CMA Intermediate · Operations Management and Strategic Management · Economics of Maintenance and Spares Management
A mill at Surat has 50 looms. Past data show the following breakdowns per month under breakdown maintenance: 2 breakdowns with probability 0.3, 4 with probability 0.5, 6 with probability 0.2. Each breakdown costs ₹5,000. A preventive maintenance contract costs ₹12,000 per month and reduces breakdowns to a constant 2 per month. What is the monthly net advantage or disadvantage of the preventive contract?
Correct figure needs checking.
- AAdvantage of ₹3,000
- BDisadvantage of ₹2,000Correct
- CAdvantage of ₹8,000
- DDisadvantage of ₹12,000
Explanation
Expected breakdowns now = 2(0.3)+4(0.5)+6(0.2) = 0.6+2.0+1.2 = 3.8. Cost = 3.8 x 5,000 = ₹19,000. Preventive: 2 x 5,000 = 10,000 + 12,000 = ₹22,000. The contract costs ₹3,000 more, so the disadvantage is ₹3,000, not ₹2,000.
Did you get it right without looking?
One question tells you little. A timed set on Economics of Maintenance and Spares Management shows your real accuracy, how long you take and where you lose marks.
More Economics of Maintenance and Spares Management questions
- Sundaram Textiles finds that a machine breakdown costs ₹12,000 per occurrence. Without preventive maintenance, expected breakdowns are 5 per…
- A textile mill uses a spare part with annual demand of 1,600 units. Ordering cost is ₹400 per order and carrying cost is ₹8 per unit per yea…
- Which of the following is a genuine feature of corrective maintenance as distinct from breakdown maintenance?
- In a replacement analysis without time value of money, a machine should be replaced when:
- Which cost element is generally LOWER under a preventive maintenance policy than under a pure breakdown maintenance policy, other things rem…
- A plant in Pune fits sensors to its turbines and schedules overhaul only when vibration and temperature readings cross set limits. Which sta…