UBC Undergraduate Research

Economic analysis of investment decisions in tooling in operation for kitchen cabinet manufacturers Moon, Andy


In the wood products manufacturing industry, the main objective for a machining operation is to achieve an optimal cutting result in the shortest possible time with minimal cost and waste (J. Ratnasingam, T. P. Ma, & M. C. Perkins, 1999). Going into the 21st century, the supply of wood resources has become a growing concern. Environmental issues such as global warming, and the industry’s desire to save cost and enhance productivity has resulted in the need to address the optimization of machining processes (J. Ratnasingam et al., 1999). However, investment in machinery can be significant for small to medium-sized companies and could affect the company’s survival at poor economic times. On the other hand, machine tools such as computer numeric control (CNC) router bits are far less expensive and, therefore, investment in optimization of machine tooling is far more feasible and will return improved results in quality, productivity and economics of a machining operation. Machine tools such as saw blades, cutter-heads or router bits have short life expectancies compared to those of the relevant machines, at which the tools are attached to. In this report, the life expectancy of CNC router bits and its effect on a company’s capital budgeting will be analyzed. Considering the short duration of a router bit’s life expectancy, cost benefit analysis has been used to evaluate an investment in an alternative type of CNC router bits, and provide supporting evidence for a case study in determining the optimal choice between two different types of CNC router bits.

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