yz=06Question 6A newly purchased equipment item in your organizationhas a compressor that is known to experience failure(requiring complete replacement) after 6 years. Becauseof the problems in finding OEM parts, your organization isconsidering purchasing spare compressors.Your organization uses some numbers (all PER SINGLE COMPRESSOR) to make decisions:It costs $1200+YZ to purchase AND store a single spare compressor for one year.It costs $2000 for downtime costs and repair with that same stored compressorIt costs $5000 to purchase a compressor (and downtime costs) and repair if you have to purchase it when it is immediatelyrequired. (the higher cost reflecting the convenience and not having to pay for storage)If the time frame of analysis is 4 years, use the Poisson distribution to advise on the lowest cost decision(ie. How many spare compressors will you recommend - zero, one, two...?)

The expected cost of failure is a concept that indicates the costs related to the failures that can…

Answered: If the time frame of analysis is 4…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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If the time frame of analysis is 4 years, use the Poisson distribution to advise on the lowest cost decision (ie. How many spare compressors will you recommend-zero, one, two...?)