Question

C

CIJ, Inc. (Cheap Imported Junk) has developed a new media player called the MePod. The average life of a MePod is 20 months with standard deviation 5.2 months.

a) If CIJ has a full refund guarantee for 12 months, what percentage of all MePods sold would they have to replace?

b) If CIJ wanted to replace 3% or fewer of their MePods, how long should the guarantee period be?

Answer 1

Solution:

Given and .

a) They have to replaced all media players which have life less than or equal to 12 months. Therefore:

b) CIJ wants to replace all media players which have life lowest 3%. From z table, the z score corresponding to lowest 3% is . Therefore:

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