ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
Question
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Chapter 14, Problem 66P

(a)

To determine

To find: The material cost in 2020.

(b)

To determine

To find: The material cost in 2023.

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Homeowner Henry is building a fireplace for his house. The fireplace will require 2500 bricks. (a) If the cost of a Chimney Brick in 2007 was $2.10, calculate the material cost of Henry’s project in 2020. The Chimney Brick Index (CBI) was 442 in 2007 and is expected to be 651 in 2020. (b) Estimate the material cost of a similar fireplace to be built in the year 2023. What assumption did you make?
It is assumed that the machine handles a flow rate of 0.5 million gallons per day. The cost of the machine is $1.24 million in 2020. The correlation exponent is 0.14. The cost index has been updated from 156 to 221 this year. The cost today for a flow of 2.3 million gallons per day is: a. $8,752,042 b. $2,175,081 c. $5,347,061 d. $3,562,455
Sally Statistics is implementing a system of statistical process control (SPC) charts in her factory in an effort to reduce the overall cost of scrapped product. The current cost of scrap is $X per month. If a 75% learning curve is expected in the use of the SPC charts to reduce the cost of scrap, what would the percentage reduction in monthly scrap cost be after the charts have been used for 6 months? (Hint: Model each month as a unit of production.)

Chapter 14 Solutions

ENGR.ECONOMIC ANALYSIS

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