W2_ASY_Food Preparation Product Selection

Problem Statement

After free for a while from the routine daily work in the office, is the perfect time to experience time with family at home. have healthy children is a dream for every family. as we want to enjoy spare time with homemade healthy food so buy a quality blender to consider. we want to compare the total life cost of product when we must decide to buy the product at the time of our choosing blenders for food preparation. Which one is really most economical from the total cost perspective.

Feasible Alternatives

For the test case of total life cycle cost between blender Philips with different capacity between blender Philips type HR2160/50
and type HR2020/50

now we pick the same brand named Philips so that an quality equivalent of each option will not lead to equipment usage life. The difference is capacity of type HR2160/50 is 2 liter and type HR2020/50 is 1.75 lite and that means that we should take the capacity of both types into consideration in term of productivity.

Figure.1

Browsing from the internet we know that price of HR2160/50
is £45.00 or equals higher than HR2020/50 £35.00. HR2160/50
has power consumption 600 watt compare to HR2020/50

400 watt.

Assume for 5 years life cycle cost comparison, factors such as electrical bill payment for using each option of feasible option and different capacity between each item. we can shall be paid on the run operation for these two air conditioners. Another cost of other things such maintenance, replacement parts, etc. are assumed the same for these two kitchenware as we choose the same level of manufacturing quality standard because we use the same brand. Then we go to next step, assuming each time we are using for 12 liter

Outcomes/ Calculations of Each Alternative

Description	Unit	A	B	(A-B)
Capacity blender jar		2 Ltr.	1.75 Ltr
Type		HR2160/50	HR2020/50
Rated Input	watt	600	400
Production Volume per day	Ltr	12	12
Serve ( Cap.blender jar / Prod.Volume)	–	6	7
Blending time per	hour	0.1	0.167
Unit Price (CAPEX)	IDR	786,567	611,775	174.79
Utilization per 12 Liter prod. volume	hour	7.2	14
Electrical Consumption per month	Kwh	0.216	0. 42
Electrical power price per kWh	IDR	676	676
Opex per month	IDR	146	283.9	(137.9)
Total Cost (CAPEX + OPEX)
Total Cost for 1 year	IDR	788,319	615,182
Total Cost for 2nd year	IDR	790,071	618,589
Total Cost for 3rd year	IDR	791,823	621,995
Total Cost for 4th year	IDR	793,575	625,402
Total Cost for 5th year	IDR	795,327	628,809	166.518

Table.1

As time value of money is not taken into consideration, from the table we know that alternative B has lower total cost value than alternative A

Setting Minimum/ Selection Criteria

The selection shall be based which alternative has the minimum total life cycle cost, in this case the one that has lower total CAPEX and OPEX for the same life span assumption.

In life-cycle cost concept, a summation of all costs related to a product, structure, system, or service during its life span is considered. In general, life cycle may be divided into two general time periods: the acquisition phase and the operation phase. The greatest potential for achieving life-cycle cost saving is available in the acquisition phase of the life-cycle, because maximizing that potential life-cycle cost saving is critically dependent on effective engineering design and economic analysis that implemented during this (early) acquisition phase/ period.

Analysis/ Comparison of the Alternatives against the Criteria

The previous calculation as shown in table above has shown that at although the smaller volume for blender type HR2020/50 for this case is giving the best result in terms total cost.

Selection of the Best/ Preferred Alternative Compared against the Criteria

Considering above analysis, blender type HR2020/50 is the preferred alternative.

Performance Monitoring and Post Evaluation of Result/ Follow up Assessment

Factors that we should pay attention for calculating total life cycle cost here are unit price of blender (fair price/ over price), power consumption, rate of electrical power per kWh and the life span utilization of the air conditioner, and at how much we want to set the volume of blended food per day we want to produce.

References :

1. Koninklijke Philips N.V. (2013). Food Preparation. [ONLINE] Available at: http://www.philips.co.uk/c/food-preparation/319273/cat/. [Last Accessed 6 September 2013].
   
2. Bank Indonesia (2013). Kurs Transaksi Bank Indonesia. [ONLINE] Available at: http://www.bi.go.id/web/id/Moneter/Kurs+Bank+Indonesia/Kurs+Transaksi/. [Last Accessed 6 September 2013].
   
3. Bursa Elektronik (2013). Products Categories. [ONLINE] Available at: http://www.bursa-elektronik.com/. [Last Accessed 5 Sept 2013].
   
4. PT PLN (Persero) (2013). Tarif Tenaga Listrik. [ONLINE] Available at: http://www.pln.co.id. [Last Accessed 6 September 2013].
   
5. Sullivan, William G., Wick, Elin M., Koelling, C. Patric. (2012), Engineering Economy. Chapter 2 Pp. 20 – 66, Fifteenth edition, Prentice hall.