Is the investment in the brake justified why or why not

Reference no: EM131407636

Assignment

A machine that produces a certain piece must be turned off by the operator after each piece is completed. The machine "coasts" for 20 seconds after it is turned offpreventing the operator from removing the piece quickly before producing the next piece. An engineer has suggested installing a brake that would reduce the coasting time to 10 seconds.

The machine produces 25,000 pieces a year. The time to produce one piece is 2 minutes 50 seconds, excluding coasting time. The operator earns $[H] an hour and other direct costs related to the operations are $[D] an hour. The brake will require servicing every [S] hours of operation. It will take the operator 20 minutes to perform the necessary maintenance and will require $[M] in parts and material. The brake is expected to last 5,000 hours of operation of the machine (with proper maintenance) and will have no salvage value.

Is the investment in the brake justified? Why or why not? If the investment is justified, how much could be spent for the brake if the Minimum Attractive Rate of Return is 10% compounded annually?

If your student ID number ends in	H	D	S	M
0, 2, 4, 6, 8	12	4	253	56
1, 3, 5, 7, 9	13	4	258	54

Hints:

1. What are the two options? How long is the total time per piece for each of the two options?

2. If you know the total time per piece and we need 25,000 pieces how long should the machine work per year for each option?

3. How much will be the annual cost for the number of hours in hint 2 for the two options?

4. In the case of the brake there are additional charges for maintenance. Based on how often it fails how many maintenances are required in a year? What is the cost for each maintenance?

5. If the brake lasts for 5,000 hours of operation how many years of operation does that equal? How can you use this information in comparing the alternatives?

Reference no: EM131407636

Questions Cloud

Describing a deliberatively developmental organization : Question 1. Describing a Deliberatively Developmental Organization.

How does the advertisement challenge sexuality : How does the advertisement challenge and/or reinforce stereotypical notions of class, gender, race, and/or sexuality? Explain in detail. You must reference at least 1 reading from the course. (Reading :"Defining Contested Concepts" -Lynn Weber (5..

Determine and interpret p-value for sales pitches case : A telephone sales solicitor, trying to decide between two alternative sales pitches, randomly alternated between them during a day of calls.- At the 0.05 level, can we conclude that the difference in results was due to chance?

Moments of optimism and happiness : This is the corporate mission statement of Coca Cola. "To refresh the world...To inspire moments of optimism and happiness...To create value and make a difference."

Is the investment in the brake justified why or why not : Is the investment in the brake justified? Why or why not? If the investment is justified, how much could be spent for the brake if the Minimum Attractive Rate of Return is 10% compounded annually?

Determine and interpret p value for affairs department case : Use an appropriate one-tail test and the 0.10 level of significance in examining the difference between these two rates. Determine and interpret the p-value for the test.

Understanding culture of children in school community : Read the three brief articles linked below. Based upon your reading, discuss the importance of language to understanding the culture of the children in your school community

How reliable does this scheme seem : Jamie O'Connor appraises his employees using the views of two managers. In one department the two managers rank staff as follows. How reliable does this scheme seem?

Present the project to the board of directors : Suppose the VoIP project sponsor wants you to present the project to the board of directors. Particularly, the sponsor would like you to discuss the quality of the project. It is worth noting that during the deployment of the VoIP system the quali..

User Account

All Pages