Section 3 (Problem Solving):

(8 marks)

The number of monitors breakdown in an industrial firm can be presented as follow:

Number of Breakdowns	Number of Months That Breakdowns Occurred
0	1
1	4
2	2
3	3
4	2
Total	12

Let the average cost of breakdown = AED 400 and the Cost of Service contract, that ensure an expected number of breakdown less than 1.5 by month, is equal to AED150/month.

1. Compute the expected number of breakdowns. (2 marks)

2. Compute the expected breakdown cost per month with no preventive maintenance. (2 marks)

3. Compute the cost of preventive maintenance. (2 marks)

4. Should the firm contract for maintenance on their monitors? (2 marks)

= 0*1+1*4+.. +4* 2 12 11 1) E[X] = expctd no.of brkdowns = _ P(X = x) 2.0833 expct brkdown cost per month = 400 * 2.0833 = 833.32 2) cost of prev maintenance = 1.5 * 150 = 225 YES