Fulton National Hospital is reviewing ways of cutting the cost of stocking medical supplies. Two new systems are being considered to lower the hospital’s holding and handling costs. The hospital’s...

Fulton National Hospital is reviewing ways of cutting the cost of stocking medical supplies. Two new systems are being considered to lower the hospital’s holding and handling costs. The hospital’s industrial engineer has compiled the relevant financial data for each system as given in Table P7.47 (dollar values are in millions). The system life of eight years represents the period that the contract with the medical suppliers is in force. If the hospital’s MARR is 10%, which system is the most economical? TABLE P7.47


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Fulton National Hospital is reviewing ways of cutting the cost