Question

In: Economics

38. In Problem S1-37, the decision analysis is for automobiles and light trucks. Allegheny Mountain Power...

38. In Problem S1-37, the decision analysis is for automobiles and light trucks. Allegheny Mountain Power and Light would like to reformulate the problem for its heavy construction equipment. Emergency maintenance is much more expensive for heavy equipment, costing $15,000. Required preventive maintenance costs $2000 and unnecessary maintenance costs $1200. The cost of an oil change is $200 and the cost of taking an oil sample and analyzing it is $50. All the probabilities remain the same. Determine the strategy the company should use for its heavy equipment.

Solutions

Expert Solution

As per the scenario, the company is spending too much on their heavy equipment used for construction. They can't spend too much amount of their income in single heavy equipment if the company is not in the race of profits.

So some strategies they should take include

*try to buy quality equipment for construction

This will somehow reduce the extra costs that may cause in spending the equipment

*try to use skilled labours

For maintaining the equipment, it is better to appoint skilled labors so that they can efficiently handle the equipment thereby reduce the chance of misfunction

*try to recheck the equipment

The heavy equipment always requires some examinations after some of their workings.Appy greasing, oiling is required for the smooth function so as to reduce the malfunction

*try to keep them safe

this is very important in preventing the machine from going to rest or affected by other factors

I hope it helps you,friend


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