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(a) For each tire sold, what is the expected cost (in dollars) of the promotion? (Round your answer to two decimal places.) (b) What is the probability that Grear will refund more than $50 for a tire? (Round your answer to three decimal places.) (c) What mileage should Grear set the promotion claim if it wants the expected cost to be $2? This question can be answered by trial and error. While the mean profit can vary, a promotion claim of ---Select--- miles will result in an expected cost of approximately $2.00.

(a) For each tire sold, what is the expected cost (in dollars) of the promotion? (Round your answer to two decimal places.) (b) What is the probability that Grear will refund more than $50 for a tire? (Round your answer to three decimal places.) (c) What mileage should Grear set the promotion claim if it wants the expected cost to be $2? This question can be answered by trial and error. While the mean profit can vary, a promotion claim of ---Select--- miles will result in an expected cost of approximately $2.00.

A First Course in Probability (10th Edition)
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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2 Grear Tire Company has produced new tire with an estimated mean lifetime mileage of 36,500 miles. Management also believes that the standard deviation is 5,000 miles and that tire mileage is normally distributed. To promote the new tire, Grear has offered to refund a portion of the purchase price if the tire fails to reach 30,000 miles before the tire needs to be replaced. Specifically, for tires with a lifetime below 30,000 miles, Grear will refund customer $1 per 100 miles short of 30,000. Construct a simulation model to answer the following questions. (Use at least 1,000 trials.) (a) For each tire sold, what is the expected cost (in dollars) of the promotion? (Round your answer to two decimal places.) $ (b) What is the probability that Grear will refund more than $50 for a tire? (Round your answer to three decimal places.) (c) What mileage should Grear set the promotion claim if it wants the expected cost to be $2? This question can be answered by trial and error. While the mean profit can vary, a promotion claim of ---Select--- miles will result in an expected cost of approximately $2.00. SHOW WORK FOR (a) and (b) ON EXCEL SPREADSHEET.
Transcribed Image Text:2 Grear Tire Company has produced new tire with an estimated mean lifetime mileage of 36,500 miles. Management also believes that the standard deviation is 5,000 miles and that tire mileage is normally distributed. To promote the new tire, Grear has offered to refund a portion of the purchase price if the tire fails to reach 30,000 miles before the tire needs to be replaced. Specifically, for tires with a lifetime below 30,000 miles, Grear will refund customer $1 per 100 miles short of 30,000. Construct a simulation model to answer the following questions. (Use at least 1,000 trials.) (a) For each tire sold, what is the expected cost (in dollars) of the promotion? (Round your answer to two decimal places.) $ (b) What is the probability that Grear will refund more than $50 for a tire? (Round your answer to three decimal places.) (c) What mileage should Grear set the promotion claim if it wants the expected cost to be $2? This question can be answered by trial and error. While the mean profit can vary, a promotion claim of ---Select--- miles will result in an expected cost of approximately $2.00. SHOW WORK FOR (a) and (b) ON EXCEL SPREADSHEET.
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