After graduation, you join a small manufacturing company. The boss has designed

Question

After graduation, you join a small manufacturing company. The boss has designed a revolutionary new product and has asked you to evaluate the best way to produce it. The boss has found a second hand Harding lathe ($10,000) and two used Bridgeport milling machines ($6000 ea) for sale. They can be installed immediately in the factory using existing power. Running single shift with a machinist ($2! (working an average 200 hr/month on each machine, he estimates that you could produce $00 pars per month, initial tooling will cost $8000. Maintenance on each machine will be S150/month you find that you can buy a new mill-turn machine for $47,000 (including 3 years free maintenance) can produce 650 parts/ month. The machine requires a 3 phase power, 100 ps. air, and reconfiguration. of the access door to the shop totaling $3000. The new machine is on back order (though you pay a costs now); you estimate that it cannot be in production in less than 6 months. The machine requires a master machinist ($37,50/h) working an average 200 hr/month and can produce 600 parts per month. Tooling will cost $1000. Over the next 3 years it is estimated that you can see an the parts you can make -using Option A or Option B) at $120 each. Which will you recommend based solely on the information given here? List any 3 other economic considerations for which you do not have information and state if each one should be included or not in your analysis (application of common sense)

Explanation / Answer

option A

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