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Bayes Theorem Calculations

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Experience has shown a company that the cost of delivering a small package within 24 hours is $14.80. The company charges $15.50 for shipment but guarantees to refund the charge if delivery is not made within 24 hours. If
the company fails to deliver only 2% of its packages within the 24-hour period, what is the expected gain per package?

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Solution Preview

Let X denote the gain of delivering a small package within 24 hours. Then X is a random variable, from the hypothesis, we ...

Solution Summary

Experience has shown a company that the cost of delivering a small package within 24 hours is $14.80. The company charges $15.50 for shipment but guarantees to refund the charge if delivery is not made within 24 hours. If
the company fails to deliver only 2% of its packages within the 24-hour period, what is the expected gain per package?

$2.19