17. Downtime Cost Calculation
The chapter delves into the financial implications of machine downtime costs, obsolescence, and the economic life of equipment, emphasizing the need for timely replacement to minimize costs. It outlines how cumulative costs evolve over time and how depreciation, maintenance, and obsolescence hitches can affect the total cost of ownership. Analytical methods are discussed to identify the optimal replacement time to optimize productivity versus cost.
Enroll to start learning
You've not yet enrolled in this course. Please enroll for free to listen to audio lessons, classroom podcasts and take practice test.
Sections
Navigate through the learning materials and practice exercises.
What we have learnt
- Downtime costs can accumulate significantly over the life of equipment.
- Obsolescence costs emerge as equipment ages and alternatives become more productive.
- Determining the economic life of machinery is crucial for cost management and maximizing productivity.
Key Concepts
- -- Downtime Cost
- The cost incurred due to equipment not being operational, specified as a percentage of the equipment cost.
- -- Obsolescence Cost
- The cost associated with retaining old equipment which has diminished productivity compared to newer models.
- -- Economic Life
- The period during which the cumulative cost per operating hour of owning and operating equipment is minimized.
- -- Cumulative Cost
- The total cost of ownership of equipment over its operational life, calculated cumulatively year by year.
Additional Learning Materials
Supplementary resources to enhance your learning experience.