Seldon Industries manufactures plastic bottles for the food industry. On average,

SheldonSheldon

pays

$ 73$73

per ton for its plastics.

Sheldon'sSheldon's

waste-disposal company has increased its waste disposal-charge to

$ 50$50

per ton for solid and inert waste.

SheldonSheldon

generates a total of

500500

tons of waste per month.

Sheldon'sSheldon's

managers have been evaluating the production processes for areas to cut waste. In the process of making plastic bottles, a certain amount of machine "drool" occurs. Machine drool is the excess plastic that "drips" off the machine between molds. In the past,

SheldonSheldon

has discarded the machine drool. In an average month,

170170

tons of machine drool is generated. Management has arrived at three possible courses of action for the machine drool issue:

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(Click the icon to view the courses of action.)Read the requirements

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.

Requirement 1. What is the annual cost of the machine drool currently? Include both the original plastic cost and the waste-disposal cost.

	Annual cost
Material cost of machine drool (plastic)	$148,920
Disposal cost	102,000
Total annual cost	$250,920

Requirement 2. How much would the company save per year (net) if the machine drool were to be sold to the local recycler? (Use parentheses or a minus sign to show amounts that will reduce the annual savings. If a box is not used in the table leave the box empty; do not select a label or enter a zero.)

	Annual savings (net)
Amount received from local recycler
Reduction in waste-disposal costs
Total annual savings (net)

Choose from any list or enter any number in the input fields and then click Check Answer.

2

parts remaining

Final Check

More Info

1.	Do nothing and pay the increased waste-disposal charge.
2.	Sell the machine drool waste to a local recycler for $10 per ton.
3.	Re-engineer the production process at an annual cost of $40,000. This change in the production process would cause the amount of machine drool generated to be reduced by40% each month. The remaining machine drool would then be sold to a local recycler for $10 per ton.