A lab orders 100 rats a week for each of the 52 weeks in the year for experiments that the lab conducts. Prices for 100 rats follow the following distribution:

Question

Price:

R 10.00

R 15.00

R 17.50

Probability

0.30

0.40

0.30





How much should the lab budget for next year's rat orders be, assuming this distribution does not change?

Answer 1

To calculate the budget for next year's rat orders, we need to find the expected price per 100 rats.

Expected price = (Price1 * Probability1) + (Price2 * Probability2) + (Price3 * Probability3)
Expected price = (R 10 * 0.30) + (R 15 * 0.40) + (R 17.50 * 0.30)
Expected price = R 3 + R 6 + R 5.25
Expected price = R 14.25

Therefore, the lab should budget R 14.25 for each order of 100 rats. Since they order 100 rats each week for 52 weeks in a year, the total budget for next year's rat orders should be:

Total budget = R 14.25 * 52
Total budget = R 741

The lab should budget R 741 for next year's rat orders based on the given price distribution.