A couple weeks ago, i sensed something wrong with my motorcycle. It feel unstable when turning, and there is noise from the rear side.
Root Cause Analysis
After conduct root cause analysis, and examine my motorcycle, i found the problem causes. It comes from the rear suspension. Then I bought it to the service point to repair the suspension. The mechanic said to me that the suspension need to be replaced, then he explained two alternatives of suspension replacement. A new manufacturing original one, and a cheaper one (not manufacturing original). I have chosen the original one, with a little regret because it emptied my wallet. I need to know if my decision is right or wrong. So I perform an engineering economic based analysis as follow.
Alternative A : Buy an original rear suspension cost Rp 500,000, lifetime 5 years.
Alternative B: Buy cheaper Product of rear suspension cost Rp 200,000 ,Lifetime 2 years.
- Future Worth
- Spending Time Value
- Early Investment Cost
Analysis and Comparison of Alternatives
1. Calculate the FW for both product,using annual interest of 10 %:
P=500,000, i=10%, N=5
FW=P(F/P,10%, 5) = 500,000(1.6105) =805,250
P=P2=P3=200,000, i=10%, N=5, N2=2, N3=1
FW=P1(F/P,%,N) + P2(F/P2,%,N2) + P3(F/P3,%,N3)
FW=200,000(1.6105)+ 200,000(1.3310)+ 200,000(1.1) =808,300
The value FW from alternative A resulting a cheaper cost than alternative B
2. Quantify Time spend for Maintenance.
i. the time for repairement is 1 hour.
ii. Service point is open on weekdays only, need to request permission on workhour.
iii. Workhour equal to Rp 40,000 per hour
Alternative A: spend 1 x 1 hour = Rp 40,000
Alternative B: spend 3 x 1 hour = Rp 120,000
3. Early Investment Cost
Alternative A makes me grab Rp 500,000 from my wallet at 1st repairment, while Alternative B only took Rp 200,000.
Using Multiatributes decision making with Lexicography type:
1. Results of paired comparisons
FW > Spending Time Value
(Future worth value is more important than Spending Time Value)
Early Investment Cost > Spending Time Value
(Early Investment Cost is more important than Spending Time Value)
FW > Early Investment Cost
(Future worth value is more important than Early Investment Cost)
2. Ordinal rangking of atributes
Spending Time Value——–1
Early Investment Cost——-2
3. Application of Lexicography
|FW||3||Alternative A > Alternative B|
|Spending Time Value||1||Alternative A > Alternative B|
|Early Investment Cost||2||Alternative B > Alternative A|
Note : 1. Rank of 3 = most important, rank of 1 = Least Important
2. Selection is based on the highest rank atribute
Selection of Preferred Alternative
Based on Multi atributes decision making , Alternative A (will be the preferred Alternative.
Performance Monitoring & Post Evaluation of Result
Go to high quality service point to, prevent unnecessary failure after the repairment.
Do on time-check up at the service point, right after the end of its lifetime .
Sullivan, William G., Wicks, Elin M. & Koelling, C. Patrick (1942), Engineering Economy15th Edition, Singapore: Prentice Hall, Inc.
“Root Cause Analysis” process.nasa.gov.com. NASA, n.d. Web 15 Apr 2011