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Negotiating a Contract with Employees

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A manufacturing company is negotiating a contract with its employees. The probability that the union will go on strike is 5%. If the union goes on strike, the company estimates that it loose $345,000.00 for the year. If the union does not go on strike, the company estimates it will make $1.2 million dollars. Find the companies expected gain or loss for the year.

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Solution Summary

A company is negotiating a contract with its employees. This makes a higher probability of workers going on strike. This probability is analyzed in the solution.

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There is a 5% chance that the company will lose $345,000.
There is a 95% chance that the company will gain $1,200,000.

Now, ...

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