Equipment Budget Justification

Due March 7th

The purpose of this assignment is to familiarize you with the process of writing an
equipment justification as part of a capital budget. You are the Foodservice Manager and
your facility is in need of a new fryer. Your facilitys fryer is 12 years old and needs to be
replaced. The primary use of the fryer is for French fries and sweet potato fries. Your task is
to investigate your options and submit a brief written justification to the Food & Nutrition
Services Director (your boss), who will approve the purchase. The departments total capital
budget for all new equipment is $20,000 for 2017 and your boss has already received 5
proposals from other managers within the department. Typically, major capital equipment
has an acquisition cost of $5,000.00 or more.

You will be comparing 3 gas fryers and 3 electric fryers. You will compare the models
available, determine which piece of equipment you want to purchase, and write a
justification showing why you need the fryer and why you chose a particular brand and
model and its energy source.

Your assignment is as follows:

1. Read all instructions before beginning the assignment!
2. You will be calculating the life-cycle cost of fryers using the online Food Service
Technology Center (www.fishnick.com) Life-Cycle Cost Calculator.
3. Read background material regarding fryers:
http://www.fishnick.com/equipment/techassessment/2_fryers.pdf
http://www.fishnick.com/equipment/appliancetypes/fryers/tipsheet_fryers.pdf
4. You will compare 3 gas fryers and 3 electric fryers:
You are to select one gas and one electric fryer.
One gas base efficiency fryer and one gas Energy Star fryer are provided for you.
One electric base efficiency fryer and one electric Energy Star fryer are provided for
you.
5. Choose one gas and one electric standard fryer from the list at:
http://www.fishnick.com/publications/appliancereports/fryers/
6. The two fryers that you select should be standard 14 open-top; NOT self-contained or
ventless.
7. Review the Test Report for each of the fryers that you have chosen to determine the
following:
Fryer size (inches) = should be 14
Preheat Energy (kWh or Btu) = energy required to heat up oil
Idle Energy Rate (kW or Btu/h) = energy required to keep oil hot when not
cooking
Heavy-load Energy Efficiency (%) = efficiency when cooking
Production Capacity (lbs/hr) = how many potatoes cooked per hour
The Cost Calculator provides everything else, except for Additional Costs.

The annual consumable costs and maintenance costs for each fryer are as follows:
Gas Electric
Consumable Costs NA NA
(oil, filtration, etc.)
Maintenance Costs (all) $120.00 $125.00

Note that the initial cost of each fryer is as follows:

Gas Electric
Your Fryers (the ones you $6917.00 $6750.00
selected on Fishnick)
Base Efficiency Fryer $6679.00 $5225.00
Energy Star Fryer $8967.00 $7842.00
8. Use the Life-Cycle and Energy Cost Calculators at:
http://www.fishnick.com/saveenergy/tools/calculators/
o Select the electric fryer first.
o If you input your fryers manufacturer and model number at the top, the
calculator will self-fill-in the blanks (EASIEST ROUTE)
o If your selected models are not available, then input the Fryer Size, Preheat
Energy, Idle Energy Rate, Heavy-load Energy Efficiency, and Production Capacity
for your fryer.
o Use the default numbers for Fryer Usage and Utility Cost and Lifespan
sections.
o Click Calculate!
o Next input the maintenance cost and initial cost for each fryer (see chart above).
We are not inputing the consumable costs.
o Finally, input the name and model number of your fryer under Optional if you
did not use the self-fill-in function.
o Select Print Results at the bottom and save as a pdf.
o Repeat the process for your gas fryer using the link above.

9. You should have one Cost Calculator comparison sheet for the 3 gas fryers and one for
the 3 electric fryers.

10. You will need to see whether or not the fryer you have selected can adequately produce
the quantity of potatoes your foodservice requires during peak production periods. For
this one fryer, the facility will typically need to prepare 200 servings of 4 ounces of
French fries per hour during lunch. Is the fryer youve selected able to handle this load?

11. Finally, youd like to compare the cost of preparing French fries from fresh potatoes or
purchasing frozen French fries. This is a Make or Buy decision (4 pts).
o Use the calculator at LambWeston using the following data:
https://www.lambweston.com/resources/fresh-vs-frozen
o 50 lb box raw potatoes = $19.55
o 30 lb frozen French fries = $18.98
o 35 lb canola oil = $63.95
o Your employees are paid $15.00/hour
o Base the calculations on 200 portions and only one store.
o Save the calculation sheet as a pdf and attach to your assignment.

12. Write a justification/proposal regarding the fryer that you have evaluated and make a
recommendation for the one you would like to purchase. Since your director/boss is
making the final decision, you need to justify the recommendation that you make. You
need to explain and interpret the results of the comparison in your summary. You also
need to state why you selected gas vs. electric.

