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24 August, 14:32

A $38,000 coil winding and unwinding machine is estimated to provide additional value to production by $15 per unit. When the machine is operated at 58 units per hour, it needs to be cooled down after 4 hours of operation and receive minor maintenance for 15 minutes. When the machine is operated at 118 units per hour, it needs to be cooled down after 5 hours of operation and receive minor maintenance for 30 minutes. The production line runs 8 hours per day. If each maintenance check costs $625 and the machine has a useful life of 80,000 hours of operations, at what speed should the machine should be operated

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  1. 24 August, 14:44
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    Answer: 118 units per hour

    Explanation:

    At 58 units per hour:

    The cycle time = 4 hours + 0.25 hours

    = 4.25 hours

    The cycle per day = 8/4.25 = 1.88 cycle

    The value added per day will be:

    = 1.88 * 4 * 58 * 15

    = $6542.4

    The cost of maintenance per day will be: = 1.88 * $625 = $1175

    The cost of operating the machine per day will be:

    = $38,000/80,000 * 4 * 1.88

    = $3.57

    The net increase in the value per day will be:

    = $6542.4 - $1175 - $3.57

    = $5363.83

    At 118 units per hour:

    The cycle time = 5 hours + 0.5 hours

    = 5.5 hours

    The cycle per day = 8/5.5 = 1.45 cycle

    The value added per day will be:

    = 1.45 * 5 * 118 * 15

    = $12832.5

    The cost of maintenance per day will be: = 1.45 * $625 = $906.25

    The cost of operating the machine per day will be:

    = $38,000/80,000 * 5 * 1.45

    = $3.44

    The net increase in the value per day will be:

    = $128322.5 - $906.25 - $3.44

    = $11922.81

    The machine should be operated at 118 units per hour because it gives a higher value.
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