A Manufacturing Plant Is Planning to Replace Outdated Equipment with More

question 6

Essay

A manufacturing plant is planning to replace outdated equipment with more energy- efficient and environmental- friendly equipment. Two models are under
consideration. Model A is sold for $159,000 and can produce at an optimum speed of 78 unit/hour. Model B is sold for the same price, but can produce at an optimum speed of 76 unit/hour. Model A requires 6 hours of maintenance for every 4300 units produced, while Model B requires 5 hours of maintenance for every 3300 units. The maintenance cost for both models is $100 per hour. The variable operating cost is $340 per hour for Model A and $290 per hour for Model B. Due to obsolete parts, there is a sunk cost of $2700 for model A and $1900 for Model B . If the price of the product is $150 per unit and the company expects to sell 145,000 units each year, which model should be selected?

---

Definitions:

Trainee Capacity

The ability or potential a trainee has to learn, absorb, and apply new skills or knowledge acquired through training programs.

Trainee Motivation

The drive or enthusiasm of trainees or learners to engage in and complete their training programs.

Whole-versus-part Learning

A learning strategy debate focusing on whether it is more effective to learn something in its entirety or in segmented parts.

Customer's Name

The designation or identification used to refer to a client or purchaser of goods and services.