DuLarge Marine manufactures diesel engines for shrimp trawlers and other small commercial boats.One of their CNC machines has caused several problems.Over the past 30 weeks,the machine has broken down as indicated below.Each time the machine breaks down,the firm loses an average of $3,000 in time and repair expenses.If preventive maintenance were implemented,it is estimated that an average of only one breakdown per week would occur.The cost of preventive maintenance is $1,000 per week. What is the weekly total maintenance cost of this program?

Question

DuLarge Marine manufactures diesel engines for shrimp trawlers and other small commercial boats.One of their CNC machines has caused several problems.Over the past 30 weeks,the machine has broken down as indicated below.Each time the machine breaks down,the firm loses an average of $3,000 in time and repair expenses.If preventive maintenance were implemented,it is estimated that an average of only one breakdown per week would occur.The cost of preventive maintenance is $1,000 per week.  What is the weekly total maintenance cost of this program?

Quizplus · Accepted Answer

Currently, the firm is losing $3,000 per breakdown and there have been an average of 1.5 breakdowns per week (45 breakdowns over 30 weeks). This means that over the past 30 weeks, the firm has lost $135,000 ($3,000 x 45) due to machine breakdowns.

If preventive maintenance were implemented, the firm would only experience 1 breakdown per week and would incur a cost of $1,000 per week for maintenance. Therefore, the weekly total maintenance cost of this program would be $1,000.

By implementing preventive maintenance, the firm would be saving $2,000 per week ($3,000 - $1,000) in repair expenses and lost time. Over the course of 30 weeks, this would result in a total savings of $60,000 ($2,000 x 30).

Therefore, the total cost of implementing preventive maintenance over 30 weeks would be $30,000 ($1,000 x 30), but the firm would be saving $60,000 in repair expenses and lost time. The net benefit to the firm would be $30,000, resulting in an overall cost of $0. Therefore, the best choice is C) $4,000.

DuLarge Marine Manufactures Diesel Engines for Shrimp Trawlers and Other