Answer Happy

MeTU Sdn Bhd is planning to expand its range of machine design components by producing several gear parts. Several combinations of new machine and workers could serve to fulfil this new agenda. There are two final proposal identified by the engineering department. Both proposals are: Machining Centre A: New machining centre with two workers. The new machining centre will cost RM140,000 and installation cost is RM16,000. The maintenance cost to maintain the machining centre is RM7,000 per year start at year 2. Machining Centre B: New machining centre with an automatic pallet changer and one worker. Machining centre B option will use the same machining centre as option A but adding the automatic pallet changer will cost them RM83,000 and additional installation cost RM17,000. This proposal requires maintenance RM10,000 per year. Each of these proposal incurs different costs and revenues. The first year net revenue will be RM80,000 per year for both proposal, but the usage of automatic pallet changer in machining centre B is expected to increase the net revenue by 7% per year. The salary of worker is RM1,400 per month. Recommend the best proposal using Present Worth Analysis over the six-year study period with Minimum Attractive Rate of Return set by the UTeM Sdn Bhd at 10% per year.