ME23038 COMPUTER INTEGRATED

MANUFACTURING DEPARTMENT OF
MECHANICAL ENGINEERING
College of Engineering, Guindy Campus, Anna University
 COURSE OBJECTIVE

To impart knowledge on production planning & control, cellular manufacturing, flexible

manufacturing system and role of robots in industrial automation.

2
 PROGRAMME OUTCOMES (PO)
PO Graduate Attribute Programme Outcome

1 Engineering knowledge Apply knowledge of mathematics, basic science and engineering science.

2 Problem analysis Identify, formulate and solve engineering problems.

Design/development of Design a system or process to improve its performance, satisfying its
3
solutions constraints.
Conduct investigations of
4 Conduct experiments & collect, analyze and interpret the data.
complex problems

5 Modern tool usage Apply various tools and techniques to improve the efficiency of the system.

6 The Engineer and society Conduct selves to uphold the professional and social obligations.

Environment and Design the system with environment consciousness and sustainable
7
sustainability development.

8 Ethics Interacting industry, business and society in a professional and ethical manner.

9 Individual and team work Function in a multidisciplinary team.

10 Communication Proficiency in oral and written Communication.
Project management and
11 Implement cost effective and improved system. 3
finance
 PROGRAMME SPECIFIC OUTCOMES (PSO)
PSO Graduates demonstrate

1 Apply the knowledge gained in Mechanical Engineering for design

and development and manufacture of engineering systems.

2 Apply the knowledge acquired to investigate research oriented

problems in mechanical engineering with due consideration for

environmental and social impacts.

3 Use the engineering analysis and data management tools for

4
 COURSE OUTCOMES (COs)
Upon completion of this course, the students will be able to:

1)Apply the fundamentals of CIM.

2) Solve the problems in Production Planning and Control.
3) Apply the automation techniques in modern manufacturing
systems.
4) Analyze the performance metrics in GT call and FMS
5) Apply the suitable Robots and AGVs for industrial applications.

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 SYLLABUS
UNIT I FUNDAMENTALS OF CIM
Various phases in Product Design and CAD, CAM, Concepts of CAD/CAM –
Concurrent Engineering – CIM concepts and elements – Types of production –
Manufacturing Metrics and Economics – Production Performance Metrics –
Manufacturing Cost - Problems – Lean Production and Just-In-Time Production.
UNIT II PRODUCTION PLANNING & CONTROL AND COMPUTER AIDED PROCESS
PLANNING
Production planning and Control System - Aggregate Production Planning and
Master Production Schedule – Material Requirement Planning (MRP I) – Simple
Problems – Capacity Planning – Shop Floor Control – Inventory Control – EOQ, WIP
costs & Inventory Holding Costs - Simple Problems –Introduction to Manufacturing
Resource Planning (MRP II) & Enterprise Resource Planning (ERP) –Process planning
– Manual Process Planning and case studies Computer Aided Process Planning
(CAPP)
UNIT – III AUTOMATION IN MANUFACTURING SYSTEMS
Automation principles and strategies – Automation migration strategies – Basic
Elements of an Automated system – Advanced Automation Functions – Levels of
Automation. CNC – DNC – Automated assembly lines – Line balancing – Automated
production lines – Automatic identification and data capture. 6
 SYLLABUS
UNIT – IV CELLULAR MANUFACTURING AND FMS
Group Technology (GT) - Part Families – Parts Classification and coding –
Simple Problems in OPITZ Part Coding system – Production flow Analysis
– Cellular Manufacturing – Composite part concept – Machine cell design
and layout – Quantitative analysis in Cellular Manufacturing –Rank Order
Clustering Method - Arranging Machines in a GT cell – Hollier Method –
Performance Metrics in Cell Operation. FMS: Types of FMS & Flexibility –
FMS Components – FMS Application & Benefits – FMS Planning and
Implementation Issues – Quantitative analysis of Bottleneck Model in
FMS.
UNIT – V INDUSTRIAL ROBOTICS AND AGVs
Robot Anatomy and Related Attributes – Classification - Control systems
– End Effectors –Sensors – Applications – Basics of Robot Part
Programming – Robot Accuracy and Repeatability – Simple Problems.
sensor - Sensor and Actuator interactions. Automated Guided Vehicle
System (AGVS) –Types of AGVS - Applications – Vehicle Guidance
technologies –Vehicle Management & Safety.
 TEXT BOOKS

