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Grear Tire Company has produced a new tire with an estimated mean lifetime mileage of 36,500 miles. Management also believes that the standard deviation is 5000 miles and that tire mileage is normally distributed. To promote the new tire, Grear has offered to refund some money if the tire fails to reach 30,000 miles before the tire needs to be replaced. Specifically, for tires with a lifetime below 30,000 miles, Grear will refund a customer $1 per 100 miles short of 30,000. For each tire sold, what is the expected cost of the promotion? If required, round your answer to two decimal places. 29.04 What is the probability that Grear will refund more than $50 for a tire? If required, round your answer to three decimal places. .011 What mileage should Grear set the promotion claim if it wants the expected cost to be $2.00? If required, round your answer to the hundreds place.

Respuesta :

Answer:

A. $0.013 per tire

B.0.0107

C.24436.3956009929

Explanation:

Grear Tire Company

a.

Meal lifetime mileage $36,500

Standard deviation of mileage $5,000

Observed miles 30,000 miles

100 miles failed $1.00

Hence :

= (36,500 – 30,000) / 5000= 1.3

Cost of production

100 miles=$1.00

1.3 * 1 / 100

= $0.013 per tire

b.

P (z <25000 -36500/5000

P z <-11500/5000

z <-2.3

Hence:

1-0.9893

=0.0107

Therefore the Probability that gear will refund more than $50.00 per tire is: 0.0107

c.

The mileage that should Grear set the promotion claim if it wants the expected cost to be $2 is 24436.3956009929