Question

The average life of a certain type of small motor is 10 years with a standard deviation of 2 years. the manufacturer replaces free all motors that fail while under guarantee. if she is willing to replace only 3% of the motors that fail, how long a guarantee should be offered? assume that the lifetime of a motor follows a normal distribution

Answer 1

The given are the following: Replacement = 3% or -1.88 from z-tables; Average Life = 10 years Standard Deviation = 2 years.

Solution
Find how long a guarantee should be offered

10 years - 2 years * 1.88 = 6.24 years or 75 months