The Tailure rates of transistors in a computer are summarized in the following table. End of week 2. 3 4 Probability of failure to date 0.09 0.17 0.27 0.50 0.65 0.90 1.00 The cost of replacing an individual failed transistor is $8. If all the transistors are replaced simultaneously, it would cost $4 per transistor. Any one of the following two options can be followed to replace the transistors: (a) Replace the transistors individually when they fail (individual replacement policy). (b) Replace all the transistors simultaneously at fixed intervals and replace the individual transistors as they fail in service during the fixed interval (Group replacement policy). Find out which is the optimal replacement policy, i.e. the individual replacement policy or the group replacement policy. If the group replacement policy is optimal, then find at what equal intervals should all the transistors be replaced.

The Tailure rates of transistors in a computer are summarized in the following table. End of week 2. 3 4 Probability of failure to date 0.09 0.17 0.27 0.50 0.65 0.90 1.00 The cost of replacing an individual failed transistor is $8. If all the transistors are replaced simultaneously, it would cost $4 per transistor. Any one of the following two options can be followed to replace the transistors: (a) Replace the transistors individually when they fail (individual replacement policy). (b) Replace all the transistors simultaneously at fixed intervals and replace the individual transistors as they fail in service during the fixed interval (Group replacement policy). Find out which is the optimal replacement policy, i.e. the individual replacement policy or the group replacement policy. If the group replacement policy is optimal, then find at what equal intervals should all the transistors be replaced.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter1: Introduction And Goals Of The Firm

Section: Chapter Questions

Problem 2.2CE

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