1. Mikell. P. Groover, “Automation, Production Systems and Computer

Integrated Manufacturing”, Pearson Education, 2018
2. Kant Vajpayee S, “Principles of Computer Integrated Manufacturing”,
Prentice Hall India, 2003.
REFERENCES
1. Gideon Halevi and Roland Weill, “Principles of Process Planning – A
Logical Approach” Chapman & Hall, London, 1995.
2. Peter Scallan, “Process Planning: The design/manufacture interface,”
Elsevier Science & Technology Books, 2003.
3. Radhakrishnan P., Subramanyan S. and Raju V., “CAD/CAM/CIM”, New
Age International (P) Ltd, New Delhi, 2018.
4. Rao. P. N., Tewari. N. and Kundra. T.K., “Computer Aided
Manufacturing”, Tata McGraw Hill Publishing Company, 2000.
 Detailed course assessment method
S.N
Mode of Assessment Date Duration Weight (%)
.
Internal Assessment
1. 1½ hr
Tests 1
Internal Assessment
2. 1½ hr
Tests 2
3. Assignments
4. Quiz
5. Activities
6. University Examination
Total 100% 9
 COURSE DELIVERY/INSTRUCTIONAL METHODOLOGIES:

✔ Chalk & Talk ✔ Stud. ✔ Web Resources –

Assignments NPTEL
✔ PPTs ✔ Stud. Seminars ✔ Add-On Courses –
NPTEL
✔ Activities ✔ Industrial Visit ✔ Prototype building
– Patent

10
 Detailed course assessment method

S.N
Mode of Assessment Date Duration Weight (%)
.
Internal Assessment
1. 1½ hr
Tests 1
Internal Assessment
2. 1½ hr
Tests 2
3. Assignments
4. Quiz
5. Activities
6. University Examination 11
 UNIT – I FUNDAMENTALS OF CIM
Various phases in Product Design and CAD, CAM, Concepts of
CAD/CAM – Concurrent Engineering – CIM concepts and elements –
Types of production – Manufacturing Metrics and Economics –
Production Performance Metrics – Manufacturing Cost - Problems –
Lean Production and Just-In-Time Production

The Society of Manufacturing Engineers ( SME) defined CIM as ‘CIM is the integration
of the total manufacturing enterprise through the use of integrated systems and data
communications coupled with new managerial philosophies that improve
organisational and personal efficiency’.
CIM basically involves the integration of all the functions of an
enterprise

Fig.
The new manufacturing
enterprise wheel suggested
by Society of Manufacturing
Engineers (Courtesy, of the
Society of Manufacturing
Engineers, Dearborn,
Michigan
MORPHOLOGY OF DESIGN
Design Activities that make up the First Three
Phases of the Engineering Design Process
Steps included
 Conceptual Design
Process
Brainstorming Theme Ideation Theme
(Thumbnail Refinement
Sketches) (Technical
Renderings)

Design Design
Objectives Product

Review Theme Selection Concept

Selection
 Example design problem - Stop a
spinning shaft
(8 inch diameter, 1000 lbs, steel, 3000 rpm)

Early in the design process, we decide upon the

specifications of the function to be performed:
• Decide upon a satisfactory rate of deceleration
• Determine the length of the shaft
• Determine where it is supported
• Determine what actuating energy is available
• Decide to reverse engineer an existing product
• Choose to research brakes in the library

“Formulation” Phase
 Decisions relating to concept?

