1.2. Second Year Downtime Cost

Try these first

1. 1.

   What is the downtime cost per hour for a machine costing 900 rupees per hour at 3%?

   Hint

   Use the formula: Downtime Cost = (Percentage * Equipment Cost) / 100.

2. 2.

   Calculate your yearly downtime cost if your machine operates for 2000 hours.

   Hint

   Yearly Cost = Downtime Cost per Hour * Number of Hours.

3. 3.

   What is the downtime cost per hour for a machine at 3% of 900 rupees?

   • 27 rupees
   • 30 rupees
   • 33 rupees

   Hint

   Use the percentage calculation method.

4. 4.

   True or False: Cumulative costs decrease as a machine ages.

   • True
   • False

   Hint

   Think about downtime and obsolescence costs.

5. 5.

   Imagine a project requires a machine running 2000 hours annually. Calculate downtime costs over three years if the first year’s downtime cost is 54,000 rupees and the second year’s cost is 108,000 rupees. What is the cumulative total and average monthly downtime cost?

   Hint

   Start with year-to-year cumulative totals, then divide by the total months.

6. 6.

   A machine’s obsolescence cost increases from 0.05 in year two to 0.12 in year three. If the machinery costs 900 rupees per hour, calculate yearly obsolescence cost and determine potential savings by acquiring a newer model.

   Hint

   Consider the cost Versus benefits when deciding on upgrades.