A lab orders 100 rats a week for each of the 52 weeks in the year for experiments that the lab conducts. Prices for 100 rats follow the following distribution:
Price:
R 10.00
R 15.00
R 17.50
Probability
0.30
0.40
0.30
How much should the lab budget for next year's rat orders be, assuming this distribution does not change?
To calculate the budget for next year's rat orders, we need to find the expected price per 100 rats.
Expected price = (Price1 * Probability1) + (Price2 * Probability2) + (Price3 * Probability3)
Expected price = (R 10 * 0.30) + (R 15 * 0.40) + (R 17.50 * 0.30)
Expected price = R 3 + R 6 + R 5.25
Expected price = R 14.25
Therefore, the lab should budget R 14.25 for each order of 100 rats. Since they order 100 rats each week for 52 weeks in a year, the total budget for next year's rat orders should be:
Total budget = R 14.25 * 52
Total budget = R 741
The lab should budget R 741 for next year's rat orders based on the given price distribution.