The fire department has a number of failures withits oxygen masks and is evaluating the possibility of outsourcingpreventive maintenance to the manufacturer. Because of the riskassociated with a failure, the cost of each failure is estimated at$2,000. The current maintenance policy (with station employeesperforming maintenance) has yielded the following history:Number of breakdowns 012345Number of years in whichbreakdowns occurred 431550This manufacturer will guarantee repairs on any and all failures aspart of a service contract. The cost of this service is $5,000 per year. a) What is the expected number of breakdowns per year with sta-tion employees performing maintenance? b) What is the cost of the current maintenance policy?c) What is the more economical policy?
The fire department has a number of failures withits oxygen masks and is evaluating the possibility of outsourcingpreventive maintenance to the manufacturer. Because of the riskassociated with a failure, the cost of each failure is estimated at$2,000. The current maintenance policy (with station employeesperforming maintenance) has yielded the following history:Number of breakdowns 012345Number of years in whichbreakdowns occurred 431550This manufacturer will guarantee repairs on any and all failures aspart of a service contract. The cost of this service is $5,000 per year. a) What is the expected number of breakdowns per year with sta-tion employees performing maintenance? b) What is the cost of the current maintenance policy?c) What is the more economical policy?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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The fire department has a number of failures with
its oxygen masks and is evaluating the possibility of outsourcing
preventive maintenance to the manufacturer. Because of the risk
associated with a failure, the cost of each failure is estimated at
$2,000. The current maintenance policy (with station employees
performing maintenance) has yielded the following history:
Number of breakdowns 012345
Number of years in which
breakdowns occurred 431550
This manufacturer will guarantee repairs on any and all failures as
part of a service contract. The cost of this service is $5,000 per year.
a) What is the expected number of breakdowns per year with sta-
tion employees performing maintenance?
b) What is the cost of the current maintenance policy?
c) What is the more economical policy?
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