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Calculating the Optimal Electric Scooter Guarantee Period Based on Lifespan Data

When purchasing an electric scooter, one of the most reassuring aspects can be the manufacturer's guarantee. It's an assertion of product quality and a promise of reliability. But have you ever wondered how manufacturers determine the length of these guarantees? Let’s demystify this by using a practical example where an electric scooter's average lifespan is 13 years with a standard deviation of 1.5 years, and the manufacturer is willing to replace 5% of the failed scooters for free under the guarantee.

Understanding the Manufacturer's Challenge

A guarantee is a balance of risk and cost for manufacturers. They aim to cover most of their products without incurring excessive replacement costs. By stating they are willing to replace 5% of the failed scooters, the manufacturer has set their acceptable risk level. The goal is to find a time period for the guarantee that only 5% of the scooters would statistically fail before reaching.

Applying Normal Distribution

Since the lifespan of electric scooters can be assumed to be normally distributed, we use the z-score formula to determine the period corresponding to the bottom 5% of a normal curve. The z-score is a measure of how many standard deviations an element is from the mean. For our 5% threshold, we look up the appropriate z-score on a standard normal distribution table, which is approximately -1.645.

Calculating the Guarantee Time

The calculation to find the guarantee period is:

Guarantee Time (years) = Mean lifespan - (Z-score * Standard Deviation)

Plugging in our values gives:

Guarantee Time (years) = 13 - (-1.645 * 1.5)
= 13 + 2.468
≈ 15.47

This result suggests the manufacturer should offer a guarantee of slightly less than 15.5 years to ensure that, under typical circumstances, no more than 5% of the scooters fail within the guarantee period.

Implications for Consumers and Manufacturers

For consumers, this analysis reassures that a solid guarantee is based on statistical evidence. Meanwhile, manufacturers can apply such calculations to optimally balance customer satisfaction and economic feasibility.

In conclusion, with a strategically calculated guarantee period, electric scooter manufacturers can build trust with consumers and stand behind their products with confidence, while also keeping financial risks at bay.

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