Estimate the cost savings due to fewer crashes assume a

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Reference no: EM13623183

Suppose that the US military is considering a new lifetime regulation on their helicopter rotor blades. Instead of using them for 1000 hours (which leads to a likelihood of 5 failures per 10,000 blade sets), they are considering reducing the likelihood of a crash by replacing the blades after 500 hours, thus reducing the likelihood of a crash to 1 failure per 10,000 blade sets. Assuming a fleet of 10,000 helicopters, and assuming the helicopters are flow for 1000 hours/year, and a cost per set of blades of $5000.,

a) estimate the extra cost per year due to the increased use of blades

b) estimate the cost savings due to fewer crashes (assume a cost of $1million per helicopter, assume an average of two people in the helicopter, and remember that helicopter crashes are usually fatal).

c) Based on your calculations, what would you recommend?

Reference no: EM13623183

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