6. the effects of inflation suppose friendly airlines is considering signing a long-term contract with the union representing its pilots. friendly airlines and the union both agree that real wages should increase by 2%. inflation is expected to be 3%, so they agree on a 5% nominal wage increase. now, suppose inflation turns out to be higher than expected, coming in at 4%. this union and airlines because the real wage increase would now be .

This exercise illustrates that poor quality can affect schedules and costs. a manufacturing process has 130 customer orders to fill. each order requires one component part that is purchased from a supplier. however, typically, 3% of the components are identified as defective, and the components can be assumed to be independent. (a) if the manufacturer stocks 130 components, what is the probability that the 130 orders can be filled without reordering components? (b) if the manufacturer stocks 132 components, what is the probability that the 130 orders can be filled without reordering components? (c) if the manufacturer stocks 135 components, what is the probability that the 130 orders can be filled without reordering components?