41. A manager is going to purchase new processing equipment and must decide on the number of spare parts 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 can be described by this distribution:
Number
0
1
2
3
Probability
.10
.50
.25
.15
If a part fails and a spare is not available, two days will be needed to obtain a replacement and install it. The cost for idle equipment is $500 per day. What quantity of spares should be ordered?
a. Use the ratio method.
b. Use the tabular method (see Table 13.4).
Needs help with similar assignment?
We are available 24x7 to deliver the best services and assignment ready within 3-4 hours? Order a custom-written, plagiarism-free paper
Order Over WhatsApp
Place an Order Online