As a firm's maintenance commitment increases:
A) the breakdown maintenance costs increase, and the preventive maintenance costs decrease.
B) both the breakdown maintenance costs and the preventive maintenance costs decrease.
C) the breakdown maintenance costs decrease, and the preventive maintenance costs increase.
D) both the breakdown maintenance costs and the preventive maintenance costs increase.
E) None of these is true.

Question

Quizplus · Accepted Answer

With an increase in maintenance commitment, breakdown maintenance costs decrease because there are fewer breakdowns due to increased preventative maintenance. However, preventive maintenance costs increase because of the increased maintenance activities. Therefore, both the breakdown maintenance costs and the preventive maintenance costs do not decrease (option B) or increase (option D).

As a Firm's Maintenance Commitment Increases