Question

In establishing warranties on HDTVs, the manufacturer wants to set the limits so that few will need repair at the manufacturer’s expense. On the other hand, the warranty period must be long enough to make the purchase attractive to the buyer. For a new HDTV, the mean number of months until repairs are needed is 36.84 with a standard deviation of 3.34 months.

Where should the warranty limits be set so that only 10% of the HDTVs need repairs at the manufacturer’s expense? (Round z-score computation and final answer to 2 decimal places.)

________months

Answer 1

Since only 10 percent need repairs we can compute the Z Value.

Using SPsS or Excel, we compute Z Value = - 1.2816

Now we know that,

Z Value= X - U/ Sigma

-1.2816= X- 36.84/3.34

Thus, X= 32.56 which is upper limit for warranty.