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Project 2

Project 2. Team #13: Replacement Options. Team #13 Members. Summarizer - Eddie Robles Organizer - Arin Saghatelian Technical - Sumeet Kals. Replacement Options Scenario. Smurfit Newsprint Corporation uses a 300 hp induction motor in their cooling system.

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Project 2

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  1. Project 2 Team #13: Replacement Options

  2. Team #13 Members • Summarizer - Eddie Robles • Organizer - Arin Saghatelian • Technical - Sumeet Kals

  3. Replacement Options Scenario Smurfit Newsprint Corporation uses a 300 hp induction motor in their cooling system. The motor has reached the end of its 10 year life cycle and is needing repair. When the motor breaks down, will it be more economical to repair the motor or replace it with a brand new one?

  4. Replacement Analysis Basics • Defender – The broken motor needing repair • Challenger – The new motor used for replacement Defender • Brand: US Motor • Rating: 300 HP • Model: R1190214 • Efficiency: 85% • Repair Cost: $3400.00 Challenger • Brand: US Motor • Rating: 300 HP • Model: R1190214 • Efficiency: 90% • Cost: $10,600.00

  5. Replacement Analysis Basics • Determine analysis technique based on available data • Find the marginal cost or EUAC of the Defender, depending on analysis technique, and the EUAC of the Challenger • Make final decision based on findings

  6. Defender Scenario Details

  7. Defender Cash Flow Diagram $3,400 $75,263.63 $76,763.90 $76,763.90 $78,294.18 $78,663.63 $78,294.18 $79,855.06 $79,855.06 $81,447.16 $81,447.16

  8. Challenger Scenario Details

  9. Challenger Cash Flow Diagram $10,600 $69,012.49 $69,700.12 $70,394.62 $71,096.06 $71,804.52 $72,520.07 $73,242.77 $73,972.70 $74,709.93 $75,454.53

  10. Marginal Cost • Marginal Cost is the year-by-year costs associated with keeping an asset Marginal Cost = Loss in Market Value + Forgone Interest + Operating & Maintenance Cost

  11. Marginal Cost of Defender

  12. Analysis Decision Map Identify Participants of Comparison Defender Challenger Not Available Available Defender Marginal Cost Data No Marginal Cost Increasing? Find Defender Minimum Cost Life Find EUAC Over Given Life Yes Technique #3: Compare EUAC of defender over remaining useful life with EUAC of challenger at its minimum cost life Technique #1: Compare the next-year marginal cost of defender with EUAC of challenger Technique #2: Compare EUAC of defender with EUAC of challenger, at their minimum cost lives

  13. EUAC of Challenger Minimum Cost Life

  14. Results

  15. Sensitivity Analysis

  16. Conclusion • After analyzing all our data, we have found that it is more economical to replace the motor with the “Challenger” • When the defender total marginal cost is more than the challenger minimum EUAC it is more economical to go with the challenger

  17. Resources • Smurfit Newsprint Corp. • Southern California Edison • David Boyd- Senior Electrical Engineer • Essentials of Engineering Economics • Dr. Phillip Rosenkrantz

  18. Internet Resources • www.usmotors.com • Motor information and Cut Sheets • www.sce.com • Energy cost information

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