A manager is comparing the total maintenance (preventive plus breakdown) cost curves for two scenarios. The graphs have maintenance commitment on the x-axis and costs on the y-axis. Scenario A includes the direct breakdown maintenance costs, while Scenario B includes the "full" (direct and indirect) breakdown maintenance costs. Which of the following should the manager notice when going from Scenario A to Scenario B?
A) total cost is decreased
B) optimal point is moved to the left
C) optimal point is moved to the right
D) preventative maintenance cost slope is increased
E) none of the above

Question

Quizplus · Accepted Answer

The addition of indirect costs in Scenario B will increase the overall maintenance costs, moving the optimal point to the right. Therefore, the best choice is C. None of the other options would occur when going from Scenario A to Scenario B.

A Manager Is Comparing the Total Maintenance (Preventive Plus Breakdown)