ITPEC FE Subject A October 2025 Question 38
What is the expected value in dollars for the correction cost of an application program in the first year under the conditions shown below?
[Conditions]
Explanation
64,000 dollars — count the defects found in the first year, keep only the major ones, then price them.
- •Potential defects: 2,000 × 0.04 = 80
- •Found in the first year: 80 × 0.20 = 16
- •Major impact among them: 16 × 0.20 = 3.2
- •Expected cost: 3.2 × 20,000 = 64,000 dollars
Condition (6) says only major defects are corrected in the first year, so the 12.8 minor defects cost nothing yet.
Answer (a)
Why not others:
- •(b) 128,000 — also corrects the minor defects, 12.8 × 5,000 = 64,000, against condition (6).
- •(c) 160,000 — no combination of the given rates leads to it; the only first-year cost is the 3.2 major defects.
- •(d) 640,000 — ten times the correct value, a decimal slip such as 32 major defects instead of 3.2.
Key rule: Apply each rate in turn to the count it refers to (size, then discovery, then share), and read which defects are actually corrected in the period asked.
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