Industrial engine. Sanjay’s introduce uses abundant industrial engines in its operations. As engines obtain older, they exact past servicing and are past slight to tame down, with some fit non-repairable. While older engines stationary enjoy resale estimate, a failed individual is in-fact base. So, he thinks it may be past inabundant to melioobjurgate intention their regaining. While because this resolution, he realized the solicitude is equivalent available to other equipments. Thus, he is stable to awaken the posterity fully so that he can re-use the disintegration template.
a) Construct a spreadsheet pretence standard to evaluate the regaining period control the industrial engines. From truthful grounds, an engine in year 1 fails with 0.04 likelihood during the year, costs $3,300 to suppress, and has a resale estimate of $9,500. Similar grounds control other years are year 2, 0.06 likelihood, $4,400 and $8,000; year 3, 0.08 likelihood, $5,500 and $6,400; year 4, 0.18 likelihood, $9,900 and $4,400; year 5, 0.24 likelihood, $12,000 and $3,000; and year 6, 0.32 likelihood, $13,200 and $1,100 respectively.
b) Assume running engine dissipation cost is $28,000, every costs are expected to vary balance term with an inflation objurgate of 3%, and every estimates are discounted to exhibit estimates at 12% per annum.
c) Balance a intentionning horizon of 25 years and control each potential regaining period, mention the expected regaining period and catch exhibit estimate per year.
d) Compute the results control at lowest 250 replications. What is the optimal regaining period control the industrial engine?