Consider Thinking Bridge Example

Demand $=3,500$ Drives

Price $=$ $$400$ each

Raw Material $=$ $$80/$Drive

Employee Wage $=$ $$18/$hr

Number of Employees $=4(1/$workstation$)$

Each Employee Works $2,080$ hrs$/$year $(40$ hrs$/$week$,52$ weeks$/$year$)$

Other Expenses $=$ $$900,000$

Drive Manufacturing Process:

Workstation

Processing Time

$101$

$15$ minutes

$102$

$25$ minutes

$103$

$10$ minutes

$104$

$5$ minutes

Total Time

$55$ minutes

An Engineer proposes buying a new fixture to reduce total processing time by $3$ minutes.

The new fixture would allow some work to be transferred from workstation $101$ to $102$ and it will cost $$5,000.$

In this scenario, what is the real economic effect of the engineer's proposal to buy a new fixture?