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Examoogle • User • info@examoogle.com • EE-2024-8821
Chapter 1 of 12 • Page 1 of 248🔒 Protected PDF • Watermarked
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Due to lake of maintenance, Inventory cost___________
Becomes low
Becomes high
Remains same
All of above
Becomes high
Quick Summary: Inventory cost increases significantly due to lack of maintenance because of the resulting equipment degradation, unplanned downtime, and emergency repair expenses. Poorly maintained assets lose efficiency and reliability, forcing organizations to hold higher safety stocks and incur premium costs for urgent spare part procurement.
Inventory cost increases significantly due to lack of maintenance because of the resulting equipment degradation, unplanned downtime, and emergency repair expenses. Poorly maintained assets lose efficiency and reliability, forcing organizations to hold higher safety stocks and incur premium costs for urgent spare part procurement.
TC=Cm+Ci — Total Cost equals Maintenance Cost plus Inventory/Downtime Cost
Lack of maintenance leads to an increase in the failure rate of machinery. When components fail unexpectedly, the organization must hold excessive inventory (spare parts) to mitigate risk, which increases carrying costs. Furthermore, inefficient operation of degraded assets consumes more resources, raising the total cost of ownership and inventory-related overheads.
Preventive maintenance reduces the probability of catastrophic failure.
Unplanned maintenance leads to 'Stock-out' or 'Emergency Procurement' costs.
High equipment reliability allows for Lean inventory management.
Lack of maintenance decreases the Mean Time Between Failures (MTBF).
Predictable budgeting
Reduction in emergency procurement costs
Increased risk of production stoppage
Rapid depreciation of physical capital
Industrial Power Systems
Supply Chain Logistics
Manufacturing Maintenance Planning
Effective maintenance schedules reduce the need for excessive safety stock levels.
Option B is correct because deferred maintenance triggers exponential growth in repair costs and inventory carrying requirements.
B is correct — Inventory costs increase because neglected equipment leads to frequent breakdowns, requiring higher stock levels of spare parts and emergency order premiums.
In engineering management, always remember the inverse relationship between Planned Preventive Maintenance (PPM) costs and total Failure/Inventory holding costs.