Calculate an environmental life-cycle cost per unit

Reference no: EM13950130

Thomas Manufacturing produces automobile components used in automobile assembly. One of its divisions manufactures automotive front-end pieces. The divi- sion is currently considering two different designs: one using galvanized steel and the other a polymer composite. Both products are considered equally durable. The main issue being considered is the environmental effects of the designs. To help in this assessment, an inventory analysis and the associated cost information for the two designs are given below.

Materials:	Polymer	Galvanized Steel
Virgin materials (pounds)	8	14
Reused production scrap (pounds)	1	6
Energy:
During production (kilowatts/pound)	15	10
During product use (pounds of petroleum used
per year per unit)	66	110
Contaminants:
Gaseous residues (pounds per unit)	0.4	0.2
Solid residues (pounds per unit)	0.6	2.0
Recycle potential:
Incineration (pounds)	7.0	-
Quantity to landfill (pounds)	1.0	0.5
Recycled (pounds)	-	8.5
Financial information:
Cost per pound of raw materials	$ 30.00	$ 15.00
Cost per kilowatt-hour	0.50	0.50
Cost per pound of petroleum	0.70	0.70
Cost per pound of gaseous residue	100.00	100.00
Cost per pound of solid residue	40.00	50.00
Incineration benefits per unit	2.00	-
Recyclable benefits per unit	-	20.00

Required

1. Using the operational measures, assess the environmental impact of each design. What other information would be useful?

2. Using the financial information, calculate an environmental life-cycle cost per unit. Discuss the strengths and weaknesses of this information.

3. Explain why a manager might wish to include product use and disposal information in the assessment of environmental performance. Remember, these costs are not incurred by the company. For example, the petroleum consumption per year is a cost incurred by the end-user.

4. Based on all the above information, what recommendation would you make?

Reference no: EM13950130

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