Word problem, easy, but im confused

[blackpanther]

A department supervisor is considering purchasing one of two comparable photocopy machines, A or B. Machine A costs $10,000 and machine B costs $10,500. This department replaces photocopy machines every three years. The repair contract for machine A costs $50 per month and covers an unlimited number of repairs. The repair contract for machine B costs $200 per repair. Based on past performance, the distribution of the number of repairs needed over any one-year period for machine B is shown below.

______________________________
Number of repairs| 0 | 1 | 2 | 3 |
Probabilty |.50|.25|.15|.10 |
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You are asked to give a recommendation based on overall cost as to which machine, A or B, along with its repair contract, should be purchased. What would your recommendation be? Give a statistical justification to support your recommendation.




No idea how to show/prove this 1. Surely someone knows!

 

[mmm4444bot]

I can't do the statistical justification, but I would go with machine B.

Over the course of three years, machine A costs 11800 regardless of how many repairs it may need.

Machine B costs 10500 + 200R over the course of three years, where R is the number of repairs that it needs during that time.

During the contract, machine B would require seven or more repairs before its costs exceed machine A.

So, if machine B only needs two or less repairs per year, then its cost will not exceed machine A.

There is only a 10% probability that machine B will require more than two repairs per year.

There is a 50% probability that machine B will not require any repairs at all, each year.

I like machine B.