A single machine is needed to perform a specified function for the next four yea

Question

A single machine is needed to perform a specified function for the next four years, after which the function and machine will no longer be needed. The purchase price of a machine varies over the next four years according to the following table. One Year fromTwo Years Three Years from Now $47,000 Year Now from Now $38,000 Now S5,00033,000 38.000 47.00 Purchase Price The salvage value of a machine depends only on its length of service and is given by the following table Length of1 Year 2 Years 3 Years 4 Years Service Salvage Value S 17,000 6,000 S 3,000 $ 1,000 The ammual opermting cost varies with lmgch of service as folows 2 Years Length of Service Annual Operating Cost New 1 Year 3 Years $ 3,000 $ 5,000 $ 8,00010,000 The objective of the problem is to find the best policy to minimize the total cost of purchasing, operating, and salvaging over the next four years. Model this problem using the appropriate network technique. Give the network representation of this problem with all the information needed to solve it.

Explanation / Answer

Purchased in year 1 -25000

Purchased in Year 2 -33000

Purchased in Year 3 -38000

Purchased in Year 4 – operating for 1 year – -47000+17000-3000=-33000

                So here it can be seen that while comparing operating cost for same year over purchasing new, if cumulative operating cost is lesser than purchasing then we will go with operating the same machine and vice versa, Purchase in year 1 and operate for 5 years, Answer will be -25000-25000=-50000

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.