A Crew of Mechanics at the Department of Transportation Garage

question 98

Multiple Choice

A crew of mechanics at the Department of Transportation garage make minor repairs to snowplows during the winter. The snowplows break down at an average rate of 4 vehicles per day and breakdowns are distributed according to the Poisson distribution. The mechanic can service an average of 7 vehicles per day with a repair time distribution that approximates a negative exponential distribution. Assume an 8 hour day.
-On average, how long does a plow wait before the mechanic begins the repair?

• A) 0.19 hour
• B) 1.25 hours
• C) 1.52 hours
• D) 2.64 hours

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Definitions:

Adjusting Entry

An accounting procedure for updating the records of unrecorded expenses or revenues to ensure accurate financial statements.

Straight-Line Amortization

A method of evenly distributing the cost of an intangible asset over its useful life.

Total Interest Cost

The sum of all interest payments over the life of a loan, reflecting the true cost of borrowing.

Interest Paid

The amount paid by a borrower to a lender for the privilege of using borrowed money, typically expressed as an annual percentage of the loan outstanding.