2 Each defective unit costs 20 to replace. An overhaul would set the failure rate to 0.01 but would cost 200. Given that the firm's objective is to minimise expected cost, should the firm overhaul? (ii) How is the decision affected by the further information that a sample run of 5 units produced one defective? Examine how the decision would be influenced by:

(a) attitudes towards risk

(b) the precarious financial position of the firm.