Wharton Manufacturing Company operates its 23 large and expensive grinding and lathe machines from 7 a.m. to 11 p.m., 7 days a week. For the past year, the firm has been under contract with Simkin and Sons for daily preventive maintenance (lubrication, cleaning, inspection, and so on). Simkin’s crew works between 11 p.m. and 2 a.m. so as not to interfere with the daily manufacturing crew. Simkin charges $645 per week for this service. Since signing the maintenance contract, Wharton Manufacturing has noted an average of only three breakdowns per week. When a grinding or lathe machine does break down during a working shift, it costs Wharton about $250 in lost production and repair costs. After reviewing past breakdown records (for the period before signing a preventive maintenance contract with Simkin and Sons), Wharton’s production manager was able to summarize the following patterns:

The production manager is not certain that the contract for preventive maintenance with Simkin is in Wharton’s best financial interest. He recognizes that much of his breakdown data are old but is fairly certain that they are representative of the present picture.a) What is the weekly cost of the breakdowns without the maintenance contract?b) What is the cost per week of the breakdowns with the maintenance contract?c) Is the contract for preventive maintenance with Simkin in Wharton’s best financial interest?

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NUMBER OF BREAKDOWNS PER WEEK NUMBER OF WEEKS IN WHICH BREAKDOWNS OCCURRED 0 1 2 3 4 5 6 7 8 1 1 3 5 9 11 7 8 5