1. It currently costs a total of $1000 for an automobile engine repair following a breakdown. This is based on performing oil changes every
60000 miles. However for every 10000 miles an oil change is delayed the engine repair costs following a breakdown increases by $100 (for example if the oil
change is 70000 miles the repair cost is $1100). 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
60
0.2500
70
0.7265
80
1.8131
90
3.6469
100
5.5822
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 60000 miles. For every 10000 miles the oil change is delayed the cost of an oil change increases by $25. For example if the oil change
is every 70000 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.