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6. A welding machine (Model A) which is bought two (2) years ago by Endah Berhad Company had unexpectedly higher maintenance cost. There are two
6. A welding machine (Model A) which is bought two (2) years ago by Endah Berhad Company had unexpectedly higher maintenance cost. There are two other models B and C which could replace the model A (defender). The model B has an initial cost of RM 150,000, a lifetime of 5 years, yearly handling cost of RM 10,000 with a salvage value of RM 17,500 while model C has an initial cost of RM 110,000, a lifetime of 5 years, yearly handling cost of RM 15,000 with a salvage value of RM 7,000. If the defender is going to be replaced by model B, the defender could be sold at RM 30,000 while for model C, the defender could be sold at RM 26,000. The defender has its balance of lifetime by 5 years, yearly handling cost of RM 35,000 with no salvage value. Assume the MARR is 10% a year. (0) Use the cash flow approach to analyze each of the alternative. Choose the best alternative according to the lowest AW cost. Assume the Endah company intends to donate the model A machine to the technical institution and replacing the machine with the new one. Use PW analysis to select the best option
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