Cost of an individual worker

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Reference no: EM133251296

Case: A large pharmaceutical manufacturer has 5 critical machines that they must keep working as much as possible. Each machine breaks down on average once every 5 hours. A repair worker can repair a machine in an average of 2 hours. The company employs 3 repair workers. A suggestion has been made to have all 3 workers work together as a single repair team whenever a machine breaks down. An experiment resulted in an estimate that they can repair a machine in an average of 1 hour. Assume the only options are for them to work indivirdually or all together. Breakdown and service times are exponential. Each worker makes $40 per hour so the team would make $120 per hour. When actually repairing a machine, an additional cost of $25 per hour is incurred, bringing the cost of an individual worker to $65 per hour and the team to $145 per hour. Downtime is estimated to cost $200 per hour regardless of whether the machine is waiting to be repaired or is in the process of being repaired. Which option is better?

Reference no: EM133251296

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