Answer to Question #306053 in Statistics and Probability for pretty

Question

Angel’s Pizza delivers several types of pizza, which is sold for 499 pesos each and costs 300 pesos to make. The pizza shop has a policy that no charge will be asked if the delivery takes longer than a half an hour. Experience has shown that delivery takes longer than half an hour only 10% of the time. How much will the pizza shop expect to gain/lose in return?

Answer 1

Let X be the random variable representing the charge that Angel’s Pizza gains or losses when it delivers a pizza. Given that the probability of making a unsuccessful delivery is 0.1, the probability of making a successful delivery will be equal to 1- 0.1 = 0.9

X P(X)

499 0.9

-300 0.1

E(X) = Σ X_iP_i = (499*0.9) + (-300*0.1) = 419.1

Answer: Since the expected value is positive, the pizza shop expects to gain 419.1 pesos in return