Posted: February 16th, 2017

Conduct a cost analysis in relation to (a) and (c) to arrive at your decision as to whether you will purchase a bag or buy the potatoes individually.

In this problem, we will address the cost associated with buying potatoes. You need seven baking potatoes for a potluck dish that you will make. Either you can buy a bag of ten potatoes for $5.79, or you can buy them individually for $0.69 each. The bags are relatively opaque, and so you can’t see the quality of the potatoes very well. By buying them individually, you can better inspect them. In this case, however, each potato that you test (using your potato poke-tester), you are required to buy. (a)(5pts) Suppose that each of the ten potatoes in a bag has probability 0.8 of being good. Compute the probability that you will get at least seven good potatoes. Solution: (b)(5pts) By selectively inspecting each potato, its probability of being good is 0.9. Compute the probability that all seven potatoes you test will be good. Solution: (c)(5pts) Compute the probability that you will get no more than 3 bad potatoes, in the process of ultimately obtaining 7 good potatoes. Solution: (d)(5pts) Conduct a cost analysis in relation to (a) and (c) to arrive at your decision as to whether you will purchase a bag or buy the potatoes individually. Factor in your answers to these parts in making your decision.