Question:
Your plant has a 15-year-old conveyor motor that fails every 4 months. Each repair costs $300. A new motor costs $2,500. A refurbished motor (from a specialist) costs $1,200 with a 1-year warranty. Which path do you choose? What data would change your answer?
Answer:
Given: 15 years old, fails every 4 months → 3 failures/year × $300 = 900/year. New = $2,500; Refurbished = $1,200 with 1-year warranty.
Simple payback (repair vs. refurbished):
Current annual repair cost = $900.
Refurbished cost $1,200.
Payback = 1.33 years.
After 1 year, warranty covers failures. From year 2 onward, assume refurbished failure rate is similar to current (3 failures/year) → another $900/year. Still cheaper than $2,500 for new.
Decision: Choose refurbished motor based on current data.
What data would change answer?
▪ If the conveyor is a production bottleneck where downtime cost is >$500/hour → new motor (higher reliability) may be justified.
▪ If the refurbisher's warranty excludes labor, adding $150/failure for installation → refurbished TCO rises.
▪ If the motor is obsolete and refurbisher uses scavenged parts with unknown remaining life → avoid.
▪ If new motor efficiency is 10% better, then electricity savings alone could favor new motor over 5+ years.









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