How do we figure ROI?

Question

What will be an ideal response?

Answer 1

We calculate this by taking the operating cost of the equipment and subtracting it from the amount of money it saves. Once we know the amount of profit or money made using the machine, we divide the total cost of the equipment by this number to determine how long it takes to pay for itself. If we figure it on a part-by-part basis, we would determine how many parts it needs to make to pay for itself and then turn that into a time scale using some correlation between parts produced and the time needed to produce them. If we are working on a cost savings versus human labor then we simply figure out the per-hour savings and use that to get the total hours needed to pay for the robot. Once we have that figure we simply divide be the number of hours it runs per year or week to figure out the time for payback.