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A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs

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A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs  [#permalink]

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New post 03 Jun 2020, 08:01
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A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs each to a retailer. The manufacturer bills the retailer at a rate of $10 per bulb with a condition that the defective light bulbs may be returned to the manufacturer for full refund. The probability of a light bulb in a box being defective is 20 percent. If the manufacturer makes a profit of 100 percent on each non-defective light bulb and he has to bear a return shipment cost of $2.5 per defective light bulb, which he treats as lost revenue, what is the profit percentage of the manufacture on the whole transaction?

A. 30%
B. 33%
C. 45%
D. 50%
E. 60%

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A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs  [#permalink]

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New post Updated on: 07 Jun 2020, 08:42
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Bunuel wrote:
A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs each to a retailer. The manufacturer bills the retailer at a rate of $10 per bulb with a condition that the defective light bulbs may be returned to the manufacturer for full refund. The probability of a light bulb in a box being defective is 20 percent. If the manufacturer makes a profit of 100 percent on each non-defective light bulb and he has to bear a return shipment cost of $2.5 per defective light bulb, which he treats as lost revenue, what is the profit percentage of the manufacture on the whole transaction?

A. 30%
B. 33%
C. 45%
D. 50%
E. 60%

10 Boxes consisting of 100 light bulbs each
so total 1000 bulbs, and each costs $10
TOTAL =$10,000
Since in each box probability of defective light bulbs is 20% means 20 in 100 so 200 in 1000 bulbs
800 bulbs are non defective, and manufacturer receives $8000-(2.5*200) from the retailer.
then Questions says the manufacturer earns 100% profit on non defective bulbs
means for 800 bulbs sold, he actually manufactures them at $4000
so say manufacturing cost/ bulb=$4000/800=$5

So total manufacturing cost of 1000 bulbs is=$5000
Profit=[(7500-5000)/5000]*100
Profit=50%
D:)

Originally posted by satya2029 on 03 Jun 2020, 09:47.
Last edited by satya2029 on 07 Jun 2020, 08:42, edited 2 times in total.
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Re: A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs  [#permalink]

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New post 05 Jun 2020, 01:06
Bunuel wrote:
A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs each to a retailer. The manufacturer bills the retailer at a rate of $10 per bulb with a condition that the defective light bulbs may be returned to the manufacturer for full refund. The probability of a light bulb in a box being defective is 20 percent. If the manufacturer makes a profit of 100 percent on each non-defective light bulb and he has to bear a return shipment cost of $2.5 per defective light bulb, which he treats as lost revenue, what is the profit percentage of the manufacture on the whole transaction?

A. 30%
B. 33%
C. 45%
D. 50%
E. 60%


The Q said Selling price to the retailer is 10 per light bulb for a total of 1000 light bulb with total revenue of 10000.
However, we have to consider that in each box there is 80 light bulb that works and 20 defects. So For each light bulb not working the manufacturer refund the total cost (10 dollars) and also spend 2.5 for the shipping cost for each bulb so the total revenue would be 7500 dollars for 800 working light bulb and refund 200 not working.

The production price is 5 dollars er light, with a total price of 5000 to produce 1000 light bulb.

Profit is equal to Revenue - Cost = 7500-5000= 2500
%Profit= 2500/5000 *100= 50%
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Re: A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs  [#permalink]

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New post 08 Jun 2020, 00:17
At first lets suppose there is no default bulb:
So revenue on selling 1000 bulbs : 1000*10 = 10,000

Now 20% default bulbs came , and now manufacturer has to return its cost+ shipping = 10 +2.5= 12.5*200 = 2500
Total revenue to manufacturer: 10000-2500 = 7500

cost of manufacturer/ bulb : $10/2= 5, as we know he makes 100% profit on selling .
Cost of production of bulbs : 5*1000 = 5000

Net profit: 7500-5000= 2500
Profit % : profit/ cp = 2500/5000 *100 = 50%

Answer: D
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Re: A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs   [#permalink] 08 Jun 2020, 00:17

A light bulb manufacturer ships 10 boxes consisting of 100 light bulbs

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