Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Tires that fail in service result in significantly higher replacement costs than those replaced before
failure. For an 18-wheeler (that is, a truck with 18 tires), failure on the road costs $300, whereas all 18
tires can be replace prior to failure at a cost of $75 per tire. The probability of failure is given in the
following table.
Number of Miles
0-5,000
5,001-10,000
10,001-15,000
15,001-20,000
20,001-25,000
Probability of Failure
.05
.15
.20
.40
.20
If tires are replaced at multiples of 5,000 miles only, what is the optimal age replacement policy?
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Transcribed Image Text:Tires that fail in service result in significantly higher replacement costs than those replaced before failure. For an 18-wheeler (that is, a truck with 18 tires), failure on the road costs $300, whereas all 18 tires can be replace prior to failure at a cost of $75 per tire. The probability of failure is given in the following table. Number of Miles 0-5,000 5,001-10,000 10,001-15,000 15,001-20,000 20,001-25,000 Probability of Failure .05 .15 .20 .40 .20 If tires are replaced at multiples of 5,000 miles only, what is the optimal age replacement policy?
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