Vous êtes sur la page 1sur 12

Britt Robinson

Equipment Budget Justification


Due March 7th

The purpose of this assignment is to familiarize you with the process of writing an
equipment justification as part of a capital budget. You are the Foodservice Manager and
your facility is in need of a new fryer. Your facilitys fryer is 12 years old and needs to be
replaced. The primary use of the fryer is for French fries and sweet potato fries. Your task is
to investigate your options and submit a brief written justification to the Food & Nutrition
Services Director (your boss), who will approve the purchase. The departments total capital
budget for all new equipment is $20,000 for 2017 and your boss has already received 5
proposals from other managers within the department. Typically, major capital equipment
has an acquisition cost of $5,000.00 or more.

You will be comparing 3 gas fryers and 3 electric fryers. You will compare the models
available, determine which piece of equipment you want to purchase, and write a
justification showing why you need the fryer and why you chose a particular brand and
model and its energy source.

Your assignment is as follows:


1. Read all instructions before beginning the assignment!
2. You will be calculating the life-cycle cost of fryers using the online Food Service
Technology Center (www.fishnick.com) Life-Cycle Cost Calculator.
3. Read background material regarding fryers:
http://www.fishnick.com/equipment/techassessment/2_fryers.pdf
http://www.fishnick.com/equipment/appliancetypes/fryers/tipsheet_fryers.pdf
4. You will compare 3 gas fryers and 3 electric fryers:
You are to select one gas and one electric fryer.
One gas base efficiency fryer and one gas Energy Star fryer are provided for you.
One electric base efficiency fryer and one electric Energy Star fryer are provided for
you.
5. Choose one gas and one electric standard fryer from the list at:
http://www.fishnick.com/publications/appliancereports/fryers/
6. The two fryers that you select should be standard 14 open-top; NOT self-contained or
ventless.
7. Review the Test Report for each of the fryers that you have chosen to determine the
following:
Fryer size (inches) = should be 14
Preheat Energy (kWh or Btu) = energy required to heat up oil
Idle Energy Rate (kW or Btu/h) = energy required to keep oil hot when not
cooking
Heavy-load Energy Efficiency (%) = efficiency when cooking
Production Capacity (lbs/hr) = how many potatoes cooked per hour
The Cost Calculator provides everything else, except for Additional Costs.

The annual consumable costs and maintenance costs for each fryer are as follows:
Gas Electric
Consumable Costs NA NA
(oil, filtration, etc.)
Maintenance Costs (all) $120.00 $125.00

Note that the initial cost of each fryer is as follows:


Gas Electric
Your Fryers (the ones you $6917.00 $6750.00
selected on Fishnick)
Base Efficiency Fryer $6679.00 $5225.00
Energy Star Fryer $8967.00 $7842.00
Britt Robinson

8. Use the Life-Cycle and Energy Cost Calculators at:


http://www.fishnick.com/saveenergy/tools/calculators/
o Select the electric fryer first.
o If you input your fryers manufacturer and model number at the top, the
calculator will self-fill-in the blanks (EASIEST ROUTE)
o If your selected models are not available, then input the Fryer Size, Preheat
Energy, Idle Energy Rate, Heavy-load Energy Efficiency, and Production Capacity
for your fryer.
o Use the default numbers for Fryer Usage and Utility Cost and Lifespan
sections.
o Click Calculate!
o Next input the maintenance cost and initial cost for each fryer (see chart above).
We are not inputing the consumable costs.
o Finally, input the name and model number of your fryer under Optional if you
did not use the self-fill-in function.
o Select Print Results at the bottom and save as a pdf.
o Repeat the process for your gas fryer using the link above.

9. You should have one Cost Calculator comparison sheet for the 3 gas fryers and one for
the 3 electric fryers.

10. You will need to see whether or not the fryer you have selected can adequately produce
the quantity of potatoes your foodservice requires during peak production periods. For
this one fryer, the facility will typically need to prepare 200 servings of 4 ounces of
French fries per hour during lunch. Is the fryer youve selected able to handle this load?

