# Question

A manufacturer of electronic calculators offers a one-year warranty. If the calculator fails for any reason during this period, it is replaced. The time to failure is well modeled by the following probability distribution:

A manufacturer of electronic calculators offers a one-year warranty. If the calculator fails for any reason during this period, it is replaced. The time to failure is well modeled by the following probability distribution:

f (x) = 0.125e –0.125x x > 0

(a) What percentage of the calculators will fail within the warranty period?

(b) The manufacturing cost of a calculator is $50, and the profit per sale is $25. What is the effect of warranty replacement on profit?

A manufacturer of electronic calculators offers a one-year warranty. If the calculator fails for any reason during this period, it is replaced. The time to failure is well modeled by the following probability distribution:

f (x) = 0.125e –0.125x x > 0

(a) What percentage of the calculators will fail within the warranty period?

(b) The manufacturing cost of a calculator is $50, and the profit per sale is $25. What is the effect of warranty replacement on profit?

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