Example on economic justification of workholding devices Question 1 (a) In drilling a series of holes on a radial drilling machine, the use

of a drill jig will reduce the time from 45 minutes per piece to 15 minutes per piece. If the jig is not used, a machinist, whose hourly rate is P8.00, must be used. If the jig is used, the work can be done by a machinist whose rate is P6.50 per hour. The hourly rate for the radial drill is P8.75. The cost of making the jig would include P250 for design, P75 for material, and 12 hours of tool makers labor at P12.00 per hour. All machine and overhead costs in the tool making department are included in the above. The interest of the company is 15%. It is estimated that the jig will last for 3 years and during this period 200 parts will be produced. i) Is the use of a jig in this operation economical? (R + Rm) t (Rt + Rm) tt

Ct n i 1 N 2

(8.00 + 8.75) 0.75 (6.5 + 8.75) 0.25 Therefore it is economical to use the jig.

469 3 0.15 1 200 2

8.75 > 2.87

ii) Determine the least number of parts that can be produced to justify the use of a jig?

Ct n i 1 N 2 469 3 0.15 1 (8.00 + 8.75) 0.75 (6.5 + 8.75) 0.25 = N 2

(R + Rm) t (Rt + Rm) tt = N* 8.75 = 574.525 N = 65.66 parts 65 parts would have to be produced to break even. (b) Suppose that, for question 1(d), the time over which the tooling is to be used is less than one year, how many pieces would be made? (Hint: Interest cost is neglected).

Ct N

8.775

N = 53.6 53 pieces 53 parts would have to be produced to break even.