Refer to Example 4.6 in which a mechanical engineer has decided to introduce automated materials-handling equipment to a production line. Use a present worth approach with an IRR analysis to determine which of the two alternatives is best. The ALARR is 9%. Use the repeated lives method to deal with the fact that the sendee lives of the two alternatives are not equal.
Example 4.6:
Xottawasaga Printing has four printing lines, each of which consists of three printing stations, A, B, and C. They have allocated S20 000 for upgrading the printing stations. Station A costs S7000 and takes 10 days to upgrade. Station B costs S5000 and takes 5 days, and station C costs S3000 and takes 3 days. Due to the limited number of technicians, Xottawasaga can only upgrade one printing station at a time. That is, if they decide to upgrade two Bs, the total downtime will be 10 days. During the upgrading period, the downtime should not exceed 14 days in total. Also, at least two printing lines must be available at all times to satisfy the current customer demand. The entire line will not be available if any of the printing stations is turned off for upgrading. Xottawasaga Printing wants to know which line and which printing station to upgrade. Determine the feasible mutually exclusive combinations of lines and stations for Xottawasaga Printing.