What is the profit or loss for the mahcine over its lifetime

Assignment Help Operation Management

Reference no: EM1390465

a company is to make a decision on whether or not to purchase a machine to package its product and has asked you to review the information and provide them with answers to some questions. The machine will cost $200,000. It is desired to pay it off completely after 4 year (4 annual end of year payments). The Supplier has offered to finance the machine at 4.35%. The machine has a life span of 6 years and will have negligible salvage value. Maintenance costs are as follows: Years 1 & 2 $7,500 per year. Years 3 & 4 $10,000 per year. Years 5 & 6 $15,000 per year. Operational costs will start at $18,000 per year and increase by 2% per year (compounded). Savings from the packaging machine are estimated to be $0.40 per package with a yearly volume estimated between a high of 200,000 and a low of 150,000. Do a year-by-year analysis and answer the following questions. The Company had many other projects planned that will give a MARR of 10%.

a) Will the machine cost the company money or make the company money in the first two years assuming the high estimate of production? How much?

b) At the end of four years will the machine have made or lsot the company money? how much? (Calculate for both best and worst case scenarios).

c) What is the profit or loss for the mahcine over its lifetime assuming a best-case scenario? Assuming a worst-case scenario?

d) What is the minimum production level needed to make the purchase viable (breakeven)? To make it past the MARR?

e) If the Saving on the machine drops to $0.35 per package what happens to our numbers?

f) Based on the information available would you recommend pruchase of this machine? Explain your reasoning.

Reference no: EM1390465

Questions Cloud

What is the speed of the block : What is the speed of the block while the spring is till now compressed by xf=0.14m.

Priori probability-empirical-subjective probability : For each of the following, indicate whether the type of probability involved is an example of a priori probability, empirical probability, or subjective probability.

Problem on x bar chart-ucl-lcl : Determine the centerline and the upper and lower control limits for a 3-sigma mean control chart in which each sample consists of 4 cylinders

What plate radius is required if the stored charge : A circular parallel-plate capacitor with a spacing of 3.2 mm is charged to produce a uniform electric field with strength of 1.50 multiplied by 106 N/C. What plate radius is required if the stored charge is -15.6 µC.

What is the profit or loss for the mahcine over its lifetime : What is the profit or loss for the mahcine over its lifetime assuming a best-case scenario? Assuming a worst-case scenario? What is the minimum production level needed to make the purchase viable (breakeven)? To make it past the MARR?

Constructing bar charts and pie charts : Develop a pie chart to summarize these contributions. Develop a bar chart to summarize these contributions and why is it appropriate to construct a bar chart for these data instead of a histogram?

How large a force f2 must the second crewman pull : How large a force F2 must the second crewman pull so that the net force of the two crewmen is in the forward direction.

Must be performed according to their assembly requirements : Some tasks and the order in which they must be performed according to their assembly requirements are shown in the following table. These are to be combined into workstations to create an assembly line

Mean and standard deviation of the shopping time : A study of the time spent shopping in a supermar- ket for a market basket of 20 specific items showed an approximately uniform distribution between 20 minutes and 40 minutes. What is the probability that the shopping time will be:

User Account

All Pages