Question
As automation levels increase, the number of labor hours required to produce each unit falls. For each point of change in automation, up or down,
As automation levels increase, the number of labor hours required to produce each unit falls.
For each point of change in automation, up or down, the company is charged $4.00 per unit of capacity. For example, if a line has a capacity of 1,000,000 units, the cost of changing the automation level from 5.0 to 6.0 would be $4,000,000.
When you buy automation, you might want to determine the return on investment (ROI). Your labor cost savings be approximately 10% for each new point of automation. Multiply the savings by the number of rounds remaining in your simulation then divide it by the total cost of the automation. (Savings * Remaining Rounds) / Automation Cost = ROI
Calculate the ROI for each product line below.
| Round 0 | Round 1 | Round 2 | Round 3 | Round 4 | Round 5 | Round 6 |
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 |
A1 | $ 7.49 | $ 7.38 | $ 6.42 | $ 5.27 | $ 4.40 | $ 4.52 | $ 4.21 |
A2 | $ 7.12 | $ 7.45 | $ 4.84 | $ 3.77 | $ 3.27 | $ 3.16 | $ 2.63 |
A3 | $ 8.57 | $ 8.43 | $ 8.71 | $ 8.37 | $ 6.85 | $ 7.17 | $ 7.54 |
A4 | $ 8.57 | $ 8.43 | $ 7.70 | $ 8.15 | $ 6.36 | $ 6.78 | $ 6.31 |
A5 | $ 8.57 | $ 8.43 | $ 8.63 | $ 8.60 | $ 7.92 | $ 7.88 | $ 7.48 |
A6 |
|
| $ 6.66 | $ 6.48 | $ 5.84 | $ 6.72 | $ 7.07 |
A7 |
|
|
| $ 7.27 | $ 7.14 | $ 7.26 | $ 7.47 |
Automation |
|
|
|
|
|
|
|
A1 | 4 | 5.5 | 6 | 6.5 | 6.5 | 7 | 7 |
A2 | 5 | 7 | 7.5 | 8 | 8 | 8.5 | 8.5 |
A3 | 3 | 3.5 | 3.5 | 4 | 4.5 | 4.5 | 4.5 |
A4 | 3 | 4 | 4 | 4.5 | 4.5 | 5 | 5 |
A5 | 3 | 3.5 | 3.5 | 4 | 4 | 4.5 | 4.5 |
A6 |
| 5 | 5 | 5.5 | 5.5 | 5.5 | 6 |
A7 |
|
| 5 | 5 | 5 | 5 | 5.5 |
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