Fast Auto Service provides oil and lube service for cars. It is known that the mean time taken for oil and lube service at this
garage is minutes per car and the standard deviation is minutes. The management wants to promote the business by guaranteeing a maximum waiting time for its customers. If a customer's car is not serviced within that period, the customer will receive a discount on the charges. The company wants to limit this discount to at most of the customers. What should the maximum guaranteed waiting time be
1 answer:
Answer: 19.93 minutes
Explanation:
This is the complete question
Fast Auto Service provides oil and lube service for cars. It is known that the mean time taken for oil and lube service at this garage is 15 minutes per car and the standard deviation is 2.4 minutes. The management wants to promote the business by guaranteeing a maximum waiting time for its customers. If a customer's car is not serviced within that period, the customer will receive a 50% discount on the charges. The company wants to limit this discount to at most 2% of the customers. What should the maximum guaranteed waiting time be? Assume that the times taken for oil and lube service for all cars have a normal distribution
The solution is attached below
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Answer:
$627
Explanation:
To find the answer, we use the present value of an annuity formula:
Where:
- P = Present value of the investment
- A = Value of the annuiry
- i = interest rate
- n = number of compounding periods
Now, we plug the amounts into the formula:
12,600 = A (20.09870355)
A = 12,600/20.09870355
A = 627
Thus, the value of the monthly payments is $627