An automobile manufacturer is considering a change in an assembly line that should save money due to
Question:
An automobile manufacturer is considering a change in an assembly line that should save money due to a reduction in labor and material cost. The change involves the installation of four new robots that will automatically install windshields. The cost of the four robots, including installation and initial programming, is $400,000. Current practice is to amortize the initial cost of robots over two years on a straight-line basis. The process engineer estimates that one full-time technician will be needed to monitor, maintain, and reprogram the robots on an ongoing basis. This person will cost approximate- ly $60,000 per year. Currently, the company uses four full-time employees on this job and each makes about $52,000 per year. One of these employees is a material handler, and this person will still be need- ed with the new process. To complicate matters, the process engineer estimates that the robots will apply the windshield sealing material in a manner that will result in a savings of $0.25 per windshield installed. How many automobiles need to be produced over the next two years to make the new robots an attractive investment? Due to the relatively short horizon, do not consider the time value of money.
Step by Step Answer:
Operations Management For Competitive Advantage
ISBN: 1572
11th Edition
Authors: Richard B. Chase, F. Robert Jacobs