Chapter 12 Simulation and Risk Analysis 463 CASE: PERFORMANCE LAWN EQUIPMENT In one of PLE's manufacturing facilities. a drill press that per bit. The company that supplies the drill bits has his- has three drill bits is used to fabricate metal parts. Drill torical evidence that the reliability of a single drill bit is bits break occasionally and need to be replaced. The pres- described by a Poisson probability distribution with the ent policy is to replace a drill bit when it breaks or can mean number of failures per hour equal to A = 0.01. Thus, no longer be used. The operations manager is considering the time between failures is an exponential distribution a different policy in which all three drill bits are replaced with mean a = 1/A = 1/0.01 = 100 hours. The opera- when any one bit breaks or needs replacement. The ratio- tions manager at PLE would like to compare the cost of nale is that this would reduce downtime. It costs $200 each the two replacement policies. Develop spreadsheet simula- time the drill press must be shut down. A drill bit casts tion models to determine the total cost for each policy over $85, and the variable cost of replacing a drill bit is $15 1,000 hours and make a recommendation