19. A large firm has on an average, 30 pieces ofan equipment requiring repairs per week. The probability of an equipment failure is approximately constant so that the arrivals are distributed according to the Poisson law. The repair time is exponentially distributed. The down-time cost of the equipment is estimated at Rs 100 per work day. There are 6 working days and the firm works 50 weeks per annum.

The firm has two repair facilities to choose from. The details are:

Assuming that there is no time value ofmoneY, which facility would You suggest the firm to choose?

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Installation Charges Operating Expenses p.a. Economic Life Scrap Value Service Rate Facility F F Rs 120,000 Rs 200,000 Rs 40,000 5 Years nil Rs 50,000 5 Years nil 40 per week 80 per week