Ward Doering Auto Sales is considering offering a special service contract that will cover the total cost of any service work required on leased vehicles. From experience, the company manager estimates that yearly service costs are approximately normally distributed, with a mean of $150 and a standard deviation of $25.
a. If the company offers the service contract to customers for a yearly charge of $200, determine the probability that any one customer's service costs will exceed the contract price or $200.
b. Determine Ward's expected profit per service contract.
Normal Distributions, Z-Scores and Standard Deviations are investigated. The solution is detailed and well presented.