Compactor Bin Lifecycle Assessment: Replacement Recommendation

This report provides a comprehensive analysis of compactor bin replacement, evaluating the costs associated with maintaining existing bins versus investing in new ones. The analysis includes a detailed breakdown of maintenance costs such as metallic spares, moving parts, plastic spares, pipes, transportation, labor, and oiling, totaling $337,872,000 annually. In contrast, the replacement cost is estimated at $33,840,000 per year, encompassing transportation, installation, labor, training, disposal, and the cost of new bins. The report recommends replacing the old compactor bins due to the high maintenance expenses and argues that new bins would eliminate costs related to metallic and plastic part replacements, moving part repairs, and oiling. The email included suggests that the cost of maintaining the asset is significantly higher than replacing it, advocating for asset replacement as the most economically sound decision. Desklib offers a variety of resources, including similar reports and solved assignments, to aid students in their studies.

Running head: COMPACTOR BIN 1
Compactor Bin
Student’s Name
Institutional Affiliation

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Compactor Bin
Introduction
Asset condition assessment refers to the systematic examination, evaluation,
measurement and analysis of the consequential data1. Asset assessment helps to display the
condition of a particular asset with a fundamental aim of determining the need of some
anticipatory or counteractive action. It helps to know the remaining usefulness of an asset and
assets capability to meet performance requirements 2. The assessment process involves two main
processes. First, defect inspection which is designed to determine the need for maintenance and
temporary works and it is carried out in more frequent basis3. Second and the last one is the
overall and more detailed asset assessment which is designed to assess the overall condition and
1 Cruz, Pedro Eduardo. "A life cycle approach to understand major causes during a LPG plant
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IAEE International Conference, Jun 10-13, 2018. International Association for Energy
Economics, 2018.

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the remaining useful life of an asset4. Therefore, this essay is brought forth to critically analyze
compactor bins and provide necessary recommendations for replacement.
Section One
Source replacement of an asset usually has its own cost as it takes in the need of
investment in the replacement asset5. The replacement process may be of much cost than
maintaining the existing one6. There are some conditions that may force one to reinvest in
replacement of an asset. Firstly, if the maintenance cost of the asset per year is high, that you
can be able to buy a new asset after every five years, it will be of no use to stick on the asset yet
when you replace every five years you will have no maintenance cost for more than 50 years.
Secondly if the condition of an asset is beyond repair, it will call to the need of
replacement7. According to Wendling 2012, particular organizations tend to engage in asset
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Assesment Factor to Good Information Governance on The Indonesia Higher Education
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Short Term Assesment of Biological Assets." Journal of Accounting and Business Education 1,
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and the assesment of the “renovation potential” of a built asset." Tema: Technology,

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replacement due to obsolescence 8. Also, Martin (2006), claims that an organization may
replace an asset due to changes in law regulations technology and operational requirements 9.
And finally, Theron (2016) claims that some companies look at them as financial lose thus
conducting their asset replacement operations while the assets are still in their good
conditions10. Secondly, physical asset deterioration presents higher risk to the company
operations thus calling for asset replacement operations11.
Following the source of the replacement of the assets in terms of life cycle
management and sustainability, various costs have to be incurred from the source to the
company. Firstly, a transportation cost estimated at one unit per week factoring out the cost of
per unit is forty thousand leads to a cumulative transport cost of $1920000 per year.
Installation of the new compactor bins calls for experts from the source with adequate
technological knowledge to fix the new compactor bins. Therefore, a constant installation cost
Engineering, Materials and Architecture 1, no. 2 (2015): 112-117.
8 Prasetyo, Sigit, and Yudho Giri Sucahyo. "Information security risk management planning: A
case study at application module of state asset directorate general of state asset ministry of
finance." In Advanced Computer Science and Information Systems (ICACSIS), 2014
International Conference on, pp. 96-101. IEEE, 2014.
9 Rimsha, Andrew S., and Alexander A. Zakharov. "Method for Risk Assesment of Industrial
Networks' Information Security of Gas Producing Enterprise." In 2018 Global Smart Industry
Conference (GloSIC), pp. 1-5. IEEE, 2018.
10 Neaxie, Lidya Vega, and Puspita Kencana Sari. "The Security RisN Analysis On The
Information Technology Infrastructure Of An Internet Service Provider." (2015).
11 Rinaldi, Stefano, Paolo Ferrari, Alessandra Flammini, Matteo Loda, and Mattia Rizzi.
"Distributed measurement system for the assesment of IEC 61850 transfer time in smart grid."
In Instrumentation and Measurement Technology Conference Proceedings (I2MTC), 2016 IEEE
International, pp. 1-6. IEEE, 2016

