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: $$\begin{array} { | c | c | } \hline \text { Observed Quality Characteristic } & \text { Probability } \\\hline 0.46 & 0.05 \\\hline 0.47 & 0.10 \\\hline 0.48 & 0.12 \\\hline 0.49 & 0.15 \\\hline 0.50 & 0.30 \\\hline 0.51 & 0.12 \\\hline 0.52 & 0.10 \\\hline 0.53 & 0.05 \\\hline 0.54 & 0.01 \\\hline\end{array}$$ 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 an estimated $5.00. Determine the expected total quality loss of the observed quality characteristic for IPI. Round final steps of calculation to 4 decimal places (e.g., $18.89568 becomes $18.8957) .

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