The frequency of breakdown of a machine per month is shown in the table. The cost ofa breakdown is $1,000 and the cost of preventive maintenance is $1,250 per month. Ifpreventive maintenance is performed, the probability of a machine breakdown is negligible. Should the manager use preventive maintenance, or would it be cheaper to repair themachine when it breaks down?Number of breakdowns 0 1 2 3Frequency of occurrence .20 .30 .40 .10

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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The frequency of breakdown of a machine per month is shown in the table. The cost of
a breakdown is $1,000 and the cost of preventive maintenance is $1,250 per month. If
preventive maintenance is performed, the probability of a machine breakdown is negligible. Should the manager use preventive maintenance, or would it be cheaper to repair the
machine when it breaks down?
Number of breakdowns 0 1 2 3
Frequency of occurrence .20 .30 .40 .10

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