The initial investment required for an upgraded warehouse management system (WMS) is $750,000. However, once it is installed, the warehouse will operate more efficiently and require less labor, which will lead to a certain amount of savings annually. It costs $5,000 annually to maintain the system. It is assumed the system would be in use for 6 years. Assume that the direct labor rate is $16.50/hr. How many direct labor hours does the WMS need to save annually in order to break-even on the new system, given an interest rate of 9% per year?

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To determine the number of direct labor hours that the WMS needs to save annually in order to breake... View the full answer