Your boss has asked you to review a machine that can replace five full-time employees in your production facility. The machine has an upfront cost of $1 million dollars, a useful life of 20 years, but can only make one of your products and would be obsolete if that line is discontinued. Where would you start?
Responses
Since the machine has a useful life of 20 years, it will pay for itself before the product line becomes obsolete, so let your boss know you think it is a good investment.
Since the machine has a useful life of 20 years, it will pay for itself before the product line becomes obsolete, so let your boss know you think it is a good investment.
Analyze the cost of the employees per year as a variable cost, and the machine as a fixed cost, and create a spreadsheet with best and worst case scenarios.
Analyze the cost of the employees per year as a variable cost, and the machine as a fixed cost, and create a spreadsheet with best and worst case scenarios.
Tell your boss it is a bad idea to let go of the employees.