The failure pattern of a production equipment is very similar to wear-out failure pattern discussed in class and also on page 166, (pattern -a)in the textbook. The MTBF is 30 months. To prevent failure, on overhaul must be done every 24 months. If no overhaul is undertaken, failure is imminent at 30 months.
Cost of an overhaul = $3,000.Cost of breakdown ( Repair and downtime) = $5,000
a. Determine if the overhaul is cost effective, if it is done every 24 months.
b. If routine PM at a cost $ X per year is performed, the mean life can be extended from 30 months to 48 months. For the PM to be cost effective, what should be the value of X?