Compute for the expected value of each alternative and select the best option.
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
A machine shop owner is thinking of expanding his operations. He has 3 options: a drill press, a lathe, and a grinder. The return on investment for each tool is largely determined by whether the company wins a government military contract. The profit and loss for each purchase and the
| Purchase |
Contract 0.40 |
No Contract 0.60 |
| Drill Press | $40,000 | ($8,000) |
| Lathe | $20,000 | $4,000 |
| Grinder | $12,000 | $10,000 |
Part 1) Compute for the expected value of each alternative and select the best option.
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