A work cell is currently operated 2000 hr/yr by a human worker who is paid an hourly rate of $23.00, which includes applicable overhead costs. One work unit is produced in a cycle time of 4.8 min. Management would like to increase output to meet increasing demand and a robot cell is being considered as a replacement for the present manual cell. The cycle time of the proposed cell would be reduced to 4.0 min. The installed cost of the robot plus supporting equipment is $120,000. Power and other utilities to operate the robot will be $0.30/hr, and annual maintenance costs are $2500. Determine: a. the number of parts produced annually by the manually operated cell.
b. cost per part produced.
c. how does the cost per part of the robot cell compare with your answer in part (b), given a 4-year service life, 10% rate of return, and no salvage value.

a) 25000 pcs/yr

b) cost per part produced is $ 1.84 per pc

c) Cpc = $ 1.365 per pcs

Explanation:

a)

the relation to calculate the number of parts produced annually by manual process is;

Q = Hw / Tc

Hw is the hourly rate ( 2000hr/yr) and Tc is the cycle time ( 4.8 min)

so we substitute

Q = (2000 × 60) / 4.8

= 120000 / 4.8

= 25000 pcs/yr

b)

cost per part produced

the relation to calculate the cost per part produced is expressed as;

Cpc = $23(Hw) / Q

Cpc is the cost per part produced

so we substitute

Cpc = $23(2000) / 25000

= 46000 / 25000

= $ 1.8 per pc

therefore cost per part produced is $ 1.84 per pc

c)

for the robot cell, at a service life of 4 years and a 10% rate of return , the factor is expressed as;

f = [r(1 + r)^t] /  [((1 + r)^t ) - 1 ]

our rate r = 10% = 0.1 and our t = 4

so we substitute

f = [0.1 (1 + 0.1)^4] /  [((1 + 0.1)^4 ) - 1 ]

f = 0.14641 / 0.4641

f = 0.3155

now we find the total cost

TC = 120000(0.3155) + 2000(0.3) + 2500

TC =  $ 40,960

next we find the parts produced annually

Q = (2000 × 60) / 4

Q = 120,000 / 4

Q = 30000 pcs/yr  

finally we find the cost per part produced;

Cpc = TC / Q

we substitute

Cpc = 40,960 / 30000

Cpc = $ 1.365 per pcs

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