1. Best Movers Co. has collected the following information concerning the number
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Question
1. Best Movers Co. has collected the following information concerning the number of accidents per year for their fleet of moving trucks. There are 3,000 trucks in the fleet.
Number of accidents Probability
0 .75
1 .12
2 .05
3 .03
Q 1. Calculate the expected number of accidents, which is the E(F).
They also have collected information on the financial implications of accidents.
Dollar Amount of Accident Probability
$1000 .65
$1500 .20
$3500 .08
$7000 .05
$11,000 .02
b. Find the expected cost per accident, which is the E(S).
c. Find the expected total loss per truck.
d. Find the expected total loss for the entire fleet of trucks.
Number of accidents Probability
0 .75
1 .12
2 .05
3 .03
Explanation / Answer
a. the expected number of accidents = 0.75*0 +.12*1 + 0.05*2 + 0.03*3 =0.31
b. expected cost per accident = 0.65*1000 + .2*1500 +.08*3500+.05*7000+.02*11000 =$1800
c. expected total loss per truck = the expected number of accidents*expected cost per accident = 0.31*1800 =$558
d. expected total loss for the entire fleet of trucks = 558*3000 =$1,674,000
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