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17.21 The fire department has a number of failures with its oxygen masks and is evaluating the possibility of outsourcing preventive maintenance to the

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17.21 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 0 1 2 3 4 5 Number of years in which breakdowns occurred 4 3 1 5 0 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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