3. Say you are a manager and proposing to purchase of $1.5 million new machine to increase of the productivity. The machine will produce 1000 more units per hour. The machine will replace five employees. The units will be of higher quality because they will be more uniform. Life spend for that machine is 10 years. Data below shows the others cost and benefit received by your company. Based on that data, should this company invest in that new machine or nor? 3,125 1. Installation of Machine including screens & removal of old machine 2. Increased Revenue ...... net value of additional 1000 units per hour, 1 shift/day, 5 days/week 40,000 358 3. Quality Increase Revenue ...... calculated at 75% of current reject rate 4. Reduced material costs .......... purchase of bulk supply reduces cost by $0.82 per hundred 1,128 24,000 10,000 5. Reduced Labor Costs .... 5 operators salary plus labor o/h 6. New Operator ........... salary plus overhead. Includes training 7. Utilities ....... power consumption increase for a new machine 8. Insurance ......... premiums increase 500 1800