Life Cycle Cost Principle
A through economic analysis should account for the entire life cycle of material handling equipment and resulting systems.
- Life cycle cost includes all cash flows that occur between the time the first dollar is spent to plan a new material handling method or piece of equipment until that method and /or equipment is totally replaced.
- Life cycle cost includes capital investment, installation, set up and equipment programming, training system testing and acceptance, operating (labor, utilities etc.), maintenance and repair, reuse value and ultimate disposal.
- A plan for preventive and predictive maintenance should be prepared for the equipment, and the estimated cost of maintenance and spare parts should be included in the economic analysis.
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