Problema Solution
lee tire wishes to offer free replacements on each tire that does not last at least 84 months. If the mean production average is 60 months and the standard deviation is 8 months solve for the number of tires that will have to be "free replacements"?
Answer provided by our tutors
OK, basically Lee Tire is committing financial suicide. Here's why. 84 month is is 24 months above the 60 month average. If the standard deviation is 8, then 84 months is 3 SDs (3 x 8 = 24) above the mean. Now we simply look up to determine what percentage of a normal population falls within 3 SDs + or minus of the mean and we find it is 99.7%. In other words, they will have to replace almost every tire they make for free.