GEN 200 ENGINEERING ECONOMY


GEN 200 ENGINEERING ECONOMY

Case Study 2: ECONOMIC SERVICE LIFE 

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Introduction and Background

A major manufacturer is considering a CNC Machining Equipment. Because of the variation in the strength and stiffness of the raw metals that are being machined, there shall be a wear and tear on the CNC Machine, and for that we keep a record of the work hours for the CNC machine. There are also Safety records and overall wear and tear on the machine. The repair and O&M (Operation and Maintenance) costs keep rising as the CNC machine reaches 10,000 (Ten Thousands) hours of operation.

Data 

Estimate for the CNC machine are presented herewith below:

 

COST ITEM AMOUNT (AED)
INITIAL COST -2,000,000
RETROFIT AND REPAIR COST -225,000 when we reach 10,000 hours; the retrofit cost increases by 15% for every instance of repair; the maximum number of repairs is 4 times.)
MAINTENANCE AND OPERATION (M&O) -30,000 from year 1 till the first retrofit.

-45,000 per year after the first retrofit and increases with a geometric gradient of 10% yearly

MARR 12%

 

The production manager estimates that the CNC machine would be in service for the following hours:

 

YEAR HOURS OF OPERATION PER YEAR
1 600
2 1200
3+ 2200

Questions for the Case Study

  1. Find the ESL (Economic Service Life) of the CNC Machine. How does the ESL compare with the maximum allowed Retrofits or repairs?

 

  1. The production manager and safety expert said, contend that only one retrofit (repair) is practical, because these types of CNCs usually have their ESL at their minimum before the second retrofit. Determine a market value for this CNC that will force the ESL to be 8 years. Comment on the practicality of ESL 8 years, given the MV (Market Value) calculated.

 

  1. The Project Director advised you not to plan for any retrofits after the first retrofit. This is because the CNC will be replaced after 14,000 hours of operation. The cost Engineer needs to establish the base AOC (Annual Operating Cost) from year 1 sot that the ESL is 6 years. He also told you to assume now that the 15% growth rate applies from year 1 forward. How does this AOC value compare with the retrofit cost after the first retrofit?

 

  1. What do you think of these suggestions from the plant superintendent and the line manager?

 

 

 

 

 

SUBMISSION REQUIRMENTS

  1. Carry out the analysis and present the results in ONE WORD OR PDF file
  2. Analysis should show the EXCEL analysis sheets
  3. Submit the original Excel sheet you used in the analyses and organize the work in proper TABS as per the case questions above. All equations used or programming made inside excel should be available for the instructor’s review
  4. The report will be organized as follows:
  5. Cover page (names, IDs, Course, Semester, Professor’s Name)
  6. Copy of the whole case and questions
  7. Summary of the most important findings from the analysis
  8. Detailed results AND analysis of the case with snapshots from the Excel sheets. Each picture, or table, or figure should be numbered and discussed in the text in detail
  9. Appendix (any additional results you wish to add)
  10. Format for the report
  11. Font ARIAL size 10pts, spacing 1.5, margins 1.5” all sides
  12. Number each page except cover page
  13. Divide the work into the sections above and each section should be in bold and font size 14pts

 

To get your Assignment/Homework solutions;

Simply Click ORDER NOW and your paper details. Our support team will review the assignment(s) and assign the right expert whose specialization is same to yours to complete it within your deadline. Our Editor(s) will then review the completed paper (to ensure that it is answered accordingly) before we email you a complete paper

 

 

 

 

 

 

 

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