Answer: 118 units per hour
Explanation:
At 58 units per hour:
The cycle time = 4 hours + 0.25 hours
= 4.25 hours
The cycle per day = 8/4.25 = 1.88 cycle
The value added per day will be:
= 1.88 × 4 × 58 × 15
= $6542.4
The cost of maintenance per day will be: = 1.88 × $625 = $1175
The cost of operating the machine per day will be:
= $38,000/80,000 × 4 × 1.88
= $3.57
The net increase in the value per day will be:
= $6542.4 - $1175 - $3.57
= $5363.83
At 118 units per hour:
The cycle time = 5 hours + 0.5 hours
= 5.5 hours
The cycle per day = 8/5.5 = 1.45 cycle
The value added per day will be:
= 1.45 × 5 × 118 × 15
= $12832.5
The cost of maintenance per day will be: = 1.45 × $625 = $906.25
The cost of operating the machine per day will be:
= $38,000/80,000 × 5 × 1.45
= $3.44
The net increase in the value per day will be:
= $128322.5 - $906.25 - $3.44
= $11922.81
The machine should be operated at 118 units per hour because it gives a higher value.
