35% 1 10% 2 18% 3 12% 4 25% Using the ‘expected value’ method, calculate the amount of revenue received from customers. Your calculations will be different should you use most likely method. Which method would Mali prefer and why?

Mali company has a contract to sell 350 bikes to a customer for $200 each and the customer has the right to return the bikes within 30 days for a full refund. Based on past experience the Mali places the following probabilities on the number of bikes the customer is expected to return: Number of bikes returned Probability of outcome 0 35% 1 10% 2 18% 3 12% 4 25% Using the ‘expected value’ method, calculate the amount of revenue received from customers. Your calculations will be different should you use most likely method. Which method would Mali prefer and why?

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

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