Advanced Engineering Economics
The paper presents an expanded replacement analysis based on the existing ROI model used by the company previously. The group identified non-economic factors like: work in process (WIP), flow time, machine utilization, maintenance, ergonomics, quality and training level. These factors were not included in the ROI analysis. The group assigned economic values to all non-economic factors identified, based on literature research and interviews with managers from the company that replaced the machines. The data used in the model, for the old machine, was based on previous records and forecasted values, using Crystal Ball software, for the new machine. The results showed a decreased payback period and increased ROI, IRR, modified IRR, if the non-economic factors are considered in the replacement analysis.
Cutar, Adriana; Evanhus, Blake; Hallaj, Wajeeh; Khan, Nausheen; Liner, Paul; Rao, Meghana; and Valsan, Rahul, "ROI: Applying Non-Economic Factors to Replacement Analysis" (2008). Engineering and Technology Management Student Projects. 1094.