EXAMPLE 6-10 AW and Repeatability: Perfect Together! Three products will be manufactured in a new facility at the Apex Manufacturing Company. They each require an identical manufacturing operation, but different production times, on a broaching machine. Two alternative types of broaching machines (M1 and M) are being considered for purchase. One machine type must be selected. For the same level of annual demand for the three products, annual production requirements (machine hours) and annual operating expenses (per machine) are listed next. Which machine should be selected if the MARR is 20% per year? Solve by hand and by spreadsheet. Show all work to support your recommendation. (Use Rule 2 on page 231 to make your recommendation.) Product Machine M1 Machine M2 ABC 1,500 hr 900 hr MNO 1,750 hr 1,000 hr STV 2,600 hr 2,300 hr 5,850 hr 4,200 hr Capital investment $15,000 per machine $22,000 per machine Expected life five years eight years Annual expenses $4,000 per machine $6,000 per machine Assumptions: The facility will operate 2,000 hours per year. Machine availability is 90% for Machine M1 and 80% for Machine M2. The yield of Machine M1 is 95%, and the yield of Machine M2 is 90%. Annual operating expenses are based on an assumed operation of 2,000 hours per year, and workers are paid during any idle time of Machine M1 or Machine M2. Market values of both machines are negligible