1.1. First Year Downtime Cost

Try these first

1. 1.

   Calculate the downtime cost per hour for equipment that costs 900 rupees, with a downtime percentage of 3%.

   Hint

   Use the formula: (downtime percentage * equipment cost) / 100.

2. 2.

   If a machine operates 1,500 hours, what is the total downtime cost at 54 rupees per hour?

   Hint

   Multiply the hourly cost by the total hours of operation.

3. 3.

   What is the initial downtime cost per hour for a machine that costs 900 rupees?

   • 27 rupees
   • 54 rupees
   • 90 rupees

   Hint

   Remember to use the percentage formula.

4. 4.

   True or False: The obsolescence cost increases as machines grow older.

   • True
   • False

   Hint

   Consider how newer models might perform better.

5. 5.

   Calculate the total downtime and obsolescence costs for a machine over three operating years given the following rates: Year 1 - 3%, Year 2 - 6%, Year 3 - 12%.

   Hint

   Break it down year by year, adding each year's costs.

6. 6.

   Given that the cumulative costs are minimum in the fourth year, determine the implications of using a machine beyond its economic life.

   Hint

   Think about the return compared to the costs of keeping old equipment.