1. A fork-lift truck costs $18,000 and has a useful estimated life of 5 years with no salvage. The
truck is used to move materials from the warehouse to the shipping department. The average
distance traveled is 80 meters each way for a drop off and back. About 50,000 moves are required
per year. The facility operates two 8-hour shifts a day. The driver is paid an average of $20 per
hour. A truck is expected to be down 10% of the time for scheduled and unscheduled
maintenance. The cost of insurance and maintaining the forklift has been estimated as being
around $2,000 per year. This cost is considered part of the variable cost by the company's
accountant and is allocated to each move. The truck speed is 40 meters/minute and pickup and
drop-off time is about 1 minutes each. Fuel costs are $1.2/litre and the truck consumes 25 liters
of fuel for every 100km.
a. What is the fixed cost of purchasing one truck over a yearly horizon? (5)
b. How many trucks are required for this move (leave your answer in decimals) (5)
c. What is the variable cost per move? Assume that the variable cost is allocated to
the fractional number of trucks you calculated in your answer to b. (5)
Assume that there are 200 working days per year. The discount rate for annualizing the fixed
cost is 5%.
2. Search online for examples of 3 the following material handling equipment. Include a picture
(don't forget to cite the source) and write a short sentence that describes the use of each. (15)
1. Palletizer
2. Wheel Conveyor
3. Power-and-Free Conveyor
4. Tilt-tray sorter
5. Jib Crane
6. Drive-in Pallet Rack
7. Straddle Stacker
8. Turret Truck
9. Carton Flow Rack
10. Unit Load AS/RS
11. Vertical Carousel
12. Radio Frequency Tag
