Answer to Question #155903 in Statistics and Probability for bert

Question

A computer store sells computer packages. Since the package is so expensive, the company wants to advertise an impressive guarantee on this hardware. The guarantee policy will replace the unit if the computer fails during the guaranteed period. The research department has done tests shows that the mean life for the computers is 36months, with standard deviation of 12months. The computer life is normally distributed. How long can the guarantee period be if the company does not want to replace the unit on more 8% of the computer package?

Answer 1

P(x<z)=0.08

z = -1.405

X = $z*\sigma+\mu=-1.405*12+36=19.14$

Answer: Guarantee period can be up to 19 months.