Question
A wafer fab facility received an order for custom-made wafers. The customer agrees to pay for five, six, or seven good wafers, at a price
A wafer fab facility received an order for custom-made wafers. The customer agrees to pay for five, six, or seven good wafers, at a price of $55,000 per wafer. Other than these, all other wafers (good or bad) are to be destroyed. The cost of producing each wafer is estimated to be $25,000. To obtain the contract, the wafer fab offers to pay the customer $110,000 if at least five good wafers are not produced. Each wafer is produced independently; the probability of a wafer being acceptable is estimated to be 0.80.
Does this span (5, 10) exhaust all potentially profitable options? If not, what span would exhaust all reasonable options? Justify your answer (without referring to expected profit)
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