Question 3 (4 points): POWRD is a startup company implementing a new high speed process for battery manufacturing. The machinery required for this new process has a small likelihood of causing a fire, with one fire occurring, on average, every 5400 batches of batteries produced in current testing. POWRD estimates that fires have an average cost of $1.2 million due to equipment damage. The same machinery can also result in worker injuries, with one occurring every 3200 batches of batteries. Injuries cost the company about $300,000 each. A design change is possible that would reduce each incident rate (fires and injuries), but it requires increases costs for this improvements since it increases the overall system mass considerably the more mitigation is designed in. The cost of the A rate improvement is: Mitigation Cost = x ($5,500). 100 batches 1.5 (i So, by spending $5,500, the company can reduce the rate of fires from 1 in 5400 batches, to 1 in 5500 batches, and likewise the rate of injuries from 1 in 3200 batches to 1 in 3300 batches. Assuming nominal production is 6400 batches per year, what level of mitigation spending would produce the highest expected net benefits? (List the net benefits and new incident rates as well as the mitigation spending.) Question 3 (4 points): POWRD is a startup company implementing a new high speed process for battery manufacturing. The machinery required for this new process has a small likelihood of causing a fire, with one fire occurring, on average, every 5400 batches of batteries produced in current testing. POWRD estimates that fires have an average cost of $1.2 million due to equipment damage. The same machinery can also result in worker injuries, with one occurring every 3200 batches of batteries. Injuries cost the company about $300,000 each. A design change is possible that would reduce each incident rate (fires and injuries), but it requires increases costs for this improvements since it increases the overall system mass considerably the more mitigation is designed in. The cost of the A rate improvement is: Mitigation Cost = x ($5,500). 100 batches 1.5 (i So, by spending $5,500, the company can reduce the rate of fires from 1 in 5400 batches, to 1 in 5500 batches, and likewise the rate of injuries from 1 in 3200 batches to 1 in 3300 batches. Assuming nominal production is 6400 batches per year, what level of mitigation spending would produce the highest expected net benefits? (List the net benefits and new incident rates as well as the mitigation spending.)