Case Study - Economic Analysis of a Modified Conveyor System at Buick-Oldsmobile-Cadillac
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| Audience/Grade: | College Junior-Graduate |
| Discipline(s): |
Engineering Management Industrial Engineering Manufacturing Engineering |
| Special Topic(s): | |
| Learning Resource Type: |
Teaching - Case Study |
| Media Type: |
Audio |
| Author(s): |
Chan Park |
| Description: | Case Study designed to complement Chapters 7, 9 and 12 of the textbook titled: Contemporary Engineering Economics. Concepts illustrated: Payback period, present worth analysis, rate of re- turn analysis, depreciation, and development of project cash fows. Introduction: "The Buick-Oldsmobile-Cadillac (BOC) plant in Lansing, Michigan, is in- volved in the fabrication and assembly of the Olds Calais, Buick Somerset Regal, and Pontiac Grand Am. A small part of the total operation is the sheet molding compound (SMC) area where plastic parts are formed from sheets of plastic material. Front-end panels (the front part of the car where the lights are housed) are produced here, and a conveyor system is used to transport the panels after they are formed. This case study examines an economic justi cation analysis for a proposed modi cation of the conveyor system that would decrease the number of workers needed while improving quality and facilitating material ow." |
| Rating: |
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| Related Resources | |
| Is Component of: |
Contemporary Engineering Economics |
| Usage Tip | |
| Related ABET Criteria: |
(h) Understand global, economic, environmental, and societal context |
| Use of Resource: |
Issues for Discussion: "1. Determine the project cash ows for the 5-year life of the proposed conveor system. 2. Suppose that, to install the proposed conveyor system, there would be a 2-day's of plant shut-down. This translates into a cost of $350,000 in lost production. How should this shut-down cost be considered in the analysis? 3. Suppose that there is no place to accommodate the 17 workers in the plant and they must let go. This action would lead to paying $200,000 for severance. How would this payment a ect the pro tability of the investment? 4. Recall that the annual savings gures based on displacing 17 workers were assumed to remain unchanged over the years. Suppose that the wages would increase at the annual rate of 7% over the years, due to in ation. The annual O&M cost would also increase at the annual rate of 6%. The general in ation rate is expected about 5% per year during the project period. How does this scenario of in ation a ect the pro tability of the investment? (This assignment is relevant when Chapter 10 is covered.)" |
| Difficulty: |
Medium |
| Interactivity Level: |
Very low |
| Version Info | |
| Publication Date: | September 2003 |
| Platform/Format: |
WWW |
| Cost: |
Free |
| Download URL: | http://www.eng.auburn.edu/~park/documents/case_study/case3.pdf |
| Metadata: |
IEEE LOM Record |
| Collection: |
NEEDS
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