The purchasing agent for a PC manufacturer is currently negotiating a purchase agreement for a particular electronic component with a given supplier. This component is produced in lots of 1,000, and the cost of purchasing a lot is $30,000. Unfortunately, past experience indicates that this supplier has occasionally shipped defective components to its customers. Specifically, the proportion of defective components supplied by this supplier has the probability distribution given in the file P09_55.xlsx. Although the PC manufacturer can repair a defective component at a cost of $20 each, the purchasing agent learns that this supplier will now assume the cost of replacing defective components in excess of the first 100 faulty items found in a given lot. This guarantee may be purchased by the PC manufacturer prior to the receipt of a given lot at a cost of $1,000 per lot. The purchasing agent wants to determine whether it is worthwhile to purchase the supplier's guarantee policy. a. Identify the strategy that minimizes the expected total cost of achieving a complete lot of satisfactory microcomputer components. The purchasing agent minimizes the expected total cost of achieving a complete lot of satisfactory components by not purchasing the supplier's guarantee policy. The corresponding expected total cost is $ ?
The purchasing agent for a PC manufacturer is currently negotiating a purchase agreement for a particular electronic component with a given supplier. This component is produced in lots of 1,000, and the cost of purchasing a lot is $30,000. Unfortunately, past experience indicates that this supplier has occasionally shipped defective components to its customers. Specifically, the proportion of defective components supplied by this supplier has the probability distribution given in the file P09_55.xlsx. Although the PC manufacturer can repair a defective component at a cost of $20 each, the purchasing agent learns that this supplier will now assume the cost of replacing defective components in excess of the first 100 faulty items found in a given lot. This guarantee may be purchased by the PC manufacturer prior to the receipt of a given lot at a cost of $1,000 per lot. The purchasing agent wants to determine whether it is worthwhile to purchase the supplier's guarantee policy.
a. Identify the strategy that minimizes the expected total cost of achieving a complete lot of satisfactory microcomputer components.
The purchasing agent minimizes the expected total cost of achieving a complete lot of satisfactory components by not purchasing the supplier's guarantee policy.
The corresponding expected total cost is $ ?
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