11. Finally, youd like to compare the cost of preparing French fries from fresh potatoes or
purchasing frozen French fries. This is a Make or Buy decision (4 pts).
o Use the calculator at LambWeston using the following data:
https://www.lambweston.com/resources/fresh-vs-frozen
o 50 lb box raw potatoes = $19.55
o 30 lb frozen French fries = $18.98
o 35 lb canola oil = $63.95
o Your employees are paid $15.00/hour
o Base the calculations on 200 portions and only one store.
o Save the calculation sheet as a pdf and attach to your assignment.

12. Write a justification/proposal regarding the fryer that you have evaluated and make a
recommendation for the one you would like to purchase. Since your director/boss is
making the final decision, you need to justify the recommendation that you make. You
need to explain and interpret the results of the comparison in your summary. You also
need to state why you selected gas vs. electric.

You should not rely on the reader to interpret the tables (attachments), you should
explain and interpret the results for the reader. This allows you to control the narrative of
the report and explain your reasoning. The final recommendation should summarize your
decision and include the name and model number, the initial cost, and lifetime
cost of the recommended fryer, why you chose gas or electric, and why you are
proposing the purchase of this particular fryer.

13. Complete the worksheet on the following pages and submit online on Canvas. You should
turn in one pdf containing the worksheet, 2 Cost Calculator results sheets (one gas, one
electric), and the Make or Buy calculator results.
Britt Robinson
Britt Robinson

A few comments:
1. Cooking-energy efficiency is a measure of how much of the energy that an appliance
consumes is actually delivered to the food product during the cooking process. The
higher the number, the higher the efficiency, meaning that the energy produced to heat
the appliance (oil) goes into the food and not the surrounding area. Cooking-energy
efficiency is therefore defined as:
Cooking energy efficiency = energy to food / energy to fryer

2. Natural gas vs. electricity price comparison (remember from FSM 120?)
1 Therm = 29.4kWh
Gas cost per therm = $0.808
Electricity cost per kwh = $0.1694
1 Natural gas kWh equivalent is $0.0275, which is less than 1kWh of electricity at
$0.1694

3. Natural gas prices are at an all time low because of excess production in part from
hydraulic fracturing. This is in comparison to heating oil or gasoline prices, which are
currently low, but are expected to increase in the future.

4. Electricity is not necessarily more environmentally friendly than natural gas. It depends
on the fuel source used to produce the electricity (coal, natural gas, nuclear, etc.). The
efficiency of the natural gas fryer may be lower than that of an electric fryer, but the
production of electricity may be less efficient at the power plant. In addition, the carbon
emissions and pollution from the fuel source (i.e. coal) may be greater than that of a
natural gas fryer.

5. In CA electricity is generated primarily from the following. Just something to think about!
(2014 data) http://www.energy.ca.gov/pcl/labels/
Natural gas (45%)
Renewables (20%)
o Biomass/biowaste (3%)
o Geothermal (4%)
o Hydro (1%)
o Solar (4%)
o Wind (8%)
Nuclear (9%)
Large hydro (6%)
Coal (6%)
Unspecified (14%)

6. The words cheapest or cheaper should be replaced with the words inexpensive
less expensive, less costly, or more cost effective. Cheap implies low cost
because of shoddy or poor quality materials or poor manufacturing. Inexpensive
implies low cost despite medium to high quality materials and manufacturing.
Britt Robinson

Last Name: Robinson First Name: Britt

1. List the 2 fryers you have selected to compare (1 pt):


Gas Fryer Vulcan VK45
Make &
Model #

Electric Fryer Vulcan ER50


Make &
Model #

2. Discuss the initial purchase costs of each fryer (all 6) vs. lifetime costs (9 pts):
Actual $ amount of equipment initial purchase comparison (2):
Gas:
Selected Model Initial Cost: $6.917.00
Base Efficiency Model Initial Cost: $6,679.00
Energy Star Model Initial Cost: $8,967.0

Electric:
Selected Model Initial Cost: $6,750.00
Base Efficiency Model Initial Cost: $5,225.00
Energy Star Model Initial Cost: $7,840.00

