In a Factory, Machines Breakdown at an Average of 6

question 50

Short Answer

In a factory, machines breakdown at an average of 6 machines per hour according to a Poisson distribution. The time a repair person takes to repair the machine is not defined by any probability distribution, but has a mean of 8 minutes and a standard deviation of 3 minutes.
-On average, how many machines are waiting in line to be fixed?

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Definitions:

Fixed Costs

Expenses that do not change in total volume with changes in the level of business activity, such as rent or salaries.

Contribution Margin Ratio

A financial ratio that measures how much of each sale is available to cover fixed costs after variable costs have been paid.

Variable Costs

Charges that fluctuate in relation to the volume of business activities or production levels.

CVP Analysis

Cost-Volume-Profit Analysis, a tool that helps understand the relationship between costs, volume of sales, and profit.