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Should the laundromat switch to the new repair service

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Question 1: The Quick Wash 24-hour Laundromat has 16 washing machines. A machine breaks down every 20 days (exponentially distributed). The repair service with which the Laundromat contracts takes an average of 1 day to repair a machine (exponentially distributed). A washing machine averages $5 per hour in revenue. The Laundromat is considering a new repair service that guarantees repairs in 0.50 day, but it charges $10 more per hour than the current repair service. Should the Laundromat switch to the new repair service?

a) USING CURRENT REPAIR SERVICE W = LOST REVENUES = per machine

b) USING NEW REPAIR SERVICE W = LOST REVENUES = SAVING IN REVENUES = EXTRA COST OF SERVICE = 24x vs. 12(x+10) x x + 10 24x 12(x+10) difference 10 20 5

a) USING CURRENT REPAIR SERVICE W = LOST REVENUES = per machine

b) USING NEW REPAIR SERVICE W = LOST REVENUES = SAVING IN REVENUES = EXTRA COST OF SERVICE = 24x vs. 12(x+10) x x + 10 24x 12(x+10) difference 10 20 5

Reference no: EM132489933

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