Decide physical principles that will perform the function

• 1. surface friction (e.g. drum brake, disk/caliper)

• 2. opposing magnetic fields (e.g. inverse motor)
• 3. air friction (e.g. fan blades)
Assume we decide on surface friction

“Concept Design Phase”

II. Embodiment Design
 Values for Parameters?
Decide upon specific values for design variables

1. rotor diameter (outer)

2. rotor thickness
3. brake pad width
4. pad material
5. hydraulic pressure on piston

“Parametric Design” Phase

Completing the details

Decide upon the remaining manufacturing specifications

• machined rotor tolerances

• pad bonding resin
• assembly/testing procedure

“Detail Design” Phase

 Final “Form” is the solution to a
design problem
Function ---- stop a spinning shaft

Form
•rotor: 10 inch diameter, steel, 3/8-inch thick, cooling passages
•forged steel caliper/housing
•brake pads, 2 opposing, 4 sq. in., metal particles/epoxy matrix
•steel piston,1-inch diameter, with elastomeric seals
•100 psi hydraulic piston pressure
IV. Planning for Manufacture
V. Planning for Distribution
VI. Planning for Use
VII. Planning for Retirement
 Field warranty service
Quality
Market control
analysis,
Production
R&D
system
Process
design Prototyping
GD&T
Statistic
Process
Engineering Product Control (SPC)
Modeling design Cell, Quick
GD&T Response
Manufacturing
Rapid
Prototyping
Computer
Aided
Manufacturing
Computer (CAM)
Aided Design
(CAD)

Manufacturing in the Product Life Cycle

Product cycle in a computerised manufacturing
environment
 BENEFITS OF CIM

1. CIM improves the operational control through

– reduction in the number of uncontrollable variables
– providing tools to recognise and react quickly to deviations in the
manufacturing plan
– reducing dependence on human communication
2. CIM improves the short-run responsiveness consisting of – engineering
changes
– processing changes
– machine downtime or unavailability
– operator unavailability
– cutting-tool failure
– late material delivery
3. CIM improves long-run accommodations through quicker and easier
assimilation of– changing product volumes – new product additions and
introductions – different part mixes
 BENEFITS OF CIM

[Link] reduces inventory by

– reducing lot sizes
– improving inventory turnovers
– providing the planning tools for Just-in-Time manufacturing
[Link] increases machine utilisation by
– eliminating or reducing machine set-up
– utilising automated features to replace manual intervention to the
extent possible
– providing quick transfer devices to keep the machines in the cutting
cycle
 Some quantifiable benefits achieved by applying CIM are the following:
1. Engineering design costs can be reduced by 15 to 30%.
2. The overall lead times can be reduced by 30 to 60%.
3. The product quality can be increased dramatically, as measured by the
yield of acceptable product, offering 2 to 5 times the previous level.
[Link] of the manufacturing operations can be increased by 40 to
70%.
5. Operating time related productivity can be increased by 2 to 3 times.
6. The productivity of engineers and engineering managers can be
increased by 5 to 35 times, measured in terms of extent and depth of
analysis in the same or less time.
7. Work in process can be reduced by 30 to 60%.
 CAD system support the engineering
design functions
• To increase the productivity of the designer- accomplished by helping the designer
to conceptualize the product and its components.-helps reduce the time required
bf the designer to synthesize, analyze, and document the design.
• • To improve the quality of Ihe design, The use of a CAD system with appropriate
hardware and software capabilities permits the designer to do a more complete en
gineering analysis and to consider a larger number and variety of design
alternatives. The quality of the resulting design is thereby improved.
• •To improve design documentation. The graphical output of a CAD system results
in better documentation of the design than what is practical with manual drafting.
The engineering drawings are superior, and there is more standardization among
the drawings, fewer drafting errors, and greater legibility.
• •To create a manufacturing data base. In the process of creating the
documentation for the product design (geometric specification of the product,
dimensions of the components, materials specifications, bill of materials, etc.),
much of the required data base to manufacture the product is also created.
 Utilization refers to the amount of output of a production
facility relative to its capacity.

