Question

A company in Qatar is planning to replace a manual spray painting system by a robotic system. The company has two options: Option 1 buy a new robot, and Option 2 buy a used robot. The new robot is priced at 600 000 QR. Application-specific peripherals for the new robot and other required accessories amount to 80 500 QR. The cost of used robot is half of the cost of new robot.The annual maintenance and operation cost of a new robotic system on a single-shift basis is 40 500 QR, while that of a used robot is 20 500 QR. For the new robot, the company is eligible for a 70 000 QR incentive from the government under its technology investment program while the incentive for the used robot is 20 000 QR. The robot will replace two operators. The hourly rate of an operator is 150 QR including fringe benefits. It is expected that the production rate will increase by 10% if the robotic system is implemented. Should the company go for the new robot or the used robot? Justify your answer by calculations. State any valid assumptions used in your calculations

Answer 1

New Robot Used Robot Difference From All Point Of View, Used Robot Is More Beneficial The Reasons Are As Follows It Saves Investment Of 330500. It Saves Operating Cost 20000 Every Year No Difference In Direct Labour Saving And Increasing Production Rate Other Criteria's Like Useful Life, Cost Of Capital, No .Of Hours Saved Etc Are Not Given Therefore Answer Is Framed Based On Available Information's And Missing Details Are ignored