Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A manager wants to purchase a new piece of processing equipment and must decide on the number of a spare part to order with the

A manager wants to purchase a new piece of processing equipment and must decide on the number of a spare part to order with the new equipment. The spares cost $200 each, and any unused spares will have an expected salvage value of $50 each. The probability of usage of parts can be described by the following distribution:
Number 0123
Probability 0.100.500.250.15
If the part fails and a spare is not available, it will take two days to obtain a replacement and install it. The cost for idle equipment is $400 per day. The spare is expected to cost the same in the future ($200 per unit). What quantity of spares should be stocked? use the ratio method

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Ethics Theory and Contemporary Issues

Authors: Barbara MacKinnon, Andrew Fiala

8th edition

9781305162846, 1285196759, 1305162846, 978-1285196756

More Books

Students also viewed these General Management questions