Question

Quick Start Company makes 12-volt car batteries. After many years of product testing, the company knows that the average life of a Quick Start battery is normally distributed, with a mean of 43.8 months and a standard deviation of 6.5 months.
(a) If Quick Start guarantees a full refund on any battery that fails within the 36-month period after purchase, what percentage of its batteries will the company expect to replace?


(b) If quick Start does not want to make refunds for more than 10% of its batteries under the full refund guarantee policy, for how long should the company guarantee the batteries (to the nearest month)?

Answer 1

Answer:

a) The company should expect to replace 11.51% of its batteries.

b) 35 months.

Step-by-step explanation:

Problems of normally distributed samples can be solved using the z-score formula.

In a set with mean $\mu$ and standard deviation $\sigma$, the zscore of a measure X is given by:

$Z = \frac{X - \mu}{\sigma}$

The Z-score measures how many standard deviations the measure is from the mean. After finding the Z-score, we look at the z-score table and find the p-value associated with this z-score. This p-value is the probability that the value of the measure is smaller than X, that is, the percentile of X. Subtracting 1 by the pvalue, we get the probability that the value of the measure is greater than X.

In this problem, we have that:

$\mu = 43.8, \sigma = 6.5$

(a) If Quick Start guarantees a full refund on any battery that fails within the 36-month period after purchase, what percentage of its batteries will the company expect to replace?

This is the pvalue of Z when X = 36. Then

$Z = \frac{X - \mu}{\sigma}$

$Z = \frac{36 - 43.8}{6.5}$

$Z = -1.2$

$Z = -1.2$ has a pvalue of 0.1151.

The company should expect to replace 11.51% of its batteries.

(b) If quick Start does not want to make refunds for more than 10% of its batteries under the full refund guarantee policy, for how long should the company guarantee the batteries (to the nearest month)?

The warranty should be the 10th percentile, which is X when Z has a pvalue of 0.1. So it is X when Z = -1.28.

$Z = \frac{X - \mu}{\sigma}$

$-1.28 = \frac{X - 43.8}{6.5}$

$X - 43.8 = -1.28*6.5$

$X = 35.48$

To the nearest month, 35 months.