Over the last few months, Ithaca Precision Instruments (IPI) obtained the following measurements on a key quality characteristic of its product: The company's experience has been that a customer will reject a product that deviates from the target quality characteristic of 0.50 by more than 0.004. Each rejection costs the firm $5. Determine the expected loss of the observed quality characteristic for IPI. Round final steps of calculation to 4 decimal places .
A)$7.8125.
B)$31.2500.
C)$78.1250.
D)$108.1250.
E)$312.5000.

Question

Over the last few months, Ithaca Precision Instruments (IPI) obtained the following measurements on a key quality characteristic of its product:  The company's experience has been that a customer will reject a product that deviates from the target quality characteristic of 0.50 by more than 0.004. Each rejection costs the firm $5. Determine the expected loss of the observed quality characteristic for IPI. Round final steps of calculation to 4 decimal places .
A)$7.8125. 
B)$31.2500. 
C)$78.1250. 
D)$108.1250. 
E)$312.5000.

Quizplus · Accepted Answer

The Answer of Over the last few months, Ithaca Precision Instruments (IPI) obtained the following measurements on a key quality characteristic of its product:  The company's experience has been that a customer will reject a product that deviates from the target quality characteristic of 0.50 by more than 0.004. Each rejection costs the firm $5. Determine the expected loss of the observed quality characteristic for IPI. Round final steps of calculation to 4 decimal places .
A)$7.8125. 
B)$31.2500. 
C)$78.1250. 
D)$108.1250. 
E)$312.5000.

Over the Last Few Months, Ithaca Precision Instruments (IPI) Obtained