Problem: The investors have asked that you consider running your analysis for at least 5 years. Your current widgets weigh 300 grams and the market analysis shows that you can sell the product for $3.15/widget. Finally, the investors ask that the recommended option breakeven in no more than 10 months. With these considerations in mind, the options are explained in subsequent paragraphs.
First, the current process is still functioning and may be considered. The equipment is older, harder to maintain, and less energy efficient than it was when it was new. However, you will not need to downsize the workforce and will not need to make a new investment.
The specific details are as follows:
- Name: Current
- Initial Cost: $0
- Energy Cost: $0.32/widget
- Labor Cost: $0.30/widget
- Maintenance Cost: $0.25/widget
- Landfill Cost: $0.20/widget
- Material Cost: $3.00/lbm
- Widgets per day: 1500
- Number of days per week: 5
- Number of weeks per year: 48