Decision_of_Uncertainty

Decision of Uncertainty MGT/561 September 26, 2011 Decision of Uncertainty A consumer takes into consideration his financial information before making a changes. In the case of a smart phone versus a regular cell phone rates and insurance rates increase. The consumer must look at every aspect of the investment. The rates are different from the smart phones from the regular phones. The rates go up, the insurance goes up, and Internet may be needed. The consumer will look at the warranty issue in this dilemma. Decision: To buy or not to buy insurance for a smart phone. The decision is to replace an existing phone and accept the warranty. Does the consumer purchase the warranty' The consumer is allowed 30 days to decide if he want to purchase the warranty. Verizon charges the customer monthly for this service. If the phone is lost, stolen, or has customer use damage such as water damage the warranty will cover this. The warranty requires a deductible to be paid. This warranty is covered for the two years that the phone is under contract. The customer will need to make a claim with Assurian. Assurian will validate the claim and will send the customer a new phone through the shipping company. This process takes 24 – 36 business hours. The decision is whether or not to accept this insurance. The additional cost will affect the family slightly but is it worth it. If warranty is purchased this claim requires a deductible to be paid. Research Making the decision to purchase the additional insurance one must take research the time that the phone is under contract. The cost of the insurance and the cost of the deductible will increase. A consumer must consider if this warranty is worth paying additional fees. What the likely hood is that the insurance is used. The individual should look at the cost of a smart phone versus a regular cell phone. Prices could be different from phone to phone. Interpretation of Data To come up with the data to decide whether or not to purchase this warranty the figures were added up for the two different plans. Smart phones versus regular cell phones. The cost of the smart phone warranty per month is 6.99. The cost of a regular cell phone warranty is 5.99 per month. The deductible for the smart phone is $150 and the detectible for a regular cell phone is $50. A sample mean is useful to conduct this formula to decide whether or not to purchase the cell phone warranty. Smart phone - $6.99 per month $150 deductible Regular cell phone - $5.99 per month $50 deductible The customer is spending 6.99 per month for two years for the warranty, which equals $167.76. If a customer uses the warranty he has to pay for the deductible, which is $150. On average the customer may use the warranty one-time per contract. On the regular phone contract a customer spends $5.99 per month for a two-year contract which equals $143.76. On average like a smart phone the customer may use his warranty one-time per contract, which is $50. Based on the above calculations he increase between the two cell phone warranties is a sample error of .16 Decision Based upon the above calculations the increase in the cell phones monthly bill would be 16%. A budget calculation is needed to make sure the customer can afford the increase of the warranty. The individual may consider only purchasing the warranty on a smart phone and not the regular cell phone or the opposite. The customer also needs to take in the consideration that if the phone is lost or customer damage occurs he is responsible to pay the bill whether he has a phone or not. Terminating the contract will cost a minimum amount. The customer also needs to take into consideration that this will affect the monthly budget per month or any job changes that may occur.