The following steps are needed to estimate the payback:
1 Estimate the amount of laser cutting needed using a 14” saw blade as a typical product. The blade would have approximately a 44” circumference. Doubling this amount to account for teeth and adding 9” for the arbor gives approximately 97” of linear cutting distance required to manufacture the blade.
2 Based on the cutting speed of 40”/minute, the cutting would take 2.4 minutes. Adding time to handle the blade, and maintain the workstation, estimate the total time at 3 min/blade.
3 Exhibit 3 estimates the operating cost of a 1200 watt laser at $.10/min, making the laser’s portion of the blade cost $.30/blade; not a particularly significant amount for a $25 blade.
4 Exhibit 3 estimates the cost of the laser to be about $200,000. Assume an additional $100,000 for computers and training bringing the total to $300,000.
5 If the laser can produce a blade every 3 minutes, than it could produce 160 in eight hours at $25 a unit. Based on Exhibit 1, the current profit margin is 12%, so it’s safe to assume that the single shift daily profit would equate to 160 X $25 X 12% or $480.
Given the $300,000 cost of the laser, the single shift payback period would be 625 days or half that amount