You should not rely on the reader to interpret the tables (attachments), you should
explain and interpret the results for the reader. This allows you to control the narrative of
the report and explain your reasoning. The final recommendation should summarize your
decision and include the name and model number, the initial cost, and lifetime
cost of the recommended fryer, why you chose gas or electric, and why you are
proposing the purchase of this particular fryer.

13. Complete the worksheet on the following pages and submit online on Canvas. You should
turn in one pdf containing the worksheet, 2 Cost Calculator results sheets (one gas, one
electric), and the Make or Buy calculator results.
A few comments:
1. Cooking-energy efficiency is a measure of how much of the energy that an appliance
consumes is actually delivered to the food product during the cooking process. The
higher the number, the higher the efficiency, meaning that the energy produced to heat
the appliance (oil) goes into the food and not the surrounding area. Cooking-energy
efficiency is therefore defined as:
Cooking energy efficiency = energy to food / energy to fryer

2. Natural gas vs. electricity price comparison (remember from FSM 120?)
1 Therm = 29.4kWh
Gas cost per therm = $0.808
Electricity cost per kwh = $0.1694
1 Natural gas kWh equivalent is $0.0275, which is less than 1kWh of electricity at
$0.1694

3. Natural gas prices are at an all time low because of excess production in part from
hydraulic fracturing. This is in comparison to heating oil or gasoline prices, which are
currently low, but are expected to increase in the future.

4. Electricity is not necessarily more environmentally friendly than natural gas. It depends
on the fuel source used to produce the electricity (coal, natural gas, nuclear, etc.). The
efficiency of the natural gas fryer may be lower than that of an electric fryer, but the
production of electricity may be less efficient at the power plant. In addition, the carbon
emissions and pollution from the fuel source (i.e. coal) may be greater than that of a
natural gas fryer.

5. In CA electricity is generated primarily from the following. Just something to think about!
(2014 data) http://www.energy.ca.gov/pcl/labels/
Natural gas (45%)
Renewables (20%)
o Biomass/biowaste (3%)
o Geothermal (4%)
o Hydro (1%)
o Solar (4%)
o Wind (8%)
Nuclear (9%)
Large hydro (6%)
Coal (6%)
Unspecified (14%)

6. The words cheapest or cheaper should be replaced with the words inexpensive
less expensive, less costly, or more cost effective. Cheap implies low cost
because of shoddy or poor quality materials or poor manufacturing. Inexpensive
implies low cost despite medium to high quality materials and manufacturing.
Last Name: Smith First Name: Andre

1. List the 2 fryers you have selected to compare (1 pt):

Gas Fryer Alto Shaam ASF 60G
Make &
Model #

Electric Fryer Anets 14el 17

Make &
Model #

2. Discuss the initial purchase costs of each fryer (all 6) vs. lifetime costs (9 pts):
Actual $ amount of equipment initial purchase comparison (2):
Electric (Initial vs. lifetime): Anets ($6750 ->$38682) BEF ($5225 ->$43481) EEF ($7842
->$40038)
The fryer I have selected is more expensive than the base efficiency fryer but more cost
effective than the energy efficiency fryer.
Gas (Initial vs. lifetime): Alto Shaam ($6917->$15137) BEF ($6679 ->$24187) EEF
($8967->$18879)
Similarly to the electric fryers, the gas fryer I have selected is slightly more expensive than
the BEF but has a lower cost than the EEF.
Energy cost / gas vs. electric comparison (2):
Electric (Annual vs. lifetime): Anets ($2536 ->$30432) BEF ($3063 ->$36756) EEF
($2558 ->$30696)
The fryer I have selected has both the lowest annual and lifetime energy cost out of the
three fryers.

Gas (Annual vs. lifetime): Alto Shaam ($565->$6780) BEF ($1339 ->$16068) EEF ($706-
>$8472)
The fryer I have selected has both the lowest annual and lifetime energy cost out of the
three fryers.

Maintenance cost comparison (1):

Electric: Each electric fryer has an annual maintenance cost of $125/year and a lifetime
maintenance cost of $1500.

Gas: Each gas fryer has an annual maintenance cost of $120/year and a lifetime
maintenance cost of $1440.

Total lifetime cost comparison (2):

Electric (Initial vs. lifetime): Anets ($6750 ->$38682) BEF ($5225 ->$43481) EEF ($7842
->$40038)
While the fryer I have selected is more expensive than the base efficiency fryer, it has a
lower lifetime cost than both the base efficiency and energy efficiency fryers.
Gas (Initial vs. lifetime): Alto Shaam ($6917->$15137) BEF ($6679 ->$24187) EEF
($8967->$18879)
Similarly to the electric fryers, the gas fryer I have selected is slightly more expensive than
the BEF but has a lower lifetime cost out of the three fryers.