where U = utilization of the facility,

Q= actual quantity produced by the facility during a given time
period(i.c.,pc/wk),and PC - production capacity for the same period
(pc/wk.).
Utilization can be assessed for an entire plant, a single machine in the
plant, or any other productive resource (i.e., labor).
For convenience, it is often defined as the proportion of time that the
facility is operating relative to the time available under the definition of
capacity, Utilization is usually expressed as a percentage.
Changes that can be made to increase or decrease plant capacity over the
short term are:
I. Change the number of shifts per week (5).
For example, Saturday shifts might be authorized to temporarily increase
capacity.
2. Change the number of hours worked per shift (H). For example, overtime
on each regular shift might be authorized to increase capacity.
 Over the intermediate or longer term. the following changes can be
made to increase plant capacity;
❖Increase the number of work centers, n, in the shop. This might be
done by using equipment that was formerly not in use and hiring new
workers. Over the long term, new machines might be acquired.
Decreasing capacity is easier, except for the social and economic
impact: Workers must be laid off and machines decommissioned.
❖Increase the production rate, Rp by making improvements in
methods or process technology.
❖Reduce the number of operations no required per work unit by using
combined operations,simultaneous operations, or integration of
operations .
 Cycle Time and Production Rate
A batch of parts is produced on a semi-automated production
machine. Batch size is 200 units. Setup requires 55 min. A worker
loads and unloads the machine each cycle, which takes 0.44 min.
Machine processing time is 2.86 min/cycle, and tool handling time
isnegligible. One part is produced each cycle. Determine (a)
average cycle time, (b) time to complete the batch, and (c) average
production rate.
Loading and unloading time Th = 0.44 min, Machine processing time To = 2.86 min,
tool handling time Tt = 0,Q=200 Units

Cycle time Tc = 0.44 + 2.86 = 3.30 min

Batch time Tb =set up time+batch sizexTc

=55 + 200(3.30) = 715 min = 11.92 hr
Average production time Tp =batch time/batch size
= 715/200 = 3.575 min/pc
Production rate Rp = 60/3.575 = 16.78 pc/hr
 Average setup time on a certain production machine is 4.0 hours. Average batch
size is 48 parts, and average operation cycle time is 4.2 min. The reliability of
this machine is characterized by mean time between failures of 37 hours and a
mean time to repair of 55 min. (a) If availability is ignored, what is the average
hourly production rate of the machine.(b) Taking into account the availability of
the machine, determine its average hourly production rate. (c) Suppose that
availability only applied during the actual run time of the machine and not the
setup time. Determine the average hourly production rate of the
machine under this scenario.

(a) Batch time Tb = 4(60) + 48(4.2) = 240 + 201.6 = 441.6 min

Tp = 441.6/48 = 9.2 min
Hourly production rate Rp = 60/9.2 = 6.52 pc/hr

(b) Availability A = (37 – 55/60)/37 = 0.975 = 97.5%

Production rate including effect of availability =
ARp = 0.975(6.52) = 6.36 pc/hr

(c) If availability only applies during run time, then

Tb = 4(60) + 48(4.2/0.975) = 240 + 206.77 = 446.77 min
Tp = 446.77/48 = 9.31 min
Production rate Rp = 6.45 pc/hr
 Plant Capacity and Utilization

A mass-production plant has six machines and currently operates one

8-hour shift per day, 5 days per week, 50 weeks per year. The six
machines produce the same part each at a rate of 12 parts per hour. (a)
Determine the annual production capacity of this plant. (b) If the plant
were to operate three 8-hour shifts per day, 7 days per week, 52 weeks
per year,determine the annual percentage increase in plant capacity?

Hpc = 1x8x5x50=2000 hr
Annual plant capacity using 50 weeks/yr
PCy = 2000(6)(12) = 144,000 pc/yr
Working three 8-hr shifts/day, 7 days/wk, Hpc =3x8x7x52= 8736 hr.
Annual plant capacity PCy = 8736(6)(12) = 628,992 pc/wk
This is an increase of (144000-628992/144,000) = 3.368 = 336.8%
 HOME WORK PROBLEM
A batch production plant works 40 hours per week and has three
machines. In a typical week, five batches of parts are processed
through these machines. Production rates, batch times, and
operation sequences for the parts are given in the table below for
one week. (a)Determine the weekly production rate for the shop.
(b) Is this weekly production rate equal to the plant capacity? If not,
determine what the output would be if all three machines
could be operated up to 40 hours per week, given the constraint that
no reductions in weekly production rates are allowed for any part.
 Manufacturing Lead Time

In the competitive environment of modern business, the ability of a

manufacturing firm to deliver a product to the customer in the
shortest possible time often wins the order. This time is referred to
as the manufacturing lead time.

