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CMA Intermediate · Operations Management and Strategic Management · Economics of Maintenance and Spares Management

Sundaram Textiles finds that a machine breakdown costs ₹12,000 per occurrence. Without preventive maintenance, expected breakdowns are 5 per month. Preventive maintenance costing ₹30,000 per month reduces expected breakdowns to 2 per month. What is the net monthly saving from adopting preventive maintenance?

The net saving is ₹6,000 per month. Preventive maintenance avoids three breakdowns worth ₹36,000, and after deducting the ₹30,000 programme cost, a net benefit of ₹6,000 remains, so the programme is worthwhile.

  1. A₹6,000Correct
  2. B₹30,000
  3. C₹36,000
  4. D₹66,000

Explanation

Breakdowns avoided = 5 - 2 = 3, saving 3 x 12,000 = ₹36,000. Net of preventive cost: 36,000 - 30,000 = ₹6,000. Option C ignores the cost of the preventive programme.

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