52. Appliances Unlimited (AU) sells refrigerators. Anyrefrigerator that fails before it is three years old isreplaced for free. Of all refrigerators, 2% fail duringtheir first year of operation; 4% of all one-year-oldrefrigerators fail during their second year of operation;and 6% of all two-year-old refrigerators fail duringtheir third year of operation.a. Use simulation to estimate the fraction of all refrigerators that will have to be replaced.b. It costs $750 to replace a refrigerator, and AU sells15,000 refrigerators per year. If the warranty periodwere reduced to two years, how much per year inreplacement costs would be saved?
52. Appliances Unlimited (AU) sells refrigerators. Anyrefrigerator that fails before it is three years old isreplaced for free. Of all refrigerators, 2% fail duringtheir first year of operation; 4% of all one-year-oldrefrigerators fail during their second year of operation;and 6% of all two-year-old refrigerators fail duringtheir third year of operation.a. Use simulation to estimate the fraction of all refrigerators that will have to be replaced.b. It costs $750 to replace a refrigerator, and AU sells15,000 refrigerators per year. If the warranty periodwere reduced to two years, how much per year inreplacement costs would be saved?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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52. Appliances Unlimited (AU) sells refrigerators. Any
refrigerator that fails before it is three years old is
replaced for free. Of all refrigerators, 2% fail during
their first year of operation; 4% of all one-year-old
refrigerators fail during their second year of operation;
and 6% of all two-year-old refrigerators fail during
their third year of operation.
a. Use simulation to estimate the fraction of all refrigerators that will have to be replaced.
b. It costs $750 to replace a refrigerator, and AU sells
15,000 refrigerators per year. If the warranty period
were reduced to two years, how much per year in
replacement costs would be saved?
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