PEFORMING ROR ANALYSIS FOR $3$D PRINTER AND IIoT TECHNOLOGY

Background

Software used in $3$D printer systems manufactured by Spectrum LASER Corp. is currently able to automatically develop hollows, shells, and "tree supports" to save development time. Network printing for use on multiple machines and at different locations globally is available. New software, called

JIT II$,$ is being beta tested that will allow IIoT$-$type $($Industrial Internet of Things$)$ connections between machines at distant locations. When onboard monitoring sensors detect that a part is about to fail, or it is time to replace one of several highprofile parts, the JIT II software will automatically queue the part's manufacturing code onto a $3$D printer that is detected

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Chapter $8$

Rate of Return Analysis: Multiple Alter,..atives

to be locally idle or ready. The company believes it can design and produce the JIT II software, the $3$D printers, and the accompanying computer equipment necessary to place this technology in a wide variety of harsh environments$-$chemically toxic to humans, in flight, underground in mines, on the ocean floor, in war$-$torn areas, etc.

Information

For this case, we will analyze the available computers that can provide the server function necessary to make this interlinking available and successful. The first cost and other parameter estimates, including expected contribution to annual net cash flow, are summarized below.

$\backslash$table$[[,$Server $1,$Server $2],[$First cost$,$ $$,100,000,200,000],[$Net cash flow, $$/$year$,35,000,50,000$ year $1,$ plus $5000$ per year for years $2,3,$ and $4($gradient$)],[,70,000$ maximum for years $5$ on $,$ even if the server is replaced$],[$Life$,$ years,$3$ or $4,5$ or $8]]$

The life estimates were developed by two different individuals: a design engineer and a manufacturing manager. They have asked that, at this stage of the project, all analyses be performed using both life estimates for each system.

Case Study Exercises

Use spreadsheet analysis to determine the following:

If the MARR $=12\%,$ which server should be selected? Use the PW or AW method to make the selection.

Use incremental ROR analysis to decide between the servers at MARR $=12\%.$

Use any method of economic analysis to display on the spreadsheet the value of the incremental ROR between server $2$ with a life estimate of $5$ years and a life estimate of $8$ years.