Suppose that a company guarantees refrigerators and will replace with a new one that breaks while it is under the guarantee. However, the company does not want to replace more than 5% of the refrigerators under the guarantee. For how long should the guarantee be made? You can round to the nearest tenth of a year.

Question

Suppose that a company guarantees refrigerators and will replace with a new one that breaks while it is under the guarantee.  However, the company does not want to replace more than 5% of the refrigerators under the guarantee.  For how long should the guarantee be made?  You can round to the nearest tenth of a year.

Steve · Answer

Don't you think you need some data on the expected lifetime of the units?

Morgan · Answer

Consumer Reports indicated that the average life of a refrigerator is 13 years with a standard deviation of 2.5 years. (Assume the distribution of the age of the refrigerators is approximately normal.)