Question: A fixture is being considered to improve a manufacturing process (see current rate information below). If it is implemented, it will reduce the cycle time by 10.8 s to 43.2 s/part. It will also allow a 4.8% reduction from the current operator cost as less trained labor will be required, and it will allow the use of older machines that have already been depreciated - saving 19.20% off of the current machine rate. If the current MARR is 12% APR, compounded monthly, what is the maximum that can be spent to construct the tooling if it must meet a 2 year payback?
Current rates:
Labor rate: $18.75 hr
Machine Rate: $8.04/hr
Production Req'd: 640 pieces/year