CASE STUDY 1 - cont
The expected cost of overhauling the generator before using it is
EC(0) = C(WO) Pr(WO) + C(FO) Pr(FO) = (25)(1.00) = 25.0
Since using the generator in its current condition provides the lowest expected cost of testing, that is, EC(U) <EC(0), that is the preferred option. Clearly, variations in the decision rule, or set of relevant events and associated probabilities could lead to a different choice.