Overall cost comparison (2):

The gas fryer I have selected, the Alto Shaam ASF 60G, is the most cost effective of the
six fryers. It has a low initial cost and the lowest lifetime cost as well as a lower lifetime
maintenance cost compared to the electric fryers.

3. Discuss each fryers performance in terms of efficiency and production capacity (2 pts):
Efficiency (%) comparison (1):
Electric: Anets (84%) BEF (75%) EEF (85%)
The fryer I have selected is almost as efficient as the EEF, but the EEF is only more efficient
by 1%.
Gas: Alto Shaam (66%) BEF (35%) EEF (57%)
The fryer I have selected is the most efficient out of the gas fryers, however, it is not as
efficient as the least efficient electric fryer.

Production Capacity (lb) comparison (1):

Electric: Anets (72 lb/h) BEF (65 lb/h) EEF (71 lb/h)
The fryer I have selected has the largest production capacity out of the electric fryers.
Gas: Alto Shaam (82 lb/h) BEF (60 lb/h) EEF (67 lb/h)
The fryer I have selected has the largest production capacity out of the gas fryers. Overall
the Alto Shaam fryer has the largest production capacity out of all six fryers.

4. Compare all 6 fryers overall and state your top choice (1 pt).
Overall comparison:
Out of all of the fryers I have reviewed, it is clear that the best option is to purchase the Alto
Shaam gas fryer. It is the most cost effective and has the largest production capacity out
of all six fryers. Its only drawback is that it is not as efficient (66%) as the EEF electric fryer
(85%).

5. Complete the chart below. Discuss the production capacity of your selected fryer. Is it
adequate for your needs? Explain in the box below. (1 pt)
Your Fryers Load Size Your fryers cook time to Your Fryers Production
(lb potatoes) cook one load of potatoes Capacity (lb/hour)
(min.)
3.00 lbs 2.02 minutes ~82 lb/hr

The fryer can produce about 82 pounds of cooked potatoes/hr. This is equal to about 1312
four-ounce servings, which is adequate for our facility.

6. Make or Buy decision (4 pts).

Fresh $1.02/serving Frozen $0.54/serving
Cost per serving: Cost per serving:
Will you make or buy your French fries?
It is cheaper to purchase the French fries, which will initially save us cost on product but also save
on cost of labor. We will purchase the frozen French fries.

7. Provide a justification/proposal for your boss to include at least the following (6 pts):
a. Reason you need a new fryer
b. Which fryer you propose to purchase
c. Include the initial cost and lifetime cost ($)
d. Your reasons for recommending it
The current fryer in our facility has a high maintenance cost and is approaching the end of its
lifetime. Purchasing a new fryer before our current fryer expires would be wise to maintain a steady
flow of fried food items for our customers.
I propose that our facility purchases the Alto Shaam gas fryer. It is the most cost effective and
has the largest production capacity out of all six fryers reviewed. The fryers only drawback is that
it is not as efficient (66%) as the EEF electric fryer (85%). The initial cost is $6917 with a lifetime
cost of $15137, which is the least expensive of all the fryers. The fryer is not only inexpensive, but
is also capable of exceeding our minimum goal for cooked products if we ever have the need to
produce more than 200 servings of a food.
 RUBRIC
Equipment Capital Budget Justification

Grade Item Points

1. Name the brand & model of the 2 fryers selected on 1
Fishnick

2. Initial purchase cost vs. lifetime cost: 9

Actual $ amount of equipment purchase (2 pt)
Energy cost / gas vs. electric (2 pt)
Maintenance cost (1 pt)
Total lifetime cost (2 pt)
Overall cost comparison (2 pt)
3. Performance 2
Efficiency (%) (1 pts)
Production capacity (lbs) (1 pts)
4. Overall comparison & selection 1

5. Production capacity (lbs) of selected fryer adequate? (1 pt) 1

6. Make or Buy decision 4

7. Summary Recommendation: 6
Reason for needing a new fryer (1 pt)
State which selected (1 pt)
Must list cost and lifetime cost in $ amounts (1 pt)
Reason for recommending it (3 pt)
o Gas vs. electric
o Why is it the best choice?
o Was it justified?
Organization and format
Proper format (-2)
Grammar, Spelling, etc. (-2 pt)
Printed comparisons attached (2 pts each) 6
3 Gas fryers
3 Electric fryers
Make or Buy comparison
TOTAL: 30