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EXAMPLE 2.2 A company manufactures dining tables which mainly consist of a wooden frame and a table top. The different materials used to manufacture the
EXAMPLE 2.2 A company manufactures dining tables which mainly consist of a wooden frame and a table top. The different materials used to manufacture the tables and their costs are given in Table 2.1. Table 2.1 Data for Example 2.2 Description of item Quantity Cost Wood for frame and legs Table top with sunmica finish Leg bushes Nails Total labour 0.1 m 1 4 100 g 15 hr Rs. 12.000/m2 Rs. 3,000 Rs. 10/bush Rs. 300/kg Rs. 50/hr In view of the growing awareness towards deforestation and environmental conservation, the company feels that the use of wood should be minimal. The wooden top therefore could be replaced with a granite top. This would require additional wood for the frame and legs to take the extra weight of the granite top. The materials and labour requirements along with cost details to manufacture a table with granite top are given in Table 2.2. 18 Engineering Economics Table 2.2 Data for Example 2.2 Quantity Cost Description of item Wood for frame and legs Granite table top Leg bushes Nails Total labour 0.15 m 1.62 m2 4 50 g 8 hr Rs. 12,000/m2 Rs. 800/m2 Rs. 25/bush Rs. 300/kg Rs. 50/hr If the cost of the dining table with a granite top works out to be lesser than that of the table with wooden top, the company is willing to manufacture dining tables with granite tops. Compute the cost of manufacture of the table under each of the alternatives described above and suggest the best alternative. Also, find the economic advantage of the best alternative
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