Romi, a Production Manager, Is Trying to Improve the Efficiency

question 24

Multiple Choice

Romi, a production manager, is trying to improve the efficiency of his assembly line. He knows that the machine is set up correctly only 70% of the time. He also knows that if the machine is set up correctly, it will produce good parts 95% of the time, but if set up incorrectly, it will produce good parts only 40% of the time. Romi starts the machine and produces one part before he begins the production run. He finds the first part to be good. What is the revised probability that the machine was set up correctly?

• A) 12%
• B) 33.5%
• C) 66.5%
• D) 84.7%

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Definitions:

Competitive Price-Taker

A Competitive Price-Taker is an individual or company that has no control over the market prices and must accept the prevailing prices as given.

Market Conditions

The various factors that affect the demand and supply of products and services in a market, influencing prices and the economic environment.

Output

The amount of goods or services produced by a business, industry, or economy within a certain period.

Expected Cost

The anticipated expense associated with a particular action, considering all possible outcomes weighted by their probabilities.