Chapter 12.6, Problem 18HP

To determine

To explain how probability distribution can be used to make a business decision.

Answer to Problem 18HP

Using probability distribution it can be decided that to stop the production of which product.

Explanation of Solution

Consider a company makes four types of product named A,B,C and D and the company is going to stop production of a product on the basis of no of defected item produced.

According to a report of company out of 100 defected items 40belongs to type A, 25 belongs to type B,10 belongs to type C and 25 belongs to type D.

Probability of stop the production of A $=\frac{40}{100}=0.4$

Probability of stop the production of B $=\frac{25}{100}=0.25$

Probability of stop the production of C $=\frac{10}{100}=0.1$

Probability of stop the production of D $=\frac{25}{100}=0.25$

Therefore,

Using probability distribution it can be decided that to stop the production of which product.