Based on the case, please present your recommendation and back up your points with figures if there is savings of how much it would be$,$ please if it is neccesary to do a table so thwt my recommendstion csn be regutef. Thanks

Haniff Machining

Haley Gregson, manufacturing engineer a Haniff Machining $($Haniff$),$ in Mississauga, Canada, was working on her first assignment. It was July $18,$ and Haley joined Haniff the week prior, immediately after graduating from the engineering program at a local college. Matt Salsberg, Haniff's operations manager, asked Haley to work on a proposal for the purchase of a new five$-$axis CNC machine. Matt needed Haley's analysis the following week in order to finalize the capital expenditure budget before the company board meeting on July $29.$

COMPANY OPERATIONS

Haniff supplied machined steel, aluminum, and cast iron parts for customers in the automotive and aerospace industries. Most of Haniff's customers were tier $1$ or tier $2$ suppliers to original equipment manufacturers $($OEMs$).$ Haniff was a family$-$owned business that had been in operation of more than $50$ years, and the company had a reputation for providing quality products at a competitive price.

Manufacturing operations were located in a $50,000-$square$-$foot facility in Mississauga, Ontario. The company employed approximately $60$ people in the plant across two shifts and $15$ people in the office. Haniff's manufacturing capabilities included machining, drilling, tapping, and grinding operations. It also had an anodizing line.

Equipment used in the plant included several manual lathes, drills, and milling machines. During the past decade, management had been replacing its old manual machines with new computer numerical control $($CNC$)$ equipment. CNC machines used computers to execute pre$-$programmed sequences of machine control commands. In contrast, manual machines relied on the operator to control wheels or levers to operate the equipment. Matt believed that CNC equipment provided more consistent quality, less handling and faster cycle times compared to manual equipment. In addition, it had become increasingly difficult for Haniff to hire and retain skilled operators for its manual equipment. Haniff paid experienced machinists $$20$ per hour, while benefits added an additional $$5$ per hour. CNC equipment did not require extensive specialized training for operators. There was one person on each shift with responsibility for $CNC$ machine programing and setup; each person was paid $$25$ per hour plus benefits.

NEW EQUIPMENT PROPOSAL

Matt asked Haley to prepare a proposal to purchase a five$-$axis vertical CNC machine, manufactured by Yamazaki Mazak $($Mazak$).$ The company had purchased three Mazak CNC machines in the past four years and had been happy with the performance of the equipment and the service provided by the supplier. Mazak had a technology center in Cambridge, Ontario, about a one$-$hour drive from the Haniff plant.

The list price for the new machine was $$275,000$ plus approximately $$10,000$ for freight and rigging. ${?}^9$ Haley estimated that Haniff would also need to invest about $$20,000$ in tooling. The manufacturer indicated that the useful life of the machine would be approximately $20$ years.

Haley's analysis of machine processing times indicated that the new CNC machine would replace one manual lathe and one drill on both shifts, and

provide an additional $15$ percent improvement in cycle time. Consequently, the new CNC machine would require one operator per shift, compared to the existing staffing of two operators per shift $($e$.$g$.,$ one operator for the lathe and one operator for the drill$).$ Programming and set$-$up would require approximately $20$ percent of the time of the CNC programmer$/$set$-$up person on each shift. Previously, the operators had been

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responsible for setting up the manual equipment.

Speaking with Kevin Richardson, supply chain manager at Haniff, Haley learned that the company spent approximately $$86,000$ during the most recent $12$ months on outsourcing to a local machine shop. Haley believed that the additional capacity created by the purchase of the new Mazak machine could be filled with production that was currently outsourced.

Haley recognized that Haniff would benefit from reductions in labor costs as a result of reduced staffing and faster cycle times. However, as she sat down at her desk to work on her proposal, Haley wondered what other factors needed to be considered as part of the analysis. Since this was her first assignment, Haley wanted to impress Matt