Problem
(a) A consulting engineer is considering two pumps to meet a demand of 50,000 L/min at 4.0 m total dynamic head. The specific gravity of the liquid being pumped is 1.50. Pump A operates at 70% efficiency and costs $8,000; pump B operates at 75% efficiency and costs $12,500. Power costs $0.05 kW.hr. Continuous pumping for 365 days a year is required (i.e. for 24 hours a day). Ignoring the time value of money, and assuming equal salvage values for both pumps, DETERMINE how many years of service are required for pump B to be justified economically. COMMENT on the reasonableness of not including the time value of money.
(Note: Dynamic head times litres per minute times specific gravity divided by 6,116.2 gives the number of kilowatts required.)
(b) Smythe and Jones Ltd purveyors to the gentry create individual dumbwaiters. The fixed costs of operating the workshop for a month total $3,000. Each dumbwaiter requires materials that cost $12. Each dumbwaiter takes three hours to complete, and the company pays the workers $18 per hour. The employees are paid as casuals so that if there is no work for them they are not paid. The dumbwaiters are sold to a wholesaler for $75 each.
(i) CALCULATE the break-even quantity for making dumbwaiters for this business.
The company expects to sell 500 dumbwaiters per month. The business has the opportunity to rent a polishing machine for $7,000 per month. If the machine is used there is estimated to be associated extra costs (utilities and consumables) of $2 per dumbwaiter. Using the machine would reduce the labour time per dumbwaiter to 2 hours, but the casual workers would still paid at $18 per hour.
(ii) CALCULATE the break-even quantity for making dumbwaiters for this business.
(iii) DISCUSS the advice you would give Smythe and Jones Ltd regarding the renting of the polishing machine.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.