A new manufacturing facility will produce two products, each of which requires a drilling operation during processing. Two alternative types of drilling machines (D1 and D2) are being considered for purchase. One of these machines must be selected. For the same annual demand, the annual production requirements (machine hours) and the annual operating expenses (per machine) are listed in the table below. Which machine should be selected if the MARR is 12% per year? Assumptions: The facility will operate 2,000 hours per year. Machine availability is 85% for Machine D1 and 80% for Machine D2. The yield of D1 is 95%, and the yield of D2 is 85%. Annual operating expenses are based on an assumed operation of 2,000 hours per year, and workers are paid during any idle time of Machine D1 or Machine D2. Assume repeatability. Click the icon to view the alternatives description. Click the icon to view the interest and annuity table for discrete compounding when i = 12% per year. The total equivalent annual cost of owning a required number of machines D1 is $ The total equivalent annual cost of owning a required number of machines D2 is $ Which machine should be selected? Choose the correct answer below. ... (Round to the nearest hundreds.) (Round to the nearest hundreds.)
A new manufacturing facility will produce two products, each of which requires a drilling operation during processing. Two alternative types of drilling machines (D1 and D2) are being considered for purchase. One of these machines must be selected. For the same annual demand, the annual production requirements (machine hours) and the annual operating expenses (per machine) are listed in the table below. Which machine should be selected if the MARR is 12% per year? Assumptions: The facility will operate 2,000 hours per year. Machine availability is 85% for Machine D1 and 80% for Machine D2. The yield of D1 is 95%, and the yield of D2 is 85%. Annual operating expenses are based on an assumed operation of 2,000 hours per year, and workers are paid during any idle time of Machine D1 or Machine D2. Assume repeatability. Click the icon to view the alternatives description. Click the icon to view the interest and annuity table for discrete compounding when i = 12% per year. The total equivalent annual cost of owning a required number of machines D1 is $ The total equivalent annual cost of owning a required number of machines D2 is $ Which machine should be selected? Choose the correct answer below. ... (Round to the nearest hundreds.) (Round to the nearest hundreds.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:The table presents a comparison between two machines, D1 and D2, in terms of various operational and financial metrics. Below is the detailed transcription of the information provided:
**Product:**
- **R-43**
- Machine D1: 2,250 hours
- Machine D2: 800 hours
- **T-22**
- Machine D1: 1,100 hours
- Machine D2: 1,550 hours
- **Total**
- Machine D1: 3,350 hours
- Machine D2: 2,350 hours
**Additional Metrics:**
- **Capital Investment**
- Machine D1: $15,000 per machine
- Machine D2: $25,000 per machine
- **Useful Life**
- Machine D1: Six years
- Machine D2: Eight years
- **Annual Expenses**
- Machine D1: $4,500 per machine
- Machine D2: $7,000 per machine
- **Market Value**
- Machine D1: $2,500 per machine
- Machine D2: $3,500 per machine
This detailed comparison aids in evaluating the efficiency, cost-effectiveness, and operational lifespan of each machine within an industrial or manufacturing context.
Transcribed Image Text:**Machine Selection for New Manufacturing Facility**
A manufacturing facility is set to produce two products, both requiring a drilling operation. Two types of drilling machines, D1 and D2, are considered for purchase. These machines must meet the same annual demand. Consider the following details for selection at a Minimum Attractive Rate of Return (MARR) of 12% per year:
- **Assumptions:**
- Operation: 2,000 hours annually.
- Machine Availability:
- D1: 85%
- D2: 80%
- Yield:
- D1: 95%
- D2: 85%
- Workers are paid for any idle time.
For further details:
- Click the icon to view alternative descriptions.
- Click the icon to view the interest and annuity table for discrete compounding when *i* = 12% per year.
**Cost Analysis**
1. **Total Equivalent Annual Cost for D1:** $ ___ (Round to nearest hundreds)
2. **Total Equivalent Annual Cost for D2:** $ ___ (Round to nearest hundreds)
**Decision Point**
Which machine should be selected? Choose from the options:
- D1
- D2
Please complete the calculations to determine the most cost-effective machine for purchase.
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