Expected Value and Standard Deviation of A1 Computer's Rebate

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SUMMARY

The discussion focuses on calculating the expected value and standard deviation of A1 Computer's rebate policy concerning defective tablets. A1 Computer stocks 15 tablets, with 4 being defective. If a client purchases two tablets, the company offers a $100 rebate for one defective tablet and a $1000 rebate for two defective tablets. The probability of selecting a defective tablet is calculated as P(R) = 4/15, leading to a total expected rebate value of $2000 when two defective tablets are given away. The discussion also addresses the confusion around applying the standard deviation formula to this scenario.

PREREQUISITES
  • Understanding of probability theory, specifically binomial probability.
  • Familiarity with expected value calculations in statistics.
  • Knowledge of standard deviation and its application in probability distributions.
  • Basic arithmetic skills for substituting values into formulas.
NEXT STEPS
  • Research binomial probability distributions and their applications in real-world scenarios.
  • Study the calculation of expected value in different contexts, including rebates and refunds.
  • Learn how to compute standard deviation for discrete random variables.
  • Explore case studies on warranty and rebate policies in retail environments.
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Statisticians, financial analysts, business managers, and anyone involved in retail operations or warranty management will benefit from this discussion.

geforce
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A1 Computer has 15 tablets stocked, but four of them were actually defectives.
A client bought two tablets from A1 Computer. If both of them are good, things are fi ne.
If the client gets one defective machine, A1 Computer will replace it and give a $100 rebate
to the client. If the clients gets two defective machines, A1 Computer will replace both of
them and give a $1000 rebate to the client. What is the expected value and the standard
deviation of the company's rebate?

P(R) = 4/15 x 100 = 26.6%

Since there were 4 defective machines then 2 x 1000 = 2000 was given away to client(s)
so value = 2000
how would I find the standard deviation? I know the usual formula but where would i plug into it?
 
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I think you are completely misunderstanding the problem.

You calculated P(R), the probability that a given computer is bad. Now What is the probability that, of 2 computers chosen at random from those 15
1) neither is bad.
2) one is bad.
3) both are bad.
 
Last edited by a moderator:
geforce said:
A1 Computer has 15 tablets stocked, but four of them were actually defectives.
A client bought two tablets from A1 Computer. If both of them are good, things are fi ne.
If the client gets one defective machine, A1 Computer will replace it and give a $100 rebate
to the client. If the clients gets two defective machines, A1 Computer will replace both of
them and give a $1000 rebate to the client. What is the expected value and the standard
deviation of the company's rebate?

P(R) = 4/15 x 100 = 26.6%

Since there were 4 defective machines then 2 x 1000 = 2000 was given away to client(s)
so value = 2000
how would I find the standard deviation? I know the usual formula but where would i plug into it?

I don't understand. If you know the formula, what is preventing you from substituting in the appropriate numbers and doing the arithmetic? Or, are you saying that you don't know what numbers to plug in?

RGV
 

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