4) Suppose that the US military is considering a new lifetime regulation on thei

Question

4)      Suppose that the US military is considering a new lifetime regulation on their helicopter rotor blades.  Instead of using them for 1000 hours (which leads to a likelihood of 5 failures per 10,000 blade sets), they are considering reducing the likelihood of a crash by replacing the blades after 500 hours, thus reducing the likelihood of a crash to 1 failure per 10,000 blade sets.  Assuming a fleet of 10,000 helicopters, and assuming the helicopters are flow for 1000 hours/year, and a cost per set of blades of $5000.,

a)      estimate the extra cost per year due to the increased use of blades

b)      estimate the cost savings due to fewer crashes (assume a cost of $1million per helicopter, assume an average of two people in the helicopter, and remember that helicopter crashes are usually fatal).

c)       Based on your calculations, what would you recommend?  

Explanation / Answer

a) Extra cost due to doubling of blade replacements.

Earlier, 1 set/helicopter/1000 hrs = $ 5000.

Now, 2 sets/helicopter/1000 hrs = $5000.

So $5000 increase per helicopter.

So, $5000*10,000 helis = $ 50,000,000 (50 million)

b) Earlier crashes = 5

Now crashes = 1

5 craches and 1 crash per 10,000 blade sets, which is equal to strength of helicopter fleet..

Total savings = 5-1 = 4* $1,000,000 = $4,000,000

c) The savings do notbreak even with costs.

There is a $ 46 million extra cost. But since defence budget is in Billions, and 2 persons lives per crash is incalculable, not to mention the cost of training new pilots, this seems to be a sound investment..

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