Engineering Economy
Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
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Chapter 11, Problem 42FE
To determine

Calculate the minimum value of X.

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A jalapeno canning company is faced with a make/ buy decision. Cardboard shipping cartons can be purchased for $0.60 each or made in-house. If manufactured, two machines will be required. Machine X will cost $20,000 and have a life of 6 years with a $2000 salvage value. Machine Y will cost $11,000 and have a life of 4 years with no salvage value. The annual maintenance cost for machines X and Y are $6000 and $5000 per year, respectively. A total of four operators will be required for the two machines at a rate of $22.50 per hour per person. In a normal 8-hour day, the four operators and two machines can produce 1000 cartons. The variable cost per carton associated with the in-house option is closest to: (a) $0.0625 (b) $0.10 (c) $0.72 (d) $0.81
A firm has an annual demand of S units for a good whose purchase cost is £c per unit. Each order costs £a to place, and the cost of holding stock is b% of the average value of stock per annum. Determine the optimal order quantity. A local firm uses 2000 units of a particular component each year. The component has a purchase price of £4/unit, while the cost of holding stock is estimated at 20% of the average stock value. If the cost of placing each order is £12.50, find the optimal number of orders placed each year. Suppose the component supplier offers a discount of 2% on the purchase price if orders are placed in units of 1000. Is the discount worth accepting? Suppose that instead of a single figure you had been given a probability distribution for the number of units used each year. Indicate the effect on stock policy.. Please explain fully , the last part is also important to solve.
Heinrich is a manufacturing engineer with the Miller Company. He has determined the costs of producing a new product to be as follows: Equipment cost: $288,000/year Equipment salvage value at EOY5 = $41,000 Variable cost per unit of production: $14.55 Overhead cost per year: $48,300 If the Miller Company uses a 5-year planning horizon and the product can be sold for a unit price of $39.75, how many units must be produced and sold each year to break even?
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