Question

A company that makes wireless routers has found that, on average, 1.2% of therouters are defective. It makes a $38 profit from selling non-defective routersbut ends up losing $24 when a defective unit is sold due to repair and shippingcosts. Find the expected profit from selling 10,000 routers.

Answer 1

Determine the number of defective routers.

`(1.2)/(100)\cdot10000=120`

Determine the number of non-defective routers.

`10000-120=9880`

For 9880, the profit is $38 per unit and for 120 units loss is $24 per unit.

Determine the expected profit from selling 10000 router.

`\begin{gathered} P=9880\cdot38-24\cdot120 \\ =375440-2880 \\ =372560 \end{gathered}`

So expected profit from selling 10000 routers is $372560.