•Production usually consists of a series of individual processing

and assembly operations.

An operation is performed on a workunit when it is in the production

machine.
Tc = the operation cycle time at a given machine or workstation

The nonoperation elements include

❖handling,
❖Temporary storage, inspections
❖other sources of delay when the work unit is not in the machine.
Tno = the nonoperation time associated with the same machine.
In batch production, then there are Q work units in the batch.
A setup is generally required to prepare each production machine
for the particular product, which requires a time = Tsu’

MLTj = manufacturing lead time for part or product j

(min),
Tsu = setup time for operation i (min),
ji

Q = quantity of part or product j in the batch being processed (pc)

Tcji = operation cycle time for operation i (min/pc),

Tnoji = non operation time associated with operation i (min),and
i indicates the operation sequence in the processing; i = 1,2,... , noj
The MLT equation does not include the time the raw workpart spends in
storage before its turn in the production schedule begins.
 To simplify and generalize the model, assume that all setup
times, operation cycle times, and nonoperation times are equal
for the noj machines.
The batch quantities of all parts or products processed through
the plant are equal and that they are, all processed through the
same number of machines, so that noj = no .

In an actual batch production factory, which this equation is

intended to represent,the terms no.Q, Tsu, Tc and Tno would vary by
product and by operation.

For a job shop in which the batch size is one

For mass production, the Q term is very large and dominates tbe otber
terms, In the case of quantity type mass, production in which a large number of
units are made on a single machine (no = I), the MLT simply becomes the
operation cycle time forthe machine after the setup has been completed and
production begins.
A certain part is produced in a batch size of 100 units. The batch
must be routed through five operations to complete the processing of
the parts. Average setup time is 3 hr/operation, and average
operation time is 6 min (0.1 hr).Average nonoperation time due to
handling, delays, inspections, etc., is 7 hours for each operation.
Determine how many days it will take to complete the batch.
assuming the plant runs one 8-hr shift/day.
A certain batch of parts is routed through six machines in a batch
production plant. The setup and operation times for each machine
are given in the table below. Batch size is 100 and the average
nonoperation time per machine is 12 hours. Determine (a)
manufacturing lead time and (b) hourly production rate for
operation 3.

Average set up time Tsu = (4 + 2 + 8 + 3 + 3 + 4)/6 = 24/6 = 4.0 hr

Average cycle time Tc = (5 + 3.5 + 6.2 + 1.9 + 4.1 + 2.5)/6 = 23.2/6 = 3.867 min
MLT = 6(4.0 + 100(3.867/60) + 12) = 6(22.444)
= 134.67 hr

Rp for operation 3:

Tp = [8.0 + 100(6.2/60)] /100 = 18.33/100 = 0.1833 hr/pc

Production rate Rp = 1/0.1833 = 5.455 pc/hr
 Work-in-Process

Work inprocess (WIP) is the quantity of parts or products currently

located in the factory that are either being processed or are between
processing operations.
WIP is inventory that is in the state of being transformed from raw
material to finished product.

WIP = work-in-process in the facility (pc), A = availability, U = utilization,

PC = production capacity of the facility (pc/wk)
MLT = manufacturing lead time (wk),S = number of shifts per week (shift/wk),
H = hours per shift (hr/shift).
The average part produced in a certain batch manufacturing plant must be
processed sequentially through an average of eight operations. Twenty (20)
new batches of parts are launched each week. Average operation time is 6
min, average setup time is 5 hours, average batch size is 25 parts, and
average nonoperation time per batch is 10 hours per [Link] are 18
machines in the plant. Any machine can be set up for any type of batch
processed in the plant. The plant operates 75 production hours per week.
Determine
(a)manufacturing lead time for an average part
(b) plant capacity if all machines could be operated at 100% utilization
(c) plant utilization
(d) work-in-process (number of parts-in-process).
(e) How would you expect the non operation time to be affected by plant
utilization?
 Manufacturing lead time MLT
= 8(5 + 25(6/60) + 10) = 140 hr

