Background Scenario

It has been two weeks since you received this assignment from your boss, Mickey Chelini, who is the Production Engineer at the manufacturing plant that employs you. "We've been having more trouble with one of our forklift trucks," he explained. You are not surprised. Some of those jalopies have been breaking down regularly for years.

"And Ballinger's finally decided to replace one of them." Mickey continued. Ballinger is Mickey's boss and the top executive at the plant. His title is Plant Manager.

"What finally happened to make him decide that?" you asked. "I thought he was going to keep trying to replace those wrecks forever."

"Actually, he wants to replace one of the newer ones that we bought just two years ago," Mickey replied. "That particular forklift was manufactured by a company that has since gone bankrupt. Ballinger's afraid we won't be able to get replacement parts. I think he's right."

"Hmmm," you commented.

"Anyway," Mickey said, "Ballinger wants to be sure he spends the company's money more wisely this time. He's done a little investigation himself and has narrowed the choice to two machines. He's asked me to figure out which one is the best choice."

You could see what was coming. You've had a hundred assignments like this before from Mickey.

"I'd like you to pull together all the relevant information for me. Don't make any recommendation yourself; just give me all the information I need to make my recommendation. Have it to me in two weeks."

"Will do," you said, as you started to think about how you could squeeze this assignment into your already tight schedule.

Your Assignment

It’s now two weeks later. You’ve gathered the information given below in “Notes on Forklifts.” Using this information, write a memo report that you would send to Ballinger about the purchase of a new forklift. It must contain your recommendation.

Notes on Forklifts

Present Forklift. The present forklift, which is red, moves raw material from the loading dock to the beginning of the production line and takes finished products from the Packaging Department back to the loading dock. When it moves raw materials, the forklift hoists pallets weighting 600 pounds onto a platform 8 feet high, so that the raw material can be emptied into a hopper. When transporting finished products, the forklift picks up and delivers pallets weighting 200 pounds at ground level. The forklift moves between stations at 10 mph, although some improvements in the production line will increase that rate to 15 mph in the next two months. The present forklift is easy to operate. No injuries and very little damage have been associated with its use.

Electric Forklift. The electric forklift carries loads of up to 1,000 pounds at speeds up to 30 mph. Although the electric forklift can hoist material only 6 feet high, a 2-foot ramp would be built beneath the hopper platform in three days (perhaps over a long weekend, when the plant is closed). During construction of the ramp, production would have to stop. The ramp would cost $1,600. The electric forklift costs $37,250, and a special battery charger costs $1,500 more. The forklift would use about $2,000 worth of electricity each year. Preventive maintenance costs would be about $700 per year, and repair costs would be about $800 per year. While operating, the electric forklift emits no harmful fumes. Parts are available from a warehouse 500 miles away. They are ordered by phone and delivered the next day. The electric forklift has a good operating record, with very little damage to goods and with no injuries at all. It comes and blue and red.

Gasoline Forklift. The gasoline forklift is green and carries loads of up to 1 ton as rapidly as 40 mph. It can hoist materials 12 feet high. Because this forklift is larger than the one presently being used, the company would have to widen a doorway in the cement wall separating the Packaging Department from the loading dock. This alteration would cost $800 and would stop production for two days. The gasoline forklift costs $49,000 but needs no auxiliary equipment. However, under regulations established by the Occupational Safety and Health Administration (OSHA), the company would have to install a ventilation fan to carry the exhaust fumes away from the hopper area. The fan costs $870. The gasoline forklift would require about $1,800 of fuel per year. Preventive maintenance would run an additional $400 per year, and repairs would cost about $600 per year. Repair parts are available from the factory, which is 17 miles from our plant. Other owners of the forklift have incurred no damage or injuries during its operation.