ZAOZHUANG UNIVERSITY

枣 庄 大 学

ASSIGNMENT ON
Subject: Industrial Robotics and Application.
Assignment no: - 11
Department: Mechanical Design Manufacturing and Automation.
(Mechanical Engineering).

Submitted to, Submitted by,

MD. SHARIFUL ISLAM,
Assistant Professor of
Zaozhuang University,
Zaozhuang, Shandong, China.
MD RAYHAN ALI,
ID No: 201815160207.
BSc in Engineering Final Year
Zaozhuang University,
Zaozhuang, Shandong, China.

Submitted On:15/12/2021

Economic analysis of Robots:

 In addition to the technological considerations involved in applications engineering for a
robotics project, there is also the economic issue.

The economic analysis for any proposed engineering project is of considerable importance in
most companies because management usually decides whether to install the project on the basis
of this analysis.

To perform the economic analysis of a proposed robot project, certain basic information is
needed about the project. This information includes the type of project being considered, the cost
of the robot installation, the production cycle time, and the savings and benefits resulting from
the project.

A. Investment Cost
1. Robot purchase cost
The cost of deploying robotics can go far beyond the robot’s price tag. As well as
installation costs, factories may need to build segregated work areas or additional backup power
units before a robot can be deployed. That’s not to mention peripheral technology, such as
sensors, variable robot grippers, and any necessary mounting apparatus. When you factor in the
robot’s engineering and maintenance costs too, budgeting isn’t always as easy as requesting a
quote.

2. Engineering costs
The cost of engineering extends beyond the estimation and assessment of cost because
these capabilities can also be applied to support the aim of achieving more cost-effective results.
Awareness of the related cost is a key factor in the choice of approaches and design solutions, but
traditionally the roles of establishing design solutions and of assessing the related costs have been
separated both in time and responsibility.

3. Installation costs
Installation Cost means the costs and expenses incurred and paid for by Tenant in
performing alterations by plans and specifications approved by Landlord for its initial occupancy,
as evidenced by paid receipts for materials supplied and services rendered by independent
contractors.

4. Special tooling (e.g. and effector)

The cost of special tooling and special test equipment used in performing one or more
Government contracts is allowable and shall be allocated to the specific Government contract or
contracts for which acquired, except that the cost of-
(1) Items acquired by the contractor before the effective date of the contract (or replacement of
such items), whether or not altered or adapted for use in performing the contract, and
(2) Items which the contract schedule specifically excludes, shall be allowable only as
depreciation or amortization.
(3) When items are disqualified as special tooling or special test equipment because with
relatively minor expense they can be made suitable for general purpose use and have a value as
such commensurate with their value as special tooling or special test equipment, the cost of
adapting the items for use under the contract and the cost of returning them to their prior
configuration are allowable.

5. Miscellaneous costs
Miscellaneous expense is a term used to define and cover costs that typically do not fit
within specific tax categories or account ledgers. Regular, extensive, and ongoing expenses, such
as payroll, office rent, and inventory supplies, will all have their account to track and record
associated costs every month.

6. Gross investment cost

The total addition made to the capital stock of the economy in a given period is termed as
Gross Investment. Capital stock consists of fixed assets and unsold stock. So, gross investment is
the expenditure on the purchase of fixed assets and unsold stock during the accounting year.

7. Disposal value of any equipment retired

All plant assets except land eventually wear out or become inadequate or obsolete and
must be sold, retired, or traded for new assets. When disposing of a plant asset, a company must
remove both the asset’s cost and accumulated depreciation from the accounts. Overall, then, all
plant asset disposals have the following steps in common:
•Bring the asset’s depreciation up to date.
•Record the disposal by:
•Writing off the asset’s cost.
•Writing off the accumulated depreciation.
•Recording any consideration (usual cash) received or paid or to be received or paid.
•Recording the gain or loss, if any.