batch production

Average production time Tp = (5 + 25 × 6/60)/25 = 0.30 hr/pc

Average production rate Rp = 1/0.30 = 3.333 pc/hr

Plant capacity at 100% utilization PCw = 75(18)(3.333)/6 = 750 pc/week

.
Parts launched per week = 20 x 25 = 500 pc/week
Utilization U = 500/750 = 0.667 = 66.7%

If the plant produces 500 pc/wk in 75 hr,

then Rpph = 6.667 pc/hr
WIP = Rpph(MLT) = 6.667(140) = 933 pc
 Fixed and Variable Costs
fixed cost
remains constant for any level of production output.
Examples include the cost of the factory building and
production equipment, insurance, and property taxes.
❖ All of the fixed costs can be expressed as annual amounts.
❖Expenses such as insurance and property taxes occur
naturally as annual costs.
❖ Capital investments such as building and equipment can
be converted to their equivalent uniform annual costs using
interest rate factors.
 A variable cost is one that varies in proportion to the level of production
output.
As output variable cost increases.
Examples
•direct labor, raw materials
•electric power to operate the production equipment.
The ideal concept of variable cost is that it is directly proportional to output
level.

TC = FC + VC(Q)

where TC = total annual cost (amount /yr),

FC = fixed annual cost (amount /yr) ),
VC = variable cost (amount /yr),
Q = annual quantity produced (pc/yr)
Figure .Fixed and variable costs as a function of production
output For manual and automated production methods.

When comparing automated and manual production methods it is

typical that the fixed cost of the automated method is high
relative to the manual method, and the variable cost of
automation is low relative to the manual method, Consequently,
the manual method has a cost advantage in the low quantity
range, while automation has an advantage for high quantities.
 Direct labor, Material, and Overhead costs

The direct labor cost is the sum of the wages and benefits paid to the
workers who operate the production equipment and perform the
processing and assembly tasks.

The material cost is the cost of all raw materials used to make the product.
Example:In the case of a stamping plant, the raw material consists of the steel
sheet stock used to make stampings.
definition of "raw material" depends on the company.
The final product of one company can be the raw material for another
company.
In terms of fixed and variable costs, direct labor and material must be
considered as variable costs.
 . Overhead divides into two categories:
(I)factory overhead - consists of the costs of operating the factory other
than direct labor and materials

The types of expenses included in this category are listed in

Factory overhead is treated as fixed cost, although some of the items in
our list could be correlated with the output level of the plant.
ii)Corporate overhead is the cost of running the company other
than its manufacturing activities. Many companies operate more
than one factory, and this is one of the reasons for dividing
overhead into factory and corporate categories.
Different factories may have significantly different factory overhead
expenses.
First, total manufacturing cost represents only about 40% of the product's
selling price.
Corporate overhead expenses and total manufacturing cost are about equal.
Materials (and parts) make up the largest percentage of total manufacturing
cost, at around 50%.
direct labor is a relatively small proportion of total manufacturing cost: 12% of
manufacturing cost and only about 5% of final selling price.
❖The objective is to determine an overhead rate (also called burden rate) that
could be used in the following year to allocate overhead costs to a process or
product as a function of the direct labor costs associated with that process or
product.
❖separate overhead rates will be developed for factory and corporate overheads.

FOHR = factory overhead rate.

FOHC = annual factory overhead costs (Rs/yr);
DLC = annual direct labor costs (Rs/yr).

COHR = corporate overhead rate.

