Three models of baseball bats will be manufactured in a new plant in Pulaski. Ea

Question

Three models of baseball bats will be manufactured in a new plant in Pulaski. Each bat requires some manufacturing time at either Lathe 1 or Lathe 2, according to the following table. Your task is to help decide which type of lathe to install. Show and explain all work to support your recommendation

The plant will operate 3,000 hours per year. Machine availability is85% for Lathe 1 and 90% for Lathe2. Scrap rates for the two lathes are5% versus 10% for L1 and L2 respectively. Cash flows and expected lives for the two lathes are given in the table below. Annual operating expenses are based on an assumed operation of 3,000 hours per year, and workers are paid during any idle time of L1 and L2. Upper management has decided that MARR 18% per year.

How many type LI lathes will be required to meet the machine-hour requirement?

Machining Hours for the Production of Baseball Bats Product Lathe 1 (L1) Lathe 2 (L2) Wood bat 1,600 hr 950 hr Aluminum bat 1,800 hr 1,100 hr Kevlar bat 2,750 hr 2,350 hr Total machining hours 6,150 hr 4,400 hr

Explanation / Answer

Solution:

6,150/(3,000 x 0.85 x 0.95) = 2.54 (3 Lathes of type L1)

4,400/(3,000 x 0.9 x 0.9) = 1.81 (2 Lathes of type L2)

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