590R-2006spring-t1

# 590R-2006spring-t1 - Name IE 590 - Manufacturing Economics...

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Unformatted text preview: Name IE 590 - Manufacturing Economics Spring 2006 Test No. 1 1. Explain the following terms: a. Payback rate of return b. Return on unrecovered capital (Cf {0,352.15 i Name 2. Explain the popularity ofthe use 0fthe payback period method. Name 3. Draw a ﬂow chart ofthe internal rate of return method for evaluating “bundled” projects.. L." Name _ 4. A ﬁrm is faced with four projects competing for the funds available for investment. Project A is a coil steel cut- to-length production line. This line will feed steel from a coil, straighten it, shear it, and stack it. Project B is an electric furnace for the foundry. Project C is a gas furnace for the foundry. Project D consists of an electric trolley car to be used to load coil steel onto the proposed cut-to-length, rather than using the existing crane. Capital investment \$s is limited to \$850,000 in the current year and \$750,000 the following year. The hurdle rate for the investments under consideration is 0%. The expected cash ﬂows (x103 dollars) are as follows: EOY Proj A Proj B | Proj C Proj C 0 -500 -250 —400 -100 l -6~00 -100 50 -40 2 200 150 200 20 3 500 350 200 180 4 700 0 [00 100 5 300 O 100 0 Formulate the above problem as a 0-1 Programming Model. Name 5. Provide an explanation ofthe chart shown below. ‘Internal’ rates of return on investment projects Rate Cost of capital Amount of capital 'Ji ...
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## This note was uploaded on 07/09/2010 for the course INDUSTRIAL IE59000 taught by Professor J.tanchoco during the Spring '10 term at Purdue University Calumet.

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590R-2006spring-t1 - Name IE 590 - Manufacturing Economics...

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