no class 4/1 – online assignment

no class 4/1 – online assignment
Posted on: Friday, March 29, 2013

Online class assignment

Answer all parts of the following question. Email your answers to me (MTannen@udc.edu) by noon, Tuesday, 4/2 or before.

I. The Spoiled Food and Darkness Company produces an emergency home backup power system which runs on special, costly batteries. Product managers are trying to decide how long a warranty to issue on the batteries. They recognize that if the warranty period is short, some customers will shy away from buying the product. If the warranty period is long, the company may lose money on the system because of the high battery-replacement cost. To make an informed decision on the warranty period, the managers would like to have some additional information.

The managers anticipate the useful life of the batteries follows a normal distribution with a mean of two years and a standard deviation of six months. Given this information, they would like to know the answers to the following questions before they decide how long a warranty to issue.
a. What percentage of units will have their batteries returned within the first year?
b. What percentage of units will have their batteries returned within the first year and one-half?
c. Suppose the managers decide to issue a warranty in which no more than 15.87% of all units will have batteries that qualify for replacement, how long should the warranty period be?
d. Suppose that higher management, eager to boost sales to build market share through a longer warranty, rules that the company should issue a warranty that covers a time period in which 50% of the units will qualify for replacement batteries. These higher managers tell you your job depends on giving them the right answer today to the question of how long should the warranty period be. Your answer is?
Posted by: Michael Tannen
Posted to: 20843-2013S BGMT-414-03