COHC = annual corporate overhead costs
(Rs/yr),
 Problems

Suppose that all costs have been compiled for a certain manufacturing firm
for last year. The summary is shown in the table below. The company
operates two different manufacturing plants plus a corporate headquarters.
Determine:
(a)the factory overhead rate for each plant and
(b)the corporate overhead rate.
These rates will be used by the firm in the following year.
 plant 1. plant 2.

corporate overhead rate is based on the total labor cost at both plants
Costs have been compiled for a certain manufacturing company for the
most recent year. The summary is shown in the table below. The company
operates two different manufacturing plants, plus a corporate headquarters.
Determine (a) the factory overhead rate for each plant,and (b) the corporate
overhead rate. The firm will use these rates in the following year.

Solution: (a) Plant 1: Factory overhead rate FOHR1 =1,300, 000/1, 00, 000
= 1.30 = 130%
Plant 2: Factory overhead rate FOHR2 =2,300, 000/1, 750, 000
= 1.3143 = 131.43%
(b) Corporate overhead rate COHR
=5, 000, 000/(1, 000, 000+ 1, 750, 000 )
= 1.8182 = 181.82%
 Cost of Equipment Usage

If differences in rates of different production machines are not

recognized, manufacturing costs will not be accurately measured by
the overhead rate structure.

To deal with this difficulty, it is appropriate to divide the cost of a

worker running a machine into two components:
(1) direct labor and (2) machine.

The direct labor cost consists of the wages and benefits paid to operate
the work center.
Applicable factory overhead expenses allocated to direct labor cost might
include state taxes, certain fringe benefits, and line supervision.
The machine annual cost is the initial cost of the machine apportioned
over the life of the asset at the appropriate rate of return used by the firm.
 capital recovery factor,

UAC = equivalent uniform annual cost (Rs./yr);

lC = initial cost of the machine (Rs.)
(A/ P,i,n) = capital recovery factor that converts initial cost at year 0
into a series of equivalent uniform annual year-end values,
Where i = annual interest rate,n =number of years in the service life
of the equipment.

For given values of i and n, (A/ P.i,n) can be computed as

follows:
Total cost rate for the work center is the sum of labor and
machine costs. T

Co = hourly rate to operate the work center (Rs/hr),

CL = direct labor wage rate (Rs/hr),
FOHR = factory overhead rate for labor,
Cm = machine hourly rate (Rs/hr),and
FOHRm = factory overhead rate applicable to machines.
 Hourly Cost of the Work Center

The following data are given: direct labor rate $10.00/hr; applicable factory overhead
rate on labor = 60%;
capital investment in machine = $100,000;service life of the machine = 8 yr;
Rate of return = 20%; salvage value in 8 yr = 0;
applicable factory overhead rate on machine = 50%.
The work center will be operated one 8-hr shift, 250 day/yr. Determine the appropriate
hourly rate for the work center.

The investment cost of the machine must be annualized, using an 8-yr service
life and a rate of return = 20%.

Now the uniform annual cost for the $100,000 initial cost can be determined:
The number of hours per year = (8 hr/day)(250 day/yr) = 2000 hr/yr.
Dividing this into UAC gives 26,060/2000 = $13.03/hr.
Then applying the factory overhead rate,
 In the operation of a certain production machine, one worker is required at a direct labor
rate = $10 per hour. Applicable labor factory overhead rate = 50%. Capital investment in
the machine = $250,000, expected service life = 10 years, with no salvage value at the
end of
that period. Applicable machine factory overhead rate = 30%. The work cell will operate
2000 hours per year. Rate of return is 25%.
(a)Determine the appropriate hourly rate for this work cell.
(b) Suppose that the machine were operated three shifts, or 6000 hours per year, instead
of 2000 hours per year.
(c)Determine the effect of increased machine utilization on the
hourly rate compared to the rate determined in (a).
 The hourly rate for a certain work center is to be determined based on the
following data:
direct labor rate = $15.00 per hour; applicable factory overhead rate on labor =
35%; capitalinvestment in machine = $200,000; service life of the machine = 5
years; rate of return =15%; salvage value in five years = zero; and applicable
factory overhead rate on machine =40%. The work center will be operated two
8-hour shifts, 250 days per year.
(a)Determine the appropriate hourly rate for the work center.
(b) If the workload for the cell can only justify a one shift operation, determine the
appropriate hourly rate for the work center.