Question: 6 . The NPS Corp has a contract with the Navy to deliver 1 , 0 0 0 fuel pumps for the J - 5

6. The NPS Corp has a contract with the Navy to deliver 1,000 fuel pumps for the J-52 engines (used in A-6, A-4, E/A6 Navy and Marine aircraft). The lifetime of the pump follows a normal distribution with \mu =8 years, and \sigma =3 years. The warranty covers the first two-year failures and the company will repair the faulty pumps free of charge. Each repair costs the company an average of $4,000. The company has two options to improve the process. Which is the preferred option and what is the maximum that company willing to invest to implement that option?
Option 1: increase the mean by 1 year (i.e.,\mu =9,\sigma =3)
Option 2: decrease the standard deviation by 1 year (i.e.,\mu =8,\sigma =2)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!