A decision has been made to perform certain repairs on the outlet works of a small dam. For a particular 36-inch gate valve, there are three available alternatives:
Leave the valve as it is.
Repair the valve.
Replace the valve.
If the valve is left as it is, the probability of a failure of the valve seats, over the life of the project, is 60%; the probability of failure of the valve stem is 50%; and of failure of the valve body is 40%. If the valve is repaired, the probability of a failure of the seats, over the life of the project, is 40%; of failure of the stem is 30%; and of failure of the body is 20%. If the valve is replaced, the probability of a failure of the seats, over the life of the project, is 30%; of failure of the stem is 20%; and of failure of the body is 10%.
The present worth of cost of future repairs and service disruption of a failure of the seats is $10,000; the present worth of cost of a failure of the stem is $20,000; the present worth of cost of a failure of the body is $30,000. The cost of repairing the valve now is $10,000; and of replacing it is $20,000. If the criterion is to minimize expected costs, which alternative is best?