The following comments came from Robert Dillon production manager of Home Catering Inc maker of catering supplies for the Catering industry. "If we can get that new robot to combine with our other automated equipment, we'lI have a complete flexible manufacturing system in place in our factory plant, "Let's just hope that reduced labor and inventory costs can justify its acquisition," replied Martha Wayne, the controller. "Otherwise, we'll never get it. You know how the president feels about equipment paying for itself out of reduced costs." The cost of the robot is $1.6 million and its useful life will be 12 years. It is estimated that annual saving in inventory carrying costs is $190000, however the monthly increase in power and maintenance costs will be $2500. The company will need to invest in software and installation of the robot a total of $700000. The salvage value of the robot in 12 years will be $90000. The following data were provided to help us make the right decision relating to the robot. Engineering studies suggest that use of the robot will result in a savings of 20,000 direct labor hours each year. The following comments came from Robert Dillon production manager of Home Catering Inc maker of catering supplies for the Catering industry. "If we can get that new robot to combine with our other automated equipment, we'lI have a complete flexible manufacturing system in place in our factory plant, "Let's just hope that reduced labor and inventory costs can justify its acquisition," replied Martha Wayne, the controller. "Otherwise, we'll never get it. You know how the president feels about equipment paying for itself out of reduced costs." The cost of the robot is $1.6 million and its useful life will be 12 years. It is estimated that annual saving in inventory carrying costs is $190000, however the monthly increase in power and maintenance costs will be $2500. The company will need to invest in software and installation of the robot a total of $700000. The salvage value of the robot in 12 years will be $90000. The following data were provided to help us make the right decision relating to the robot. Engineering studies suggest that use of the robot will result in a savings of 20,000 direct labor hours each year