SOLUTION: I am trying to help my child and I am stuck on this question. Please help A plastics company has extended its warranty policy. The policy says that the product will perform a mi

Question 76798: I am trying to help my child and I am stuck on this question. Please help
A plastics company has extended its warranty policy. The policy says that the product will perform a min of 5,000 hrs. If they have a failure before that time, a refund of 25.00 will be given. The failure distribution for this line is X=6250 hours and sigma= 700 hours.1)If the company sells 10,000 units what cost could be expected from the policy? 2) What alternatives are available to control the failures at 1/2 of 1%?
I appreciate it.
Answer by stanbon(48568) (Show Source):
You can put this solution on YOUR website!
The information you have provided allows you to calculate
the probability of getting the $25 because of a failure
in less than 5000 hrs. That probability is 0.03707
So you can expect to get 0.03707*25=$0.9268
BUT you did not post the money gain or loss associated
with other failure times. So its not possible to answer
your question.
You can figure out the probability of the failure occuring
at 10,000 or more hours; that would be 0.0000000423667, but
if there is no gain or loss associated with that you cannot
calculate the expected gain or loss.
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Also, that last question aboutcontrolling the failures at
1/2 of 1% is a mystery based on the information you have posted.
Hope this helps.
Cheers,
Stan H.