Imagine You Are A Manufacturer That Creates Custom Conveyor Belts For Factories. Recently, An Engineer Noticed A Flaw In One Of Your Recent Designs That If Not Fixed, Could Cause Malfunctions As The Machine Is Used. As Part Of Your Company's Contracts With The Factories, You Are Responsible For The Repair Of Any Machines If They

 

Question 28 (1 point) Imagine you are a manufacturer that creates custom conveyor belts for factories. Recently, an engineer noticed a flaw in one of your recent designs that if not fixed, could cause malfunctions as the machine is used. As part of your company's contracts with the factories, you are responsible for the repair of any machines if they malfunction. The engineer estimates that there is a 5% chance of a minor malfunction, and a 1.5% chance of a major malfunction over the lifetime of the conveyor belt. The cost to repair the belt after a minor malfunction is $35,000, and the major malfunction would cost $165,000. Using this information, what is the expected cost of repair for a conveyor belt, accurate to the nearest dollar assuming many conveyor belts sold and used and at most one malfunction per belt's life? $26,500 $4,225 $0 $35,000 $19,975