Please solve step by step and show all work (a) A production facility will be in
ID: 3070868 • Letter: P
Question
Please solve step by step and show all work
(a) A production facility will be inspected for compliance to industry standards by a government agency. Three outcomes of the inspection are possible: no issues found, minor violations or major violations. If no issues are found, then no additional costs will be incurred. If minor violations are identified, then the efforts to address them will require additional funds represented by a uniform random variable over $10,000 and $80,000. Finally, the company will need to spend $100,000 and schedule a new inspection if major issues are discovered. It is estimated that, regardless of the number of times the inspection has been performed before, the outcome will be "no issues" with probability 10%, "minor violations" with probability 60% and "major violations" with probability 30%. Find the expected cost associated with addressing the inspection findings.Explanation / Answer
here expected value associated with inspection finding
E(X)=P(no issue)*P(X|no issue)+P(minor violation)*E(X|no violation)+P(major violations)*E(X|major violations)=0.1*0+0.6*(10000+80000)/2+0.3*100000=$57000