Answered: The Worthington Gear Company installed…

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 Worthington Gear Company installed a bank of 10 robots about three years ago. The robots greatly in-
creased the firm’s labor productivity, but recently attention has focused on maintenance. The firm does no pre-
ventive maintenance on the robots because of the variability in the breakdown distribution. Each machine has
an exponential breakdown (or interarrival) distribution with an average time between failures of 200 hours. Each
machine hour lost to downtime costs $30, which means that the firm has to react quickly to machine failure.
The firm employs one maintenance person, who needs 10 hours on average to fix a robot. Actual maintenance
times are exponentially distributed. The wage rate is $10 per hour for the maintenance person, who can be put
to work productively elsewhere when not fixing robots. Determine the daily cost of labor and robot downtime.

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