Texas A&M University Cost Benefit Analysis Case Study

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You have just been hired as the Director of Safety and Health at US Jets, a mid-sized business organization that designs, manufactures, and sells mid-sized business jets in Dallas, TX. During a review of recent injuries, you noticed that 55% of all workers’ compensation claims were suffered by workers working in Assembly Department 22. This assembly operation was just started this year. There were 5 cases of tendonitis, 2 cases of carpal tunnel syndrome, and 2 shoulder strain cases associated with this operation this past year. There are 40 workers in this department. The average wage for workers in this department is $14.50 per hour. Workers work 40 hours per week each week.

You have decided to implement an engineering design change in Assembly Department 22 that will completely eliminate the hazard causing the work task which is producing the injuries in the department. In addition, productivity will be enhanced as wasted motions will be reduced. Initial purchasing cost for this change is $20,000. Engineering costs will total $7500 and training costs will be $1000. Recurring costs will total $800.

Using the Puget Sound HFES Cost Benefit Calculator (Links to an external site.) determine the following:

  1. What is the total first-year cost of control?
  2. What is the estimated net benefit of the engineering design change after one year?
  3. What is the estimated payback period?
  4. Is this engineering design change justified? Explain your answer.

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