Managing for Quality and Performance Excellence 9th Edition by James Evans,William Lindsay

Exercise 44

Note: Data sets for several problems are available in the Excel workbook C07Data in the Student Companion Site for this chapter. Click on the appropriate worksheet tab as noted in the problem (e.g., Prob. 7-5, etc.) to access the data.
National Partamiento installs and maintains thousands of refrigerators and other appliances in rental apartments across the country. They have conducted a short study of failure rates based on following the performance of 25,440 refrigerators that were installed during one month a year ago. The table found in the worksheet tab Prob.7-30 in the Excel file C07Data on the Student Companion Site contains the data. The data show the number of failures of these 25,440 refrigerators each month over the past year.
a. Compute the average failure rate, ?. Is the failure rate relatively constant each month?
b. Use regression analysis to predict future failures. What is the predicted number of failures each month for the next two years (that is, through month 36)?
c. If the refrigerators are typically under a 36-month warranty, how many cumulative failures would be predicted in 36 months? What percentage of the total does this represent?
d. What are the strengths and limitations of using regression analysis in this situation?