Thread: Finding expected value.

A business has a new computer. The service contract for the computer offers unlimited repairs for a fee of $100 a year plus a $25 service charge for each repair needed. Research suggested that during a given year 86% of these computers needed no repairs, 9% needed to be repaired once, 4% twice, 1% three times, and none required more than three repairs.

Find the expected number of repairs this kind of computer will need each year.

Can anyone help me on the above question....I think its obvious and im just missing something.

Originally Posted by rooney

A business has a new computer. The service contract for the computer offers unlimited repairs for a fee of $100 a year plus a $25 service charge for each repair needed. Research suggested that during a given year 86% of these computers needed no repairs, 9% needed to be repaired once, 4% twice, 1% three times, and none required more than three repairs.

Find the expected number of repairs this kind of computer will need each year.

Can anyone help me on the above question....I think its obvious and im just missing something.

Using the usual formula: E(N) = (0)(0.86) + (1)(0.09) + (2)(0.04) + (3)(0.01) = ....

Ok so I therefore assume that the expected number of repairs each year is 0.2?

Also could you aid me in finding the standard deviation of the number of repairs.

Originally Posted by rooney

Ok so I therefore assume that the expected number of repairs each year is 0.2? Mr F says: What are you assuming? You did the calculation, didn't you? You pressed the correct buttons on your calculator, right?

Also could you aid me in finding the standard deviation of the number of repairs.

Use (and you should know this) .