Problem
Suppose, for simplicity, that three main parts of a laptop are CPU, RAM, and hard drive; so if one of these components fails, the laptop fails. Assume that the life times of CPU, RAM, and hard drive are exponentially distributed with mean 3 years, 2 years, and 5 years, respectively. If the company that sells these laptops guarantees the replacement of any laptops that fail in the first year, and a replacement costs $500, what would be the average yearly replacement cost? Assume that on average the company sells 100,000 laptops a year.