Over the Last Few Months, Ithaca Precision Instruments (IPI) Obtained

Multiple Choice

Over the last few months, Ithaca Precision Instruments (IPI) obtained the following measurements on a key quality characteristic of its product: The company's experience has been that a customer will reject a product that deviates from the target quality characteristic of 0.50 by more than 0.004. Each rejection costs the firm $5. Determine the expected loss of the observed quality characteristic for IPI. Round final steps of calculation to 4 decimal places .

A) $7.8125.
B) $31.2500.
C) $78.1250.
D) $108.1250.
E) $312.5000.