Given your answers to Problem 11.21, the costs of the two carousel systems are to be compared.

Question:

Given your answers to Problem 11.21, the costs of the two carousel systems are to be compared. The one-carousel system has an installed cost of $50,000, and the comparable cost of the two-carousel system is $75,000. Labor cost for a picker-operator is $20/hour, including fringe benefits and applicable overhead. The storage systems will be operated 250 days per year for 7 hours per day, although the operators will be paid for 8 hours. Using a 3 year period in your analysis, and a 25% rate of return, determine
(a) The equivalent annual cost for the two design alternatives, assuming no at the end of three years; and
(b) The average cost per storage/retrieval transaction. Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...