Economic Analysis of Production and Inspection Procedure Changes in Hydraulic Line Manufacture

In this case study, a net investment of $6,300 is shown to produce annual savings of over $38,000 with present value benefits approaching $230,000, a savings-over-investment ratio of 40.2, and amortization within one year. Economic analysis was used to (a) justify new alloy melting equipment and (b) compare four alternative methods of manufacture. Implementation of the recommendations has reduced the rejection rate for hydraulic lines manufactured with low-melting alloy from between 60 and 80% in October 1979 to below 10% by May 1981.