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It costs a total of $2,000 to perform preventive maintenance (PM) on five identical production machines. This is the cost to perform preventive maintenance on all five of the machines. If one of the machines malfunctions between PM inspections, this breakdown cost averages $5,000. Following is the historical breakdown for the machines.
PM every n months Average Number of Breakdowns between PM Inspections
2 0.1 3 0.5 4 1.6 5 3.2
a) Which PM policy provides the minimum cost strategy based on the information provided?
b) With everything else the same, what is the average breakdown cost that results in the same total cost for a 2-month PM strategy and a 3-month PM strategy?
Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..
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