8. Capital required in absence of proposed project

Capital rationing is the act of placing restrictions on the number of new investments or
projects undertaken by a company. This is accomplished by imposing a higher cost of capital for
investment consideration or by setting a ceiling on specific portions of a budget.

9. Total investment released or avoided

Long-term investment contracts between investors and host states (or state entities) often
involve a substantial investment of capital. Investors seek reassurance that the contractual
protections based on which they have invested will remain in place for the life of their
investment. To achieve this, investment contracts often contain stabilization clauses.
There are different formulations as to types of stabilization clauses. However, there are broadly
five categories of stabilization clauses:
A. Freezing clauses;
B. "Intangibility" clauses;
C. "Economic equilibrium" clauses;
D. Allocation of burden clauses; and
E. Hybrid clauses.
10. Total net investment
Net investment is the total amount of money that a company spends on capital assets,
minus the cost of the depreciation of those assets. This figure provides a sense of the real
expenditure on durable goods such as plants, equipment, and software that are being used in the
company's operations.

B. Operating Costs a
1. Direct labor cost
Direct labor costs are the wages or salaries paid to employees who physically produce
products. In other words, these expenses are the costs paid to workers who make the products
that manufacturers sell.

2. Indirect labor costs

Indirect labor cost is the cost of labor that is not directly related to the production of
goods and the performance of services. It refers to the wages paid to workers whose duties enable
others to produce goods and perform services.

3. Maintenance
The term maintenance expense refers to any cost incurred by an individual or business to
keep their assets in good working condition. These costs may be spent for the general
maintenance of items like running anti-virus software on computer systems or they may be used
for repairs such as fixing a car or machinery.

4. Utilities
Utility expense is the cost incurred by using utilities such as electricity, water, waste
disposal, heating, and sewage. The expenses are incurred throughout the reporting period,
calculated, and accrued for, or payment is rendered.

5. Training
Training and development expenses should include any labor costs (wages, salaries,
benefits) paid to internal training staff and any technology and third-party vendor pending related
to employee training (e.g., training-related conference costs, online training technology costs,
training vendor spending, etc.).

6. In-process inventories
In-process inventory is work that has begun production in a manufacturing company but
that has not yet been completed. It is an important concept for accounting departments because
they have to account for the value of in-process inventory in the same way they do for raw
materials and finished goods.

7. Finished inventories
Finished goods are goods that have been completed by the manufacturing process, or
purchased in a completed form, but which have not yet been sold to customers. Goods that have
been purchased in the completed form are known as merchandise.
8. Materials and supplies
These supplies include maintenance materials, janitorial supplies, and items that are
considered incidental to the production process. They are usually charged to expense as incurred,
in which case the supplies expense account is included within the cost of goods sold category on
the income statement.

9. Less scrap and rework

Scrap and rework are defined as material that is added into production but is not part of a
finished product. Because the cost of this scrap material does not add value to the organization, it
gets included in the calculation for the total cost of quality or poor quality. This measure sums all
costs associated with poor quality or product failure, including rework, scrap, warranty costs, and
other costs incurred in preventing or resolving quality problems.

10. Equipment utilization

Equipment utilization sometimes referred to as asset utilization, is a measurement of the
use and performance of site machinery, which assists businesses to improve Jobsite productivity
and reduce the cost of equipment rental and project delays.

11. Material handling

Material handling involves moving, loading, unloading, pushing, pulling, storing, lifting,
picking, placing, and retrieving products or goods in a factory or warehouse. It has been a critical
part of supply chains and manufacturing processes worldwide.

