EGR 324 Engineering Economics

Jennifer Hawes
Homework #1
1. a. average cost: (500*13) /500 = $13
marginal cost: $0.013
b. average cost: (1000*13) + (500*12)] /1500 = $12.66
marginal cost: $0.006
c. average cost: [(1000*13) + (1000*12) + (500*11)] /2500 = $12.20
marginal cost: $0.0036
d. average cost: [(1000*13) + (1000*12) + (1500*11)] /3500 = $11.86
marginal cost: $0.0036
2. 720 units can be made in the first 8 hours, this costs $36,000. UPH stands for Units Per
Hour
a. average cost: (6hrs*$4500)/450 = $60
marginal cost: $0
b. average cost: [(600 units/90 uph)*$4500]/600 = $50
marginal cost: $50
c. average cost: [(720 units/90 uph)*$4500]/720 = $50
marginal cost: $50
d. average cost: [(720 units/90 uph)*$4500]/720 = $50
overtime: (180 units / 85.5 uph)*$6750 = $14,210.53
($14,210.53 + $50) /900 = $15.84
marginal cost: $6750/85.5 = $78.94
3. x = number of units in 3 years
labor cost without robot = 1.4x
labor cost with robot = 0.2x + 15,000
1.4x = 0.2x + 15000
x = 12,500
12,500 / 3 = 4,167 units made each year to be of value
4. a. $125
b.
a. $500,000
b. $507,500