A manufacturing cell consists of 12 identical machines. At any given time, one or more of the machines may be inoperable. The op
erator for the manufacturing cell troubleshoots machines and performs limited repair work. Occasionally, the operator requires more skilled technicians to complete repairs. Regardless of who performs the repairs, repair times for any machine is exponentially distributed with a mean of 30 minutes. The time until failure of an operating machine is exponentially distributed with a mean of 10 hours (a) If the operator/technician only work on a single machine at a time for repairs, what is the average number of operating machines in the manufacturing cell in the long run? (b) If there were two operators who could perform repairs simultaneously, what would the average number of operating machines be in the long run
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Answer:
1.
The annual net cost savings promised by the automated welding machine
Annual Costs savings in replacing 6 welders $108,000
Reduced Material costs $6,500
Total annual Costs savings = $114,500
Note there is a $3,000 annual maintenance cost that will then be taken off this savings amount to make up the Annual Net cash inflow of $111,500
2
A. The Net Present value is $72,227. Kindly refer to the attached document for the clear presentation
B. The project should be accepted because it delivers a positive NPV. Meaning the net benefit outweighs the cost of owning the new Assets.
3.
The Discounted net Cash flow for the 6 years (aside the initial outlay) is $402,227.
Annually this comes to $67,038.
The benefit the business gets in the switch to the automatic welders is approximately $67,038 annually.
