Examlex

Solved

A Certain Type of Automobile Battery Is Known to Have

question 167

Essay

A certain type of automobile battery is known to have a lifespan that is normally distributed, with mean 1100 days and standard deviation 80 days. For how long should these batteries be guaranteed if the manufacturer wants to replace only 5% of the batteries sold because they "died" before the guarantee expired?


Definitions:

Fixed Cost

Fixed cost refers to expenses that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Sunk Cost

Expenditures that have already been incurred and cannot be recovered, which should not affect future decision-making.

Opportunity Cost

Represents the benefit that is missed or given up when an investor, individual, or business chooses one alternative over another.

Ticket Price

The cost associated with purchasing a ticket to gain entry to an event, performance, or mode of transportation.

Related Questions