The Sweet Spot Revisited

摘要

I have, for a number of years, been proposing an economic life or sweet spot calculator based on knowing the equation of the cumulative cost curve. Many managers have successfully used it; others are confused by the concept of cumulative cost and have stayed with their current methodologies. Although cumulative cost works, cost per hour life to date (LTD) is the gold standard when it comes to analyzing equipment cost. Here, then, is a methodology for using LTD hourly owning and operating costs to calculate the sweet spot. We'll use some data from a fleet of haul trucks to see how it works. First, collect and plot the data. The unit number, hours worked life to date (LTD), and repair cost LTD data are given in the first three columns of the table below for four of the trucks used in this illustrative example. Several points in the life of each truck were recorded to provide 32 data points.