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Interpret Expected Value in Decisions and Games
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DSST
DSSTSTAT.085 Interpret Expected Value in Decisions and Games
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A maintenance policy has an expected cost of $115 per machine. A company has 40 similar machines. Which interpretation is most appropriate?
A
The company should budget about $4,600 as the long-run expected total, while recognizing actual cost may differ.
B
The company should ignore expected value because no single machine has a guaranteed $115 cost.
C
The company should budget only for the most expensive possible repair.
D
The company will pay exactly $115 for each machine.
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