Problem
A city transport authority is conducting an economical analysis on opening a new bus route.
The study produces the following data:
* The purchase price of a 30-passenger bus is $100,000
* The mean time between failures (MTBF) is 5 1/2 months and the mean time to repair (MTTR) is 1/2 month.
* The administration cost of the company allocated to each bus service is $50 per month.
* Each major overhaul done during the 1/2 month repair, costs $2,000. This overhaul cost increases by $500 every year (i.e., $2,500 for in the second year and so on). * The bus ticket is $1 per person/service route of which $ 0.75 is the direct operating cost. The bus goes through 20 service routes per working day with a full load on each route. If we consider a month to be 30 days (360 days/year) and the life of every bus to be 15 years, what is the LTW of this bus if the MARR for the transport authority is 10%?