Answer:
a. The total labour cost associated with the process is <u>$124740</u> per year.
b. If steps 7, 10, 12, and 15 were eliminated, the annual labour savings associated with implementing this new process would be <u>$12029 </u>per year.
Explanation:
<u>Part A:</u>
Here, Total working hours in a year = 330 days * 9 hours/day = 2970 hours
It takes 28 mins to complete one cycle, i.e. mechanic works 28*2 = 56 mins per hour.
Total working hours per year for a mechanic = 2970 * 56/60 = 2772.00 hours
The mechanic is paid $45 per hour.
Therefore, Total Labor Cost = Cost per Hour * Total Hours = 2772 hours * $45 per hour = $124740 per year
<u>Part B:
</u>
If steps 7, 10, 12, and 15 were eliminated, this will result into the save of 2.7 mins per cycle i.e. 2.7 * 2 = 5.4 mins per hour.
Total saving in a year = 5.4/60 * 2970 = 267.3 hours
Cost per hour is $45.
Hence, saving for a year after eliminating the given processes = 267.3 hours * $45 per hour = $12028.50
