Maximize the suppliers expected profit

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A machinery supplier has a new machine which a customer is willing to buy for $10,000, but only if it works immediately after installation. Otherwise the machine will be sent right back and the supplier will recieve nithing. The machine will only works if a key part is sufficiently flat. The supplier can send the machine as is, or firs scan the surface for faults before shipment. One scan cost $500, and two scan $900. Each scan has a 90% chance of finding faults eventhough its not. Another option is to overhaul the machine before sending it at a cost of $2000. If during the overhaul the part is found not be sufficiently flat, it can be fixed for another $100 and the the supplier is then 100% sure it will work. What course of action will maximize the suppliers expected profit?

Reference no: EM132266524

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