6-33. A firm has decided to manufacture biodegradable golf tees. These are two production processes available for

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6-33. A firm has decided to manufacture biodegradable golf tees. These are two production processes available for consideration. Pertinent data for each process are as follows:

Process A Process B Investment $22,000 $15,000 Operation and maintenance costs $15,000/year $13,000/year Material and direct labor costs $0.15/golf tee $0.20/golf tee Salvage value $2,000 $2,000 Useful life 10 years 8 years Assuming material and direct labor costs are the only variable costs and the MARR = 15% per year, over what range of annual production volume is Process A preferred? Assume repeatability. (6.5)

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Engineering Economy

ISBN: 9780134870069

17th Edition

Authors: William Sullivan, Elin Wicks, C Koelling

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