The Brady & Matthew Camera Company has just come out with their newest professional quality digital camera, the ToughPix1. The company is selling this camera only through its new mobile app at a profit of $341 per camera. This purchase comes with a guarantee that, barring gross negligence, if the camera breaks in the first two years after purchase, Brady & Matthew will replace it free of charge. Replacing a camera in this way costs the company $2700. Supp- for each ToughPix1 there is a 4% chance that it will need to be replaced exactly once, a 1% chance that it will need to be replaced exactly twice, and a 95% chance that it will not need to be replaced. (If necessary, consult a list of formulas.) If Brady & Matthew knows that it will sell many of these cameras, should it expect to make or lose money from selling them? How much? To answer, take into account the profit earned on each camera and the expected value of the cost of replacements of the camera. O Brady & Matthew can expect to make money from selling these cameras. In the long run, they should expect to make dollars on each camera sold. O Brady & Matthew can expect to lose money from selling these cameras. In the long run, they should expect to lose 0 dollars on each camera sold.
The Brady & Matthew Camera Company has just come out with their newest professional quality digital camera, the ToughPix1. The company is selling this camera only through its new mobile app at a profit of $341 per camera. This purchase comes with a guarantee that, barring gross negligence, if the camera breaks in the first two years after purchase, Brady & Matthew will replace it free of charge. Replacing a camera in this way costs the company $2700. Supp- for each ToughPix1 there is a 4% chance that it will need to be replaced exactly once, a 1% chance that it will need to be replaced exactly twice, and a 95% chance that it will not need to be replaced. (If necessary, consult a list of formulas.) If Brady & Matthew knows that it will sell many of these cameras, should it expect to make or lose money from selling them? How much? To answer, take into account the profit earned on each camera and the expected value of the cost of replacements of the camera. O Brady & Matthew can expect to make money from selling these cameras. In the long run, they should expect to make dollars on each camera sold. O Brady & Matthew can expect to lose money from selling these cameras. In the long run, they should expect to lose 0 dollars on each camera sold.
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
Related questions
Question
Transcribed Image Text:**The Brady & Matthew Camera Company** has introduced their latest professional quality digital camera, the ToughPix1. This camera is available exclusively through their mobile app, generating a profit of $341 per camera. The purchase includes a guarantee: if the camera breaks within the first two years (except due to gross negligence), it will be replaced at no extra charge. The cost of replacing a camera is $2700.
There is:
- a 4% chance of the camera needing replacement once,
- a 1% chance of requiring two replacements,
- a 95% chance of no replacements being needed.
**Profit and Loss Analysis:**
If Brady & Matthew predict high sales for these cameras, should they anticipate profit or loss from the sales? How much profit or loss should they expect?
**Considerations:**
- Profit per camera: $341
- Replacement cost per camera: $2700
- Probabilities for replacement occurrences
**Options for Analysis:**
- Brady & Matthew can expect to make money: In this scenario, estimate the expected profit per camera.
- Brady & Matthew can expect to lose money: Calculate the expected loss per camera.
- Brady & Matthew should neither make nor lose money: Evaluate if the profit and cost offset each other.
**Note:** For calculations, consult a list of formulas.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
MATLAB: An Introduction with Applications
Statistics
ISBN:
9781119256830
Author:
Amos Gilat
Publisher:
John Wiley & Sons Inc
Probability and Statistics for Engineering and th…
Statistics
ISBN:
9781305251809
Author:
Jay L. Devore
Publisher:
Cengage Learning
Statistics for The Behavioral Sciences (MindTap C…
Statistics
ISBN:
9781305504912
Author:
Frederick J Gravetter, Larry B. Wallnau
Publisher:
Cengage Learning
MATLAB: An Introduction with Applications
Statistics
ISBN:
9781119256830
Author:
Amos Gilat
Publisher:
John Wiley & Sons Inc
Probability and Statistics for Engineering and th…
Statistics
ISBN:
9781305251809
Author:
Jay L. Devore
Publisher:
Cengage Learning
Statistics for The Behavioral Sciences (MindTap C…
Statistics
ISBN:
9781305504912
Author:
Frederick J Gravetter, Larry B. Wallnau
Publisher:
Cengage Learning
Elementary Statistics: Picturing the World (7th E…
Statistics
ISBN:
9780134683416
Author:
Ron Larson, Betsy Farber
Publisher:
PEARSON
The Basic Practice of Statistics
Statistics
ISBN:
9781319042578
Author:
David S. Moore, William I. Notz, Michael A. Fligner
Publisher:
W. H. Freeman
Introduction to the Practice of Statistics
Statistics
ISBN:
9781319013387
Author:
David S. Moore, George P. McCabe, Bruce A. Craig
Publisher:
W. H. Freeman