Consider the following two scenarios [Option A and Option B];

Tom. Hills, Inc. is a boutique cardboard box manufacturing company and has paper stock inventory of $400,000. Tom has this entire inventory stored in one warehouse. There is a 2% chance that a fire could occur. If this fire occurs, then Tom will lose their entire inventory. [Option A]

As an alternative to keeping their entire inventory in one warehouse, Tom is considering separating their inventory evenly into two different warehouses. Once again, there is a 2% chance that a fire could occur in each warehouse. If this fire occurs, then Butler would once again lose their entire inventory in that particular warehouse. [Option B]

1. Construct the probability distribution for total losses under Option A. Once again remember that if a fire occurs, the loss will be $400,000. Hint: Think about the definition of a probability distribution and apply it in this case.

Construct the probability distribution for total losses under Option B. In the case of Option B, you need to consider all the possible outcomes, recognizing that Tom now has two warehouses. Further hint.... Consider the rules of probability as discussed Show probabilities to 4 decimal places