ITPEC IP April 2019 Question 67
ITPEC IP April 2019 — Question 67 of 100
Plan C has the lowest expected cost, 122. Weight each cost by its probability: A is 0.9 × 0 + 0.1 × 1500 = 150; B is 36 + 100 = 136; C is 72 + 50 = 122; and D is 108 + 20 = 128.
Answer (c)
Why not others:
- plan A has expected cost 150
- plan B has expected cost 136
- plan D has expected cost 128
- each is greater than plan C's 122
Key rule: Expected cost is the sum of each possible cost multiplied by the probability of that outcome.
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