Source: Official Guide for GMAT Review 2016 Problem Solving; #30

1

A manufacturer of a certain product can expect

A manufacturer of a certain product can expect that between 0.3 percent and 0.5 percent of the units manufactured will be defective. If the retail price is $ 2,500 per unit and the manufacturer offers a full refund for defective units, how much money can the manufacturer expect to need to cover the refunds on 20,000 units?

2 Explanations

1

AMURE ADENIYI BOLAJI COLLINS

. 003 (20000) TO .005(20000) = 150000 T0 250000

Nov 1, 2016 • Comment

Sam Kinsman, Magoosh Tutor

Yep, that's correct!

Nov 2, 2016 • Reply

3

Jeffrey Braganza

0.3 % to 0.5% of 20,000 units are going to be defective
2500$/unit

Find out how many units are defective:
10% of 20,000 = 2000
Similarly,
1% = 200
0.5% = 100
0.1% = 20
0.3% of 60

Range of defective good: 60 to 100
Cost to cover refunds: (60 * 2500) to (100 * 2500) = $150,000 to $250,000

Dec 31, 2015 • Comment

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