The initial cost of the models would indicate that based on solely the up-front money spent,
an electric model of base efficiency is the least expensive.
Energy cost / gas vs. electric comparison (2):
Gas:
Selected Model Annual Energy Cost: $574.00 Lifetime Cost: $6,888.00
Base Efficiency Annual Energy Cost: $1,339.00 Lifetime Cost: $16,068.00
Energy Star Model Annual Energy Cost: $706.00 Lifetime Cost: $8,472.00

Electric:
Selected Model Annual Energy Cost: $2,420.00 Lifetime Cost: $29,040.00
Base Efficiency Annual Energy Cost: $3,063.00 Lifetime Cost: $36,756.00
Energy Star Model Annual Energy Cost: $2.558.00 Lifetime Cost: $30,696.00

Of the six models, by far the least expensive is the selected gas model, with energy costs of
just over $500 per year. Its lifetime cost is just over a fifth of the most cost effective of the
electric options!
Maintenance cost comparison (1):
Gas: $120.00 annually, $1,440.00 over lifetime (all models)
Electric: $125.00 annually, $1,500.00 over lifetime (all models)

Overall, maintenance for all machines is fairly comparable, with just a $560 difference in
lifetime maintenance costs between electric and gas models.
Total lifetime cost comparison (2):
Gas:
Selected Model Lifetime Cost: $15,245.00
Base Efficiency Model Lifetime Cost: $24,187.00
Energy Star Model Lifetime Cost: $18,879.00

Electric:
Selected Model Lifetime Cost: $37,290.00
Base Efficiency Model Lifetime Cost: $43,481.00
Energy Star Model Lifetime Cost: $40,038.00
Britt Robinson

Over the lifetime of the compared models, the most inexpensive option is the selected gas
model, which costs over $3,000 less than an Energy Star rated gas model, and less than half
of the selected electric model.
Overall cost comparison (2):
Overall, the best comparison is made with the total lifetime cost, which includes initial cost,
annual maintenance, and energy use. It is clear based on the amounts listed above that any
of the gas models are more cost-effective than their electric counterparts, but the selected
Vulcan VK45 has the best price among those.

3. Discuss each fryers performance in terms of efficiency and production capacity (2 pts):
Efficiency (%) comparison (1):
Gas:
Selected Model Heavy-Load Energy Efficiency: 65%
Base Efficiency Model Heavy-Load Energy Efficiency: 35%
Energy Star Model Heavy-Load Energy Efficiency: 57%

Electric:
Selected Model Heavy-Load Energy Efficiency: 86%
Base Efficiency Model Heavy-Load Energy Efficiency: 75%
Energy Star Model Heavy-Load Energy Efficiency: 85%

Efficiency is where the electric models shine, with the gas models varying between 35 65%
efficiency, and the electric varying between the base 75% and the selected models 86%
efficiency.
Production Capacity (lb) comparison (1):
Gas:
Selected Model Production Capacity: 78 lb
Base Efficiency Model Production Capacity: 60 lb
Energy Star Model Production Capacity: 67 lb

Electric:
Selected Model Production Capacity: 58 lb
Base Efficiency Model Production Capacity: 65 lb
Energy Star Model Production Capacity: 71 lb

During peak operating hours, production efficiency must be able to meet the demands of
200, 4 oz servings - or 50 lbs of French fries. All of the listed fryers would be able to meet
this need, but of these the selected gas model is still the most efficient, with a 78 lb
production capacity that would be able to handle fluctuations in business that could surpass
the needs of our estimated 50 lb/hr.

4. Compare all 6 fryers overall and state your top choice (1 pt).
Overall comparison:
The selected gas model has the lowest lifetime cost, the highest production capacity, and
intermediate energy efficiency. The base efficiency gas model has an intermediate lifetime
cost, low production capacity, and the worst efficiency of the explored items. The energy
star gas model was intermediate in terms of production efficiency and energy efficiency, and
low in lifetime cost.
Of the electric models, the selected model has the best energy efficiency, but due to being
electric it has a very high lifetime energy cost. Similarly, the base efficiency electric model
has good efficiency and production capacity, but also the highest overall total cost due to
the cost of electricity. The energy star electric model has the second best production load
efficiency, and energy efficiency, but also the second highest lifetime cost.
Overall, the best product for the best price is the gas-powered Vulcan VK45. It has the lowest
lifetime cost by a large margin, and even though it is not as efficient energy-wise as the
electric models, the lower cost of gas versus electricity still brings the cost savings up to
Britt Robinson

around $20,000 over the lifetime of the machine.

5. Complete the chart below. Discuss the production capacity of your selected fryer. Is it
adequate for your needs? Explain in the box below. (1 pt)
Your Fryers Load Size Your fryers cook time to Your Fryers Production
(lb potatoes) cook one load of potatoes Capacity (lb/hour)
(min.)
3 lb 2.15 min 78 lb/hr

At a need of two hundred 4 oz portions, we would need to be able to produce 50 lbs (200
portions / 4 portions/lb = 50 lbs). This fryer can handle a load of 78 lb/hr, far exceeding our
needs, which is valuable based on fluctuations in need based on food trends and seasons of
the year.

6. Make or Buy decision (4 pts).


Fresh $1.01 Frozen $0.54
Cost per serving: Cost per serving:
Will you make or buy your French fries?
Given that frozen foods are basically nutritionally identical to fresh equivalents (and that French
fries are not sold to be a health food), it makes more economic sense to purchase frozen French
fries. These have a longer shelf life and cost nearly half of what fresh potatoes cost, and so are a
reliable, inexpensive option.

7. Provide a justification/proposal for your boss to include at least the following (6 pts):
a. Reason you need a new fryer
b. Which fryer you propose to purchase
c. Include the initial cost and lifetime cost ($)
d. Your reasons for recommending it
Our facilitys fryer has been in service for 12 years, and needs to be retired in order to increase our
companys energy efficiency and avoid loss of business in the event of a potential mechanical
failure. To replace our current fryer, I propose the Vulcan VK45 fryer a 14 inch gas-powered fryer
with an initial cost of $6,917.00. This cost is slightly higher than some electric models, but the cost
is more than made up for with the lifetime cost of the model, which comes to $15,245.00 more
than $20,000 less than the lifetime cost of electric competitors. This large difference in cost comes
from the disparity in the cost of gas versus electricity in California gas prices are at an all-time
low, making it the most cost-effective choice in terms of energy. The electric models - though more
energy efficient - will cost the equivalent of an annual salary given their lifetime energy costs, but
these funds can be saved and put toward other needs of the business (other maintenance, merit
pay increases, possible future expansion, or other rainy day expenses). Based on minimal
differences in initial cost and maintenance, and the massive savings in energy, the Vulcan VK45 is
the best piece of equipment to replace our fryer.
Britt Robinson
Britt Robinson
Britt Robinson
Britt Robinson
Britt Robinson

RUBRIC
Equipment Capital Budget Justification

Grade Item Points


1. Name the brand & model of the 2 fryers selected on 1
Fishnick

2. Initial purchase cost vs. lifetime cost: 9


Actual $ amount of equipment purchase (2 pt)
Energy cost / gas vs. electric (2 pt)
Maintenance cost (1 pt)
Total lifetime cost (2 pt)
Overall cost comparison (2 pt)
3. Performance 2
Efficiency (%) (1 pts)
Production capacity (lbs) (1 pts)
4. Overall comparison & selection 1

5. Production capacity (lbs) of selected fryer adequate? (1 pt) 1

6. Make or Buy decision 4

7. Summary Recommendation: 6
Reason for needing a new fryer (1 pt)
State which selected (1 pt)
Must list cost and lifetime cost in $ amounts (1 pt)
Reason for recommending it (3 pt)
o Gas vs. electric
o Why is it the best choice?
o Was it justified?
Organization and format
Proper format (-2)
Grammar, Spelling, etc. (-2 pt)
Printed comparisons attached (2 pts each) 6
3 Gas fryers
3 Electric fryers
Make or Buy comparison
TOTAL: 30