Knott's Berry Farm is contemplating buying a new van for its operations. The farm's engineeringstaff has researched the market and found 2 units that appear to meet their requirements. Truck# 1 has a cost of $37,000 and requires an annual maintenance cost of $2,700. At the end of its usefullife (3 years), it is projected to have a salvage value of $5,000. On the other hand, Truck #2 has aninitial cost of $40,000 and requires only $2,000 in annual operating costs because the manufactureris claiming that some routine maintenance is covered in the price of the truck. Truck # 2 has anestimated salvage value of $8,000 at the end of its 4 year service life. The CEO has determined thatthe farm's MARR is 12%. The trucks are needed for 12 years according to the 2024 Strategic Plan.The Engineering Department has determined that no significant changes are needed in the futurethat would change prices and functional characteristics of each truck. As a member of theEngineering Department, select the more economical truck for the farm on the basis of AE analysis.Be sure to justify your answer, making it clear enough for both the Engineering and GeneralManagement staff members to understand.

Selecting the More Economical Truck for Knott's Berry Farm: AE Analysis ApproachBased on Annual…

Answered: Knott's Berry Farm is contemplating…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Chatham Automotive purchased new electric forklifts to move steel automobile parts two years ago. They cost $65,000 each, including the charging stand. In practice, it was found that they did not hold a charge as long as claimed by the manufacturer, so operating costs are very high. As a result, their current salvage value is about $9,000. Chatham is considering replacing them with propane models. New propane forklifts cost $58,000 each. After one year, they have a salvage value of $40,000, and thereafter decline in value at a declining-balance depreciation rate of 20 percent, as does the electric model from this time on. The MARR is 8 percent. Operating costs for the electric model will be $19,000 this year, rising by 12 percent per year. Operating costs for the propane model will initially be $11,000 over the first year, rising by 12 percent per year. Should Chatham Automotive replace the forklifts now? Find EAC for both propane and elctric forklifts. P.S. Show…
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An injection molding system has a first cost of $90,000, and an annual operating cost of $42,000 in year 1, increasing by $5000 per year thereafter. The salvage value of the system is 30,000 if you sell after 1 year of use. The salvage value decreases by $5,000 each year thereafter. The maximum useful life of the machine is 4 years. Using a MARR of 20% per year, determine the ESL and the corresponding Equivalent Annual Cost of the system.
Describe how the simulation is used in maintenance problems ?
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5. Meg Jones, the CEO of Ajax Computer Company, and Brad Smith, its Director of Operations, had been discussing how to increase the firm’s production of the company’s flagship XR58. The XR58 was particularly important because it sold 12,500 of them in the most recent year for $950, at a gross margin of 55%. After a lot of discussion, they decided to pursue an incentive system designed to increase production by 12% in the next year. After Brad discussed this possible incentive with the production team, the team determined that it could increase production by this amount without adding any more people or equipment. They believed they could accomplish this improvement primarily through process redesign. To incent them to do the hard work of process improvement, Brad told the team that it would receive 25% of the increased profits if it met the new production goal. For this team of 20 people, this would mean an additional compensation of _________ for each team member, on average, for…
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Justin is a carpenter and makes furniture which he sells via the internet. He needs a new machine with steel attachments to speed up the drilling process for his work. He contacts Fixing and Building Machines Ltd who recommends a machine which they claim is more than 10 times quicker and stronger than his old machine. Justin goes into Fixing and Building Machines Ltd. Before paying for the machine, he sees a sign on the wall behind the counter that has the words “Important Information: READ BEFORE PURCHASE! Fixing and Building Machines Ltd accepts no liability.....” in bold, red print at the top. However, the sign is falling down from the wall and the rest of the words are obscured by a large plant. Had Justin been able to read the rest of the sign, he would have read “....for loss howsoever caused.” Justin signs a document, buys this machine and takes it with him. When he tried it he found it to be no quicker than his old one and the attachments broke. He also found that it started…
please provide explaination as to why the other options are incorrect. thank youuuu

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