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A medium-sized food processing plant is considering re-designing one of its packaging operations. The operation is currently being performed by two labour workers. Due to
A medium-sized food processing plant is considering re-designing one of its packaging operations. The operation is currently being performed by two labour workers. Due to the relative complexity of the task, full automation is not being considered. However, it is possible to replace one of the two labour workers with a collaborative robot that can work safely along with the other worker. The plant has a MARR (Minimum Acceptable Rate of Return) of 7%. The table below summarizes the cost for one labour worker and the cost for one collaborative robot. Use the information in the table to answer the following questions, Labour Worker Collaborative Robot Purchase price of the collaborative robot $135,000 Robot installation & first time programming cost $15,000 Labour worker salary/year $40,000 Benefits for labour/year $3,000 Cost of robot re-programming/maintenance $12,000 Planning horizon 5years a) If the assembly operation is to be re-programmed every year, is it an economic decision to replace one labour worker with a collaborative robot? (Use Present Worth). (7 Marks) b) If the assembly operation is to be re-programmed every 2 years, is it an economic decision to replace one labour worker with a collaborative robot? (Use Present Worth). (7 Marks) c) Redo part a) using Future Worth instead of Present Worth. (6 Marks)
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