A factory operates for 8 hours everyday and has 240 working days in the year. It buys

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A factory operates for 8 hours everyday and has 240 working days in the year. It buys a large number of small machines which can be serviced by its maintenance engineer at a cost of Rs 4 per hour for the labour and spare parts. The machines can, alternatively, be serviced by the supplier at an annual contract price of Rs 20,000 including the labour and spare parts needed. The supplier undertakes to send a repairman as soon as a call is made but in no case more than one repairman is sent. The service times of the maintenance engineer and the supplier's repairman are both exponentially distributed with respective means of 1. 7 and 1.5 days. The machine breakdowns occur randomly and follow Poisson distribution, with an average of 2 in 5 days. Each hour that a machine is out of order, it costs the company Rs 8. Which servicing alternative would you advise it to opt for?

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