A newly purchased equipment item in your organization has a compressor that is known to experience failure (requiring complete replacement) after 6 years. Because of the problems in finding OEM parts, your organization is considering purchasing spare compressors.

Your organization uses some numbers to make decisions: it costs $1200 to purchase AND store a single spare compressor over the design life, $2000 for downtime costs and repair with that same stored compressor, and $5000 to purchase a compressor (and downtime costs) and repair if you have to purchase it when it is immediately required. If the design life of the compressor is 10 years, use the Poisson distribution to advise on the lowest cost decision (ie. How many spare compressors will you recommend – zero, one, two…?)

Answer rating: 100% (QA)

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