The Valley Wine Company purchases grapes from either of two nearby grape growers each season to prod


Question: The Valley Wine Company purchases grapes from either of two nearby grape growers each season to produce a particular red wine. It purchases enough grapes to produce 3000 bottles of the wine. Each grower supplies a certain portion of poor quality grapes, resulting in a percentage of bottles being used as fillers for cheaper table wines according to the following probability distribution.

Probability of Percent Defective
Defective (%) Grower A Grower B
2 .15 .30
4 .20 .30
6 .25 .20
8 .30 .10
10 .10 .10

The two growers charge a different price for their grapes and, because of differences in taste, the winery charges different prices for its wine depending on which grapes it uses. The table below gives the annual profit from the wine produced from each grower’s grapes for each percent defective.

Profit
Defective (%) Grower A Grower B
2 $46,200 $44,600
4 41,200 40,800
6 36,200 38,000
8 32,200 35,700
10 28,200 33,400

Determine which Grower to purchase grapes from to get the maximum expected profit.

Price: $2.99
Answer: The answer consists of 2 pages
Deliverables: Word Document

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