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It costs a total of $2,000 to perform preventive maintenance (PM) on five identical production machines. This is the cost to perform preventive maintenance on all five of the machines. If one of the machines malfunctions between PM inspections, this breakdown cost averages $5,000. Following is the historical breakdown for the machines.
PM every n months Average Number of Breakdowns between PM Inspections
2 0.1
3 0.5
4 1.6
5 3.2
a) Which PM policy provides the minimum cost strategy based on the information provided?
b) With everything else the same, what is the average breakdown cost that results in the same total cost for a 2-month PM strategy and a 3-month PM strategy?
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