Question:

One of the super-quants on your team was able to adapt the learning curve

formula to predict the failure rate of servers in the server farm.

F(x) = Ae^(Gx)  8.8e^(0.08(10x)

F(x) = number of failures in a population of 100,000 servers of age x

A = Initial mortality rate

G = Exponential rate of increase mortality for an increase in age x

e = Mathematical expression (Function EXP in excel) which approximates 2.71828…

Based on the equation above derive failure rate from age 2.5 to 9.0 years.

Assume the average server costs $100,000 and the average age of your server farm is 7 years. Your ops

team suggest that they are reducing the average failure rate of your server farm from 4% to 1% in order to

service enterprise customers – what would this mean to your cost basis