12. Floor space

In architecture, construction, and real estate, floor area, floor space, or floorspace is the
area (measured as square feet or square meters) taken up by a building or part of it. The ways of
defining "floor area" depend on what factors of the building should or should not be included,
such as external walls, internal walls, corridors, lift shafts, stairs, etc. Generally, there are three
major differences in measuring floor area.
 Gross floor area (GFA) - The total floor area contained within the building measured to the
external face of the external walls.
 Gross internal area (GIA) - The floor area contained within the building measured to the
internal face of the external walls.
 Net internal area (NIA) (or usable floor area UFA) - The NIA is the GIA less the floor areas
taken up by lobbies, enclosed machinery rooms on the roof, stairs and escalators, mechanical and
electrical services, lifts, columns, toilet areas (other than in domestic property), ducts, and risers.

13. Safety (estimate a value)

Safety costs can be divided into two categories: the cost of safety-producing activities and
non-safety costs. Keeping these two principle costs components separate helps organizations
track how they change over time and helps to show how investments in safety can reduce the cost
of non-safety.
14. Flexibility (estimate a value)
Flexible expenses are any non-essential cost that can be changed, reduced, or eliminated
to help balance your budget. Flexible expense examples include groceries, dining out,
entertainment, and even utilities.

15. Other (specify)

16. Totals (sum 1 through 15)

C. Other Data
1. Estimated service life of installation years
Estimated service life: service life that a building or parts of a building would be expected
to have in a set of specific in-use conditions, calculated by adjusting the reference in-use
conditions in terms of materials, design, environment, use, and maintenance.

2. Estimated life of robot used in installation years

The life expectancy of a robot can range from five to 20 years, or more, depending on the
operating conditions and care of service. But increasing numbers of robots are having these
periods extended through refurbishment.

3. Estimated salvage value of robot at end of service life

Industrial robots are prominent assets amongst manufacturing industries. They provide a
wide range of benefits including increased productivity, higher product quality, reduced costs,
and improved worker safety. Robots are one of the few investments that will pay for themselves
over time and allow users to realize their ROI relatively quickly. The rapid growth of articulated
robots has caused a high demand for used robots in the second-hand market. With the growing
demand for pre-owned robots, manufacturers can capitalize from them even when they may no
longer need them or want them. However, even when robots are no longer operational.
Individual components are considered valuable if they can be put to use elsewhere. These
components may be used as-is or need to be refurbished to be operational. The scrap value of a
component is dependent on the supply and demand for the item. Scrap value is also referred to as
salvage value, residual value, or break-up value and is estimated by factoring in the initial
purchase price of the asset and its depreciation.

4. Estimated salvage value of other equipment at end of the project

In addition to the individual parts that can be scrapped, other robotic components hold
value as well. Robotic controllers and teach pendants are items that are commonly sold
individually on the used parts market and are in high demand. It is common for older robot users
to need a replacement pendant or controller and new ones are not compatible with older robots,
driving up their demand. Not only do the components of robots hold scrap value, but the metal
exterior of robots also does. Most industrial robots are built from steel or iron, which can be
valuable metals to many scrap recyclers.

5. Minimum attractive rate of return criterion

In business and for engineering economics in both industrial engineering and civil
engineering practice, the minimum acceptable rate of return, often abbreviated MARR, or hurdle
rate is the minimum rate of return on a project a manager or company is willing to accept before
starting a project, given its risk and the opportunity cost of forgoing other projects. A synonym
seen in many contexts is the minimum attractive rate of return.

D. Calculated Results Of Analysis

1. Payback period years
The payback period is the length of time it takes to recover the cost of an investment or
the length of time an investor needs to reach a breakeven point. The payback period is calculated
by dividing the amount of the investment by the annual cash flow.

2. Return on investment over the project life

Return on investment is typically calculated by taking the actual or estimated income
from a project and subtracting the actual or estimated costs. That number is the total profit that a
project has generated, or is expected to generate. That number is then divided by the costs.

3. Equivalent uniform annual cost

Equivalent annual cost (EAC) is the annual cost of owning, operating and maintaining an
asset over its entire life. Firms often use EAC for capital budgeting decisions, as it allows a
company to compare the cost-effectiveness of various assets with unequal lifespans.