An electronics manufacturer is seeking opportunities to reduce costs in its production process. The manufacturer is considering the induction of robots to automate the mobile screen installation process, which can reduce labour, material, and energy costs. The procurement and installation cost of robots will be $550,000 and the robots will have a useful life of only 2 years (as the technology is likely to change)....

An electronics manufacturer is seeking opportunities to reduce costs in its production process. The manufacturer is considering the induction of robots to automate the mobile screen installation process, which can reduce labour, material, and energy costs. The procurement and installation cost of robots will be $550,000 and the robots will have a useful life of only 2 years (as the technology is likely to change). It is estimated that one fulltime technician will be required to maintain and program the robots on a continuous basis. The technician will cost approximately $75,000 per year. With the robots functional, the manufacturer can free up 3 fulltime employees currently installing screens. These 3 employees are paid $60,000 per year each. There is also a material handler currently working on the screen installation process. The material handler is paid $45,000 per year and will be required even after the robots are functional. Currently the screen sealant cost per screen installation is $0.5 and the energy cost per screen installation is $0.03. With robots, these two costs will reduce by half. How many mobile phones should be produced and sold by the manufacturer over the next two years to justify the investment in robots.

(Show calculations.)

[Note: The problem requires an evaluation of two capacity options: Production with robots v/s without.]

[4 marks]

Answer

The procurement and installation cost of robots will be $550,000

the robots will have a useful life of only 2 years