QUESTION 1:

A sample of failures (time between failures) of laptops batteries (measured in months) is

shown in Table 1 (given below):
Figure 1: Time between failures:
9 11 8 12 6 4 14 11 6 10

16 8 6 7 4 6 7 13 8 16

Assume that the data follows a Poisson process.

(a) If the manufacturer provides 12 months warranty, what is the expected number of failures
during the warranty period?

(b) The manufacturer would like to ensure they can meet the demand for spare batteries 90%
of the times from the stock. How many batteries they should stock to meet this condition for
2-year period?

SOLUTION:

a) To calculate the expected number of failures for laptop batteries for one year warranty
period, we have to estimate the parameter λ of the Poisson distribution. The maximum
likelihood estimate of λ is given by:

1/ (1/20)*182

1/ (182/20) = 9.1

1/9.1= 1.098

0.1098

Where Xi is the time between the failures of ith case and is the mean time
difference between failures.

The expected number of demand for spare batteries, E[N(t)] for 1 year is given by:

E[N(t)]= E[N(1*12)]= λ*t = 0.1098*1*12= 1.376

b) To ensure that the demand for spare batteries is met 90% of the time, we have to calculate
smallest k such that:

e-0.1098*12*2 x (0.1098*12*2)1
= 0.1889
1!
Where,

t is time in months

Λ is Poisson’s distribution

i is failure of each case

The below table 2, shows density and cumulative distribution function values of Poisson
process for different values of k:

Figure 2: Density and cumulative function values for different values of k

k Poisson Density Cumulative

0 0.0717 0.0717
1 0.1889 0.2606
2 0.2489 0.5095
3 0.2186 0.7281
4 0.1440 0.8721
5 0.0759 0.9480
6 0.0333 0.9813
7 0.0125 0.9938
8 0.0041 0.9980
9 0.0012 0.9992
10 0.0003 0.9995

Smallest value of k cumulative probability is greater than 0.90 is 5. That is the manufacturer
should stock 5 batteries to ensure that they meet demand for batteries in 90% of the cases
over a 2 year period.
The probability density function of Poisson distribution with mean 1.376 is shown below in
figure 3:

Figure 3: Poisson Process Density Function

0.3

0.25
Poisson Density Function

0.2

0.15

0.1

0.05

0
0 2 4 6 8 10 12
Value of k