Suppose That the Average Time Before Breakdown Is Normally Distributed

question 28

Multiple Choice

Suppose that the average time before breakdown is normally distributed with a mean of 2.5 weeks and a standard deviation of .4 weeks. If breakdowns cost an average of $1,200 and preventive maintenance costs $800, what is the optimal maintenance interval?

• A)Every .67 weeks
• B)Every .33 weeks
• C)Every 2.67 weeks
• D)Every 3.25 weeks
• E)Every 3.12 weeks

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Definitions:

Consumer Division

A part of a company focused on selling products or services directly to end-users or consumers.

Fixed Expenses

Expenses that remain constant regardless of the amount of goods produced or sold, including costs like lease payments, wages, and insurance fees.

Break-even Sales

The amount of revenue required to cover both the variable and fixed costs of production, resulting in no profit or loss.

Fixed Expenses

Costs that do not vary with the level of production or sales volume, such as rent or salaries.