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of 5000 per week should be incurred leading to a total annual cost equivalent to $240000.
Furthermore, a variable labour cost of $20000 per unit is charged leading to an annual cost of
$4800000 figuring out that five units of labour are essential every week. The fact that the
compactor bin variety is a new model that requires new skills calls for the training and
development of the employees to enhance sustainability within the organization. Therefore,
the $10,000 training and development cost estimated at a frequency of five units per week
accumulates to $2400000 annual cost. For the health of the workers in the company, there is a
need to maintain a proper disposal of the old compactor bins for operational sustainability
through accidents prevention. Therefore, a disposal cost of &10,000 incurred every week
accumulates to a $480000 annual disposal cost. Lastly, the new compactor bins are bought
from a foreign manufacturing company at a cost of $500000 per unit leading to an annual
cumulative cost of $24000000. In summary the replacement cost of the new compactor bins
costs $33840000 per year which is a sum lesser than the maintenance cost.
Section 3
In our situation we might roughly estimate the maintenance cost of the asset under
consideration to be as follows. Firstly, the metallic spars are required. Considering the fact that
50 units of the metallic spares are required weekly with a cost per unit estimated to be
$100000, then as per the calculations indicated in the excel sheet 24million is necessary as an
estimated annual cost for the metallic spares. Additionally, the moving parts of the compactor
bins are also essential at a frequency of 20 units per week. Figuring the fact that the estimated
cost per unit is 20 thousand, then the entire cost accumulates to 19.2 million US dollars per
year. Additionally, plastic spares are required at a frequency of 50 units per week estimated at a

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cost of twenty thousand per unit. Therefore, cumulatively as derived in the excel sheet 48
million US dollars are necessary to cater for the plastic spares. Pipes are essential at a
frequency of ten units per week estimated at a cost of forty thousand per unit. Cumulatively as
derived on the excel sheet pipes result into a 2.16 million US dollars’ annual cost. Additionally,
the transportation cost of the spares is required at an estimate frequency of 10 units. Figuring
out that the transportation cost per unit is forty thousand, then the cumulative cost of
transport per year is 1.92 million US dollars. The maintenance cost of the compactor bins is
also labour intensive estimated at seven units per weak. Therefore, provided that the cost per
unit of labour is 20 thousand dollars, then the cumulative annual labour cost as shown in the
excel sheet is 8.64 million dollars. Finally, the maintenance of the compactor bins calls for the
oiling of the moving parts estimated at a frequency of 7 units per week. Therefore, the
cumulative oiling cost per year amounts to 672 thousand US dollars. In total, the maintenance
cost of the compactor bins in the company is high estimated to be $337,872000.
Section 4
According to the assessment of the work and the results of spreadsheet above it will be
good for the company to implement a new compactor bin since the cost of retaining the older
one seems to be higher. For instant the new compactor bin will have its metallic parts in good
condition, there will be no cost for replacing the metallic parts. Transportation cost will lower
since the materials to be collected by the company will be few. On the other hand, the cost for
fixing the moving parts will be avoided and this will have a general impact on the cost of the
compactor bin.

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In addition, the plastic parts of the compactor bin will be in good condition, hence there
will be no reason to spend more in buying new parts and replacing cost will also be avoided.
However, since the new compactor is still strong and there is no wear out of the moving parts
yet, the oiling cost will be minimum and sometimes it will not be incurred at all. In the years to
come the company will be capable of buying new assets every year and installing it, this will see
the company ran for many years without incurring any maintenance cost. Based on the feasible
advantages it will be the best foregone idea for the company to replace the asset. This is
because the cost of maintaining the present asset is higher than replacing it with a new one.
Email
To: The managers email
From: Student’s email
Subject: Compactor Bins Replacement Assessment Recommendation

Running head: COMPACTOR BIN 8
According to the assessment of the asset replacement, it is important to note that some
times the cost of maintaining an asset might be as much as ten times the replacement cost of an
asset. Asset that has been there for a very long time might end up demanding more cost for its
maintenance and stability in functioning than what it gives back to the company in return. In
addition, the company might run in a lose without notice if no much care is taken and assessment
of the asset is not done at the end of every financial year.
For instant, in compactor bin which is of our concern, the more it stays the more it will
fail to work to its best. Compacter bin as it is well known has metallic parts that will
automatically wear out as time goes by hence need of replacement. Replacement cost for this
metallic might be much expensive to buy, in terms of transportation, in terms of fixing labor and
lastly in terms of need of skilled personnel to fix ore repair the worn out metals parts. Secondly
the compactor bins have plastic parts which are fragile and are prone to breakages. This means
the more the compactor bin stays the more the need of replacing the plastic parts.
Thirdly the moving parts in the compactor bin will wear out with time thus the need for
oiling the parts throughout for it functioning condition to be conducive. The cost of buying the
oiling facilities might be that much expensive in terms of transportation cost for the person
collecting the oils daily. On the other hand, the piping cost is high as the pipes tent to be
damaged by the rodents thus the company will use a lot of money buying and replacing the
pipes.

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Replacement of an asset will be the best foregone action for the manager to take12. For the
new asset the cost that will be that of acquiring the compactor bin the transportation of the new
bin preparation of the site for installation and the installation of the compactor bin which is much
cheaper than that of maintaining the compactor bin. As per the estimation of maintenance cost
for the asset which is almost 337872000 is much higher than that of installing a new asset which
is estimated at 9120000 which is 38 times less than the maintenance cost.
According to the data obtained, the installation of new compactor bin will be of much
benefit for the company rather than maintaining the existing one. In terms of health, the workers
will be in good condition since the new compactor bin will be free from leakages than can cause
contamination which might cause diseases. Also the life cycle of the compactor bin will last
longer for more than five years hence some expenses will be avoided. To conclude it will be
advisable for the manager to adapt the new compactor bin for it will be advantageous for the
company unlike maintaining the older one which will be disadvantageous.
Yours faithful,
Signature
Student’s Name.
12 Warren, Nicholas, Benjamin Garrard, Elliot Staudt, and Jelena Tesic. "Transfer Learning of
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