Assignment:
The marketing and production managers of a new car battery are planning to start a new advertising campaign. The most important message of the advertising is the lenght of the guarantee of battery life. The manager know that the life of the battery is normally distributed with a mean of 3.5 years and a standard deviation of 1 year.
a) Generate the battery life for 2000 batteries
b) Determin 98% confidence interval for battery life
c) How many % of battery will not function after 2 years
d) How many % of battery will not function after 4 years?
e) The managers would like to advertise a replacement guarantee if a battery dies before 2.5 years.
How many percent of battery should be replaced?
f) If the cost of the replacement of each battery is 65$, what's the total replacement cost for the average demand based on 1000 replications, if probability distribution of the demand is as follow
Prob Demand
0.1 10000
0.35 20000
0.30 25000
0.20 15000
0.05 5000
g) If selling price of each battery is 125, whats the total profit of the batteries after replacement?
h) If cost of replacement exceed 10% of the total revenue (before replacement) managment should review and revise their replacement policy,
Based on your simulation does company need to revise the replacement policy?