A car insurance company wishes to estimate the average warranty claims
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A car insurance company wishes to estimate the average warranty claims

A car insurance company wishes to estimate the average warranty claims per year for a newly introduced car model. In collaboration with the manufacturer, the insurance company obtained the following failure data shown in Table 11.3 from the laboratory testing of different components of the car. The claims are approximately equal in value regardless of the type of failure. This implies that the failure data of all the components can be analyzed as if it came from one type of failure. The table shows data obtained from subjecting eighty-four cars to continuous testing. Assume that the failure time follows a Weibull distribution; the cost of a claim is $85; the average miles per car is 15 000 per year; and 20 000 cars were introduced into the market. What is the total cost of claims per year for the next five years?


Hint
ComputerWeibull distribution: It is a continuous probability distribution which could also fit a wide range of the data from many other fields, which includes economics, biology, engineering sciences, and hydrology. The distribution, in reliability engineering, is one of the most widely used lifetime distributions, and is also a versatile distribution which could easily take on the characteristics...

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