Guardian is a national manufacturing company of home health care appliances. It is faced with a make-or-buy decision: a newly engineered lift can be installed in a car trunk to raise and lower a wheelchair. Buy: The steel arm of the lift can be purchased for $0.60 per unit or make in house. Make: If manufactured on site, two machines will be required. Machine A is estimated to cost $18,000, have a life of 6 years, and a $2,000 salvage value. Machine B will cost $12,000, have a life of 4 years, and a $-500 salvage value (carry-away cost). In addition, machine A will require an overhaul after 3 years costing $3,000. The AOC for A is expected to be $6,000 per year and for B $5,000 per year. A total four operators will be required for the two machines at a rate of $12.50 per hour per operator. 1,000 units will be manufactured in a normal 8-hour period. Use MARR=15% to find the number of units to be manufacture each year
Guardian is a national manufacturing company of home health care appliances. It is faced with a
make-or-buy decision: a newly engineered lift can be installed in a car trunk to raise and lower a
wheelchair.
Buy: The steel arm of the lift can be purchased for $0.60 per unit or make in house.
Make: If manufactured on site, two machines will be required. Machine A is estimated to cost
$18,000, have a life of 6 years, and a $2,000 salvage value. Machine B will cost $12,000, have a life of
4 years, and a $-500 salvage value (carry-away cost). In addition, machine A will require an
overhaul after 3 years costing $3,000. The AOC for A is expected to be $6,000 per year and for B
$5,000 per year. A total four operators will be required for the two machines at a rate of $12.50 per
hour per operator. 1,000 units will be manufactured in a normal 8-hour period.
Use MARR=15% to find the number of units to be manufacture each year
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