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:)