Your company manufactures HVAC products. The failure time distribution is exponential with mean of 10,000 hours. What should your warranty period be to insure you don't have to repair more than 5% of installed products?
Continuing the condition in the problem stated above, the total cost for warranty repair (parts and labor) is historically normally distributed with the mean of $440 and standard deviation of $120.
a. What is your 95% worst case cost, labor and parts, for warranty repair?
b. Determine the probability of your total warranty repair cost exceeding $600?