Question: 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

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 $300 each, and any unused spares will have an expected salvage value of $50. The probability of spare usage can be described by the following distribution (keep two decimal places):

Number of Spares Probability

0.10
0.50
0.25
0.15

If a part fails and a spare is not available, two days will be needed to obtain a replacement and install it. The cost of idle equipment is $500 per day. What quantity of spares should the manager order?

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!

1. Ignore any current plans. Using last year's actual data and sales mix, how many total cases would David need to sell in order to earn $50,000 after tax? How many of these cases would be Ocotillo...

Problem 12-41 (Algo) 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 $175 each, and any unused...

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 $172 each, and any unused spares will have an...

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...

please answer the following blue is table 1, red is table 2. Problem 12-28 (Algo) Regional Supermarket is open 355 days per year. Daily use of cash register tape averages 18 rolls. Usage appears...

Problem 12-41 (Algo) 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 $170 each, and any unused...

A mail-order house uses 15,975 boxes a year. Carrying costs are 42 cents per box a year, and ordering costs are $99. The following price schedule applies. Number of Boxes 1,000 to 1,999 2,000 to...

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 $180 each, and any unused spares will have an...

please answer the following 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 $188 each, and any...

Check my work 6 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...

Problem 12-41 (Algo) 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 $172 each, and any unused...

Compare two works of art: the epic of Gilgamesh and the two statuettes of worshippers. Address the following: Introduction: For each work, identify the author/artist, the name or title of the work,...

Statements Answer 1. The term relates to the quantity of evidence that the auditors should obtain. 2. The amount of evidence that is considered sufficient varies with the reliability of the evidence....

Check your last two programs and make sure they could be maintained by another programmer. Swap your program listing with another student and check that they can understand it.

As the manager of Smith Construction, you need to make a decision on the number of homes to build in a new residential area where you are the only builder. Unfortunately, you must build the homes...