IPC manufactures resins and molded plastic products. One production department has ten injection-molding machines. The maintenance manager at the plant is studying this group of machines to determine how often the department should shut down all of the machines and perform preventive maintenance (PM).
The nature of the department and its processes causes reventive maintenance (PM) to be performed on all of the machines at one time at a cost of $10,000 for the entire group of machines. When a machine breaks down, it costs $2,000 to repair it. The data from production records about machine breakdowns between PM has been analyzed and is provided below:
PM every n months Average Number of Breakdowns between PM
1 1.0000
2 2.6000
3 4.9100
4 8.0810
5 12.3146
a) Which PM policy provides the minimum cost strategy based on the information provided?
b) For one of the PM policies not selected in a), how much of a reduction in the PM cost (the total cost of performing a PM for all of the machines and not expressed in PM cost per machine per month) is required to have this PM policy equal to the PM policy selected in a)?