A Distribution Center Wants to Evaluate an Alternative Product Tracking

Essay

A distribution center wants to evaluate an alternative product tracking system. The system has an initial cost of $500,000 and a salvage value of $80,000 at the end of its useful life of 7 years. The operating cost is estimated to be $550 per metric ton of product moved per day. The center can handle between 30 and 50 tons per day. Analyze the sensitivity of the PW to changes in a 10- metric- ton increment of product moved. Use an interest rate of 3% per year and 200 days of work per year.