MEMORANDUM

To

: Muhammad Aiman Haqim (President)

From

: Lee Hui Ting (Vice President of Factory Operation)

Date

: May 17,2015

Subject

: Feasibility Study of Replacing Milling Machines for LS Enterprises Factory

1.0 INTRODUCTION
This report assesses two types of milling machines as possible replacement for the LS Enterprises factory.
After reviewing the background, the factory of the company needs and featured of the two possible types of
milling machines. I recommend we buy 5-axis milling machine from Avemax Machinery.
1.1 BACKGROUND
LS Enterprises has been considering to change all their milling machines in the factory for about 5 months.
This is due to the latest quote from customers which the factorys machines are not fit to fulfil the
requirement of customers. The customers require 200kg products of 9 batches per day which our machines
are unable to do so. This is because our old machines are only capable of producing 50kg products of 3
batched per day. Besides, the milling machines in the factory are old and out of maintenance. Replacing the
machines will enhance the productivity and improve our ability to meet customer requirements. As you
know, the Board of Director has set strict parameters regarding the potential milling machines for
replacement of the factory. The new machine should fulfil all the requirement of production in terms of
productivity where it could produce 3 batches of products in one time thus producing 9 batches or more in
one day. It also should produce better quality products and the machine should last for at least 4 years
without any maintenance. On the other hand, the overall cost should not exceed RM 40 000 and
reinstallation should be done within 14 weeks once factory has shut down. The new machine should be
easily installed and also easily used by the factory workers.
1.2 POSSIBLE ALTERNATIVES
I have surveyed the available types of milling machines with the assistance of Avemax Machinery, and the
two types of milling machine that seem most appropriate are 5-axis milling machine and 3-axis milling

machine. Both milling machines are product of Avemax Machinery. The two alternatives were chosen based
on production requirements, cost, feasibility in reinstallation date and how the machines are user-friendly
for workers.

2.0 ALTERNATIVE LOCATIONS

2.1 PRODUCTION REQUIREMENTS
The 5-axis milling machine comes with worktable which is movable in 25rpm. This allows the machine to
increase productivity by three times as three products are produced within a time. This machine also works
in higher speed of 20rpm-25rpm which also helps in increasing the productivity as per required by Board of
Directors. Besides, the 5-axis milling machine also has high precision class 7 spindle bearings which
contributes in better quality of products. This machine last for five years without any maintenance needed,
therefore production will not be affected within five years. The dimension of the machine is

8.6mx6.1mx4.7m which is almost same size as the old machines. Thus, there is no need of any modification
done at the factory space.
The 3-axis milling machine works in speed of 15rpm-20rpm and produces one product at a time. It also
comes with high precision class 7 spindle bearings which contributed in better quality of products. The
dimension of the machine is 9.2mx6.4mx4.6m which is bigger than the old machines. Thus, minor
modification has to be done before replacing the machines. However, it does not need any tools as it comes
in inner tools.
2.2 COST
Only minor modification are needed if 3-axis milling machine are chosen to replace the old machines in LS
Enterprises factory. Total estimated cost for the two types of machines are as follow:
5-axis milling machine:
Purchase price

RM 34 250

Delivery fees

RM

Installation fees

RM 1 200

Cutting tools & Accessories

RM

Total 5-axis milling machine

RM 36 850

900
500

3-axis milling machine:

Purchase price

RM 32 250

Delivery fees

RM

Installation fees

RM 1 500

Cutting accessories

RM

Factory modification

RM 40 000

800
900

Workshop for workers

RM 12 580

Total 5-axis milling machine

RM 88 030

Note: Cost estimates are from Brickfield Construction Solutions and Avemax Machinery
The 3-axis milling machine would be RM 48 030 over the established limit. Both types of milling machine
cost are estimated and constructions overruns could add considerably to the total cost for the 5-axis milling
machines. Costs could also be higher at the 3-axis milling machine, but it comes with its own tools.