You are trying to determine whether or not to conduct 100% final system tests of 500 ground-based radar units at the factory.The historical radar field failure rate is 4%; the cost to test each unit in the factory is $10,000; the cost to reassemble each passed unit after the factory test is $2,000; the cost to repair and reassemble each failed unit after factory test is $23,000; and the cost to repair and reinstall each failed unit in the field is $350,000.
Using decision tree analysis, what is the expected value if you decide to conduct these tests?