Make a change in its overhaul operation

Reference no: EM131105392

An airline maintenance base wants to make a change in its overhaul operation. The present situation is that only one airplane can be repaired at a time, and the expected repair time is 36 hours, whereas the expected time between arrivals is 45 hours. This situation has led to frequent and prolonged delays in repairing incoming planes, even though the base operates continuously. The average cost of an idle plane to the airline is $3,000 per hour. It is estimated that each plane goes into the maintenance shop 5 times per year. It is believed that the input process for the base is essentially Poisson and that the probability distribution of repair times is Erlang, with shape parameter k = 2.

Alternative A is to provide a duplicate maintenance shop, so that two planes can be repaired simultaneously. The cost, amortized over 5 years, is $400,000 per year for each of the airline's airplanes. Alternative B is to replace the present maintenance equipment by the most efficient (and expensive) equipment available, thereby reducing the expected repair time to 18 hours. The cost, amortized over 5 years, is $550,000 per year for each airplane. Which alternative should the airline choose?

Reference no: EM131105392

Questions Cloud

Find two designs using open-circuited stubs : Find two designs using open-circuited stubs.

Which of the following would you expect to happen : Investors expect a company to announce a 10% increase in earnings; instead, the company announces a 1% increase. If the market is semi-strong form efficient, which of the following would you expect to happen?a. The stock's price will increase slightl..

Question regarding the times-interest-earned ratio : If the company could reduce its accounts receivable to the point where its DSO was equal to the industry average without affecting its sales or its operating costs, how would this affect (a) its free cash flow? (b) its return on common equity? (c)..

Design a double-stub tuner using open-circuited stubs : Problem 5.9 Design a double-stub tuner using open-circuited stubs with a λ/8 spacing to match a load admittance YL = (0.4 + j1.2)Y0

Make a change in its overhaul operation : An airline maintenance base wants to make a change in its overhaul operation. The present situation is that only one airplane can be repaired at a time, and the expected repair time is 36 hours, whereas the expected time between arrivals is 45 hou..

How much depreciation and amortization expense : How much Depreciation and Amortization Expense did Target record in Fiscal 2009? How much was the Depreciation Expense alone (i.e. excluding Amortization)?

Formulation of financial strategies for businesses : What is the importance of ethics in the formulation of financial strategies for businesses?

What is the maximum value of normalized reactance : What is the maximum value of normalized reactance that can be obtained with a shorted stub of the same type of transmission line? Assume α is small.

Optimal order quantity for boats : Barneycle's Boat Shop sells 4,000 of its glow-in-the-dark boats each year and has fixed order costs of $220.9 per order. Carrying cost per boat is $200 per year. What is the optimal order quantity for these boats?

User Account

All Pages