4 A machine that produces a certain piece must be turned off by the operator after each piece is completed. The machine "coasts" for 15 seconds afterit is turned off, thus preventing the operator from removing the piece quickly before producing the next piece. An engineer has suggested installing abrake that would reduce the coasting time to 3 seconds.The machine produces 50,000 pieces a year. The time to produce one piece is 1 minute 45 seconds, excluding coastint time. The operator earns $11an hour and direct costs for operation are $4 an hour. The direct costs are incurred whenever the operator has to work. The brake will requireservicing every 477 hours of operation. It will take the operator 30 minutes to perform the necessary maintenance and will require $43 in parts andmaterial. The brake is expected to last 7,500 hours of operation (with proper maintenance) and will have no salvage value.How much could be spent for the brake if the Minimum Attractive Rate of Return is 10% compounded annually?Enter your answer in this format: 1234.56

The PW method is quite popular in industry since all future costs and revenues are changed to…

off, thus preventing the operator from removing the piece quickly before producing th would reduce the coasting time to 3 seconds. e produces 50,000 pieces a year. The time to produce one piece is 1 minute 45 secon direct costs for operation are $4 an hour. The direct costs are incurred whenever the ery 477 hours of operation. It will take the operator 30 minutes to perform the neces e brake is expected to last 7,500 hours of operation (with proper maintenance) and w could be spent for the brake if the Minimum Attractive Rate of Return is 10% compou nswer in this format: 1234.56

off, thus preventing the operator from removing the piece quickly before producing th would reduce the coasting time to 3 seconds. e produces 50,000 pieces a year. The time to produce one piece is 1 minute 45 secon direct costs for operation are $4 an hour. The direct costs are incurred whenever the ery 477 hours of operation. It will take the operator 30 minutes to perform the neces e brake is expected to last 7,500 hours of operation (with proper maintenance) and w could be spent for the brake if the Minimum Attractive Rate of Return is 10% compou nswer in this format: 1234.56

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter17: Making Decisions With Uncertainty

Section: Chapter Questions

Problem 17.1IP

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