Miles Hirata

Equipment Capital Budget Justification

Reason for Equipment Capital Budget Request: The current convection oven, which has been used for the last 10 years, is beginning to show signs of deterioration and mechanical issues. Over the last month, the oven has been intermittently working, resulting in multiple orders being refunded and thousands of dollars lost. Continued use of this oven will further exacerbate the situation and result in decreased customer satisfaction leading to decreased customer returns. To avoid this, I have selected 6 potential ovens for comparison and to potentially replace the old oven. All 6 of the ovens are full-size and adequate in meeting our capacity load during peak hours. Potential Ovens: The 6 ovens I have selected are composed of 3 electric and 3 gas ovens. For the gas ovens, I have chosen the Imperial Range ICV-1, base model, and energy efficient model. The Bakers Pride 456GDCO model, base oven, and energy efficient oven were selected for the electric ovens. Gas vs Electric: Generally speaking, electric appliances are about 1.5-3 times more efficient than gas powered appliances. However, gas appliances are less expensive to operate, especially in California. Since ovens usually last for a long duration, a gas oven will be cheaper to operate and maintain since gas is cheaper than electricity. Even if the gas oven has a higher initial cost, the amount of savings will increase with the duration of the oven in use. Initial Cost: The price of the ovens range from $2,160-6,069. The electric base model was the cheapest, followed by the gas base model at $3,042. The Bakers Pride GDCO-E electric oven costs $3049, while the Imperial Range ICV-1 gas ovens price is $4,770. Both of the energy efficient oven models were the most expensive at $5,121 for the electric, and $6,069 for the gas oven.

Lifetime Energy Cost: Oven Model Imperial Range ICV-1 (gas) Base Model (gas) Energy Efficient Model (gas) Bakers Pride GDCO-R (electric) Base Model (electric) Energy Efficient Model (electric) Lifetime Energy Cost $ 7,968 12,624 8,340 19,092 19,020 14,676

As expected, all of the gas oven models were significantly cheaper to operate than the electric ovens. The Imperial Range ICV-1 gas oven was the cheapest to operate, even when compared to the energy efficient gas and electric ovens. This can be attributed to the low amount of energy needed to preheat the ICV-1 oven and also its low idle rate. Lifetime Maintenance Cost: Oven Model Imperial Range ICV-1 (gas) Base Model (gas) Energy Efficient Model (gas) Bakers Pride GDCO-R (electric) Base Model (electric) Energy Efficient Model (electric) Lifetime Maintenance Cost $ 1,440 1,440 1,164 1,260 1,800 1,056

The energy efficient gas oven had the cheapest maintenance cost at $1,164, while the most expensive was the electric base model. