Falcon Plastics is a PVC pipe manufacturing firm which produces high quality PVC pipes. Currently they...
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Falcon Plastics is a PVC pipe manufacturing firm which produces high quality PVC pipes. Currently they are maintaining the Extruding machines under preventive maintenance, servicing it periodically every 4 weeks. Each of the preventive maintenance service will cost 80 OMR for the company. The machines are critical and are needed to be kept in good condition as each breakdown will cost the company 240 OMR. From the past maintenance records the company has compiled the probability of breakdown of the machine, and the same is given in Table Q3. Table Q3 Weeks of running 1 2 3 4 5 Probability of Breakdown 0.03 0.06 0.14 0.32 0.45 Determine whether it is economical to do preventive maintenance every 4 weeks. If not, suggest a better maintenance policy which is more economical, stating how much the firm would save annually on maintenance costs. Falcon Plastics is a PVC pipe manufacturing firm which produces high quality PVC pipes. Currently they are maintaining the Extruding machines under preventive maintenance, servicing it periodically every 4 weeks. Each of the preventive maintenance service will cost 80 OMR for the company. The machines are critical and are needed to be kept in good condition as each breakdown will cost the company 240 OMR. From the past maintenance records the company has compiled the probability of breakdown of the machine, and the same is given in Table Q3. Table Q3 Weeks of running 1 2 3 4 5 Probability of Breakdown 0.03 0.06 0.14 0.32 0.45 Determine whether it is economical to do preventive maintenance every 4 weeks. If not, suggest a better maintenance policy which is more economical, stating how much the firm would save annually on maintenance costs.
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Related Book For
Cost Management Accounting and Control
ISBN: 978-0324559675
6th Edition
Authors: Don R. Hansen, Maryanne M. Mowen, Liming Guan
Posted Date:
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