A Fast Food Restaurant Just Leased a New Freezer and Food

question 5

Essay

A fast food restaurant just leased a new freezer and food fryer for three years. The service contract for the freezer offers unlimited repairs for a fee of $125 a year plus a $35 service charge for each repair needed. The restaurant’s research suggested that during a given year 80% of these freezers need no repairs, 11% needed to be serviced once, 5% twice, 4% three times, and none required more than three repairs.
-What are the mean and standard deviation of the restaurant's annual expense for the service
contract?

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Definitions:

Expected Frequencies

Predicted counts in each category of a contingency table assuming no association between variables.

Chi-Square Test

A statistical test used to determine the likelihood of an observed distribution occurring by chance.

Retirement Age

The age at which a person is expected or required to stop working and is eligible to receive retirement benefits like Social Security or pensions.

Age Distribution

The proportionate numbers of individuals in successive age categories in a given population.