CHAPTER 3 - Educators

106 CHAPTER 3/COST-ESTIMATION TECHNIQUES
Figure 3-11 Remote Control
Consoles
3.6 CASE STUDY—Demanufacturing of Computers
Let’s consider a case that deals with a timely important issue concerning environmental
economics. What are companies to do with all of the old computers that
typically accumulate at their facilities?
As one possible solution to this problem, a number of states and companies
have jointly established “resource recovery” facilities to process the handling of
old electronic equipment, such as used computers. Demanufacturing of computers
involves disassembly, refurbishing, and either donating or reselling the
units. However, there are some residuals, or remaining components, that cannot
be reused, are harmful to the environment, and contribute to the cost of demanufacturing.
Let’s consider the case of one resource recovery center in the Northeast that
currently handles approximately 2,000 computers per year. Of these computers,
approximately 50% are refurbished and donated, 40% are remanufactured and
resold, and 10% are “residuals.” What to do with the residuals is a challenging
problem.
The facility currently has a contract with an outside source to take the monitors
and CPUs. This leads to storage requirements in their facility, and there are issues
concerning the determination of the optimal truckload capacity. The labor costs for
the outside contractor are $10.00 per unit, and transportation costs are $1.70 per
unit, for a total of $11.70 per unit, based on a full capacity truck load.
The recovery facility is seeking an alternative solution to the handling of
residuals. One alternative under consideration is to establish a method for demanufacturing
of the computers that will consider the CPUs only, since there are
environmental issues associated with computer monitors.
The recovery facility recently completed a work measurement study to develop
a method for demanufacture of the CPUs. The method is as follows:
1. Remove fasteners or screws.
2. Remove metal casing.