6. In Question 5, suppose the current operator can be replaced by a more efficie

Question

6. In Question 5, suppose the current operator can be replaced by a more efficient new operator, but the new operator is paid S30 per hour whereas the current operator is paid $24 per hour. The new operator can process 10.2 units per hour. If a unit's time is considered to be worth $10 per hour, is it worth to replace the current operator with the new operator? Calculate the total cost of the current operator and the units' time and the total cost of the more efficient new operator and the units' time to answer this question

Explanation / Answer

Increase in efficiency = 10.2-9.4 = 0.8 units

each Unit is $10

so $8 is saved

Increase in cost = 30-24 = 6

So net savings if new operator is introduced is 8-6 = 2

Conclusion new operator can be appointed

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