A new automated sorting and packaging system is being considered for investment at a Logistics 3PL Distribution
Question:
A new automated sorting and packaging system is being considered for investment at a Logistics 3PL Distribution Center. The initial investment is $1,500,000, and will require an upgrade of 30% of initial investment in software at the end of the 5th year. The company expects that the system will generate equivalent annual savings $350,000 increasing by a gradient series of $10,000 and will have annual O&M costs of $100,000. The company expects that the robot will have a useful life of 10 years, and that time will have a salvage value of $150,000. The administration is concerned about the accuracy of the projected savings in year 1 and the O&M costs. Perform a two parameter BTCF sensitivity analysis to determine the range in which these two parameters could vary to have a PW>0. You need to determine exactly the % in each parameter in which the economic investment is feasible. Clear show step by step your calculations.
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling