8. (6 points)
It currently costs a total of $1,000 for an automobile engine repair following a breakdown. This is based on performing oil changes every 60,000 miles. However, for every 10,000 miles an oil change is delayed, the engine repair costs following a breakdown increases by $100 (for example if the oil change is 70,000 miles, the repair cost is $1,100). Following is breakdown information for a fleet of five automobiles. The average number of breakdowns between oil changes for this fleet is as follows:
Thousands of Miles between Oil Changes
Average Number of Breakdowns between Oil Changes
A custom oil change with filter, long-wearing oil, and careful adjustments costs $200 at each oil change for each automobile assuming that the oil is changed every 60,000 miles. For every 10,000 miles the oil change is delayed, the cost of an oil change increases by $25. For example, if the oil change is every 70,000 miles, the oil change is $225.
Which interval between oil changes would you select for a fleet of five automobiles? Base this recommendation on the economics as presented.
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Oct 14, 2020EXPERT
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