One branch of a large automobile manufacturing company in a third-world country

Question

One branch of a large automobile manufacturing company in a third-world country is planning to make a capital investment of S 200,000 in a robotic welding system unit with 2 robots for the assembly of truck cabins. At present, the company employs 10 workers on this unit assembly process. Each worker is paid $130 per week including benefits and works 6h during a shift of 8h hours. The production rate is approximately 10 units per hour. The approximate annual maintenance of the manual system isS $500 4. The robotic system is estimated to produce at a rate of 20 units per hour in an 8 hour shift. The operating cost of the robotic system is S 5 per hour including a maintenance cost of $ 1 per hour for one shift operation and $ 1.1 for the two shift operation. (a) Determine the payback period for the robotic system. (b) Determine the unit production costs for both systems based on one and two shift operation.

Explanation / Answer

A) Let us considerselling rate/unit =X

so Robotics can manufacture 160units/ shift = Total cost obtained from robots is $160*X. pay back time = $200000/$160*X.

b) for one shift

1300$ Production cost through Workiers

400$*(1$*8hr) = 408$ Production cost through robots

Data Robot Workers Working hours 8hr 6hr Production rate 20units/hr*8=160units 10units/hr*6=60units operating or maintenance cost 8hour*$5=40$*10=400$. But initial capital payment is done on it Total 10workers, so workersgets =10*130=1300$. maintenance cost of 1300+500=1800$

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