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Consider an expensive part with a reliability of 96.6%. If the part fails, it will cost the firm $8,000. a. What is the expected failure cost per part? The probability of failure is 100% (round your response to two decimal places). The expected failure cost per part is $320.00 (round your response to the nearest penny). b. On each part, a rather unreliable backup can be installed that has a reliability of just 40.00%. What is the maximum amount that the firm should be willing to pay per part to install the backup? The new probability of failure is % (round your response to two decimal places). The new expected cost of failure is $(round your response to the nearest penny). The firm should pay as much as $ for the backup (round your response to the nearest penny). c. Suppose that a second 40.00% reliable backup part could be installed, so that if both the original and the first backup part fail, then the second backup part will be used. If that second backup part costs $110.00, should it be installed? Support your answer. The new probability of failure is % (round your response to two decimal places). The new expected cost of failure is (round your response to the nearest penny). The firm should pay as much as $ for the backup (round your response to the nearest penny). Should the firm install the second backup? Yes No

Consider an expensive part with a reliability of 96.6%. If the part fails, it will cost the firm $8,000. a. What is the expected failure cost per part? The probability of failure is 100% (round your response to two decimal places). The expected failure cost per part is $320.00 (round your response to the nearest penny). b. On each part, a rather unreliable backup can be installed that has a reliability of just 40.00%. What is the maximum amount that the firm should be willing to pay per part to install the backup? The new probability of failure is % (round your response to two decimal places). The new expected cost of failure is $(round your response to the nearest penny). The firm should pay as much as $ for the backup (round your response to the nearest penny). c. Suppose that a second 40.00% reliable backup part could be installed, so that if both the original and the first backup part fail, then the second backup part will be used. If that second backup part costs $110.00, should it be installed? Support your answer. The new probability of failure is % (round your response to two decimal places). The new expected cost of failure is (round your response to the nearest penny). The firm should pay as much as $ for the backup (round your response to the nearest penny). Should the firm install the second backup? Yes No

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter11: Simulation Models
Section: Chapter Questions
Problem 65P
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Consider an expensive part with a reliability of 96.6%. If the part fails, it will cost the firm $8,000. a. What is the expected failure cost per part? The probability of failure is 100% (round your response to two decimal places). The expected failure cost per part is $320.00 (round your response to the nearest penny). b. On each part, a rather unreliable backup can be installed that has a reliability of just 40.00%. What is the maximum amount that the firm should be willing to pay per part to install the backup? The new probability of failure is % (round your response to two decimal places). The new expected cost of failure is $ (round your response to the nearest penny). The firm should pay as much as $ for the backup (round your response to the nearest penny). c. Suppose that a second 40.00% reliable backup part could be installed, so that if both the original and the first backup part fail, then the second backup part will be used. If that second backup part costs $110.00, should it be installed? Support your answer. The new probability of failure is % (round your response to two decimal places). The new expected cost of failure is $ (round your response to the nearest penny). The firm should pay as much as $ for the backup (round your response to the nearest penny). Should the firm install the second backup? Yes No
Transcribed Image Text:Consider an expensive part with a reliability of 96.6%. If the part fails, it will cost the firm $8,000. a. What is the expected failure cost per part? The probability of failure is 100% (round your response to two decimal places). The expected failure cost per part is $320.00 (round your response to the nearest penny). b. On each part, a rather unreliable backup can be installed that has a reliability of just 40.00%. What is the maximum amount that the firm should be willing to pay per part to install the backup? The new probability of failure is % (round your response to two decimal places). The new expected cost of failure is $ (round your response to the nearest penny). The firm should pay as much as $ for the backup (round your response to the nearest penny). c. Suppose that a second 40.00% reliable backup part could be installed, so that if both the original and the first backup part fail, then the second backup part will be used. If that second backup part costs $110.00, should it be installed? Support your answer. The new probability of failure is % (round your response to two decimal places). The new expected cost of failure is $ (round your response to the nearest penny). The firm should pay as much as $ for the backup (round your response to the nearest penny). Should the firm install the second backup? Yes No
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