A Cell Phone Company Offers a Simple Extended Warranty Plan

question 10

Essay

A cell phone company offers a simple extended warranty plan. If your phone is damaged, they will repair it for up to $50. If you lose or destroy your phone, they will give you a $200 voucher towards a new phone. The company believes that 5% of customers will need the replacement voucher and 10% will request a repair.
-What is the standard deviation of their profit?

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Definitions:

Feature

Any physical characteristic of a product.

Advantage

The performance characteristic of a product that describes how it can be used or will help the buyer.

Benefit

A favorable result the buyer receives from the product because of a particular advantage that has the ability to satisfy a buyer’s need.

Trial Close

A sales technique where the seller proposes a closing question or statement to gauge the buyer's readiness to complete the purchase.