Please Note that the initial cost for the punch press should be 20,000 (instead of 20.000); the initial cost for the belt grinder should be 2,500 (instead of 20.000). Make the decision based on monthly cost. Also assume that the efficiency of the plant is 80%.

LIC TULLIULIUU 22. A manufacturer of staplers has the choice of two processes to produce the housing of the staplers. Method I produces the part with a punch press and smooths it with an abrasive belt grinder. Method II produces the part by casting and smooths it with an abrasive belt grinder. The manufacturer expects to produce 10,000 units per month. The present interest rate is 12%. The factors on which the manufacturer will base the decision are shown in the accompanying table. Determine the monthly cost of each alternative. Punch Press Belt Grinder Casting (Oven Mold Label) Belt Grinder 20.000 20.000 0.2 7000 1.5 2500 1.5 Initial cost ($) Time for setup operation and handling per unit (min) Percentage of defective units Unit cost of rejects ($) Operating expense, including maintenance and tool replacement per hour ($) Useful life (years) Operator cost per hour ($) 1/2 0.80 0.20 1/5 0.60 0.05 0.90 0.08 1/5 0.70 0.05 5 8.00 12.00 8.00 11.00