1. How much money are we talking about? If you could reduce the MTBF cost by $.1
ID: 420646 • Letter: 1
Question
1. How much money are we talking about? If you could reduce the MTBF cost by $.15 per thousand hours, how much money would you have saved last year? (Hint: List your products. For each, look at the # of mtbf hours. How much per product would you save? How many did you sell? Now, how much would have been saved last year? Hint 2, should be millions). Tell how you arrived at the figure you listed.
Name
Primary Segment
Units Sold
Unit Inventory
MTBF
Able
Trad
198
0
18000
Acre
Low
297
0
15500
Adam
Trad
577
18
23000
Aft
Pfmn
259
137
27000
Agape
Size
167
559
19000
Name
Primary Segment
Units Sold
Unit Inventory
MTBF
Able
Trad
198
0
18000
Acre
Low
297
0
15500
Adam
Trad
577
18
23000
Aft
Pfmn
259
137
27000
Agape
Size
167
559
19000
Explanation / Answer
MTBF means time between failures refers to a measure to evaluate the efficiency and reliability of a component where the measure is typically in thousands of hours between failures.
714
Thus total cost savings = $ 3,485,974
(Units produced x MTBF hours x MTBF savings / 1000 hours)
Savings per product is computed based on pro-rata basis of total cost savings
Able = $ 312,036 (198 units x 3,485,974 / 2,212 units)
Acre = $ 468,053 (297 units x 3,485,974 / 2,212 units)
Adam = $ 937,683 (595 units x 3,485,974 / 2,212 units)
Aft = $ 624,071 (396 units x 3,485,974 / 2,212 units)
Agape = $ 1,144,131 (726 units x 3,485,974 / 2,212 units)
Total units sold = 1,498 units
Product Name Units Sold Unit Inventory Units Produced MTBF Cost Savings ($) MTBF Savings ($) (A) (B) (A+B=C) (D) (F) Able 198 - 198 18,000 312,036 2.70 ($.15 x 18,000/1000) Acre 297 - 297 15,500 468,053 2.33 ($.15 x 15,500/1000) Adam 577 18 595 23,000 937,683 3.45 ($.15 x 23,000/1000) Aft 259 137 396 27,000 624,071 4.05 ($.15 x 27,000/1000) Agape 167 559 726 19,000 1,144,131 2.85 ($.15 x 19,000/1000) Total 1,498714
2,212 102,500 3,485,974 15.38Related Questions
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