The probability distribution showing the number of hours a specially trained
accounts clerk is required to work daily is as follows:
Hours Frequency
0 0.4
1 0.3
2 0.2
3 0.1
The accounts clerk is assigned to this work daily based on the expected daily
requirement. In addition, customers pay Sh. 2,500 per hour for this service.
The accounts clerk contracted wage is Sh. 1,500 per hour. If more hours are
required than are specified in the contract, the cost is Sh. 3,000 per hour.
Required:
(i) Determine the hours the accounts clerk should be contracted. (4
marks)
(ii) Calculate the net gain or loss to the company for each possible number
of hours if the contract is written for the expected number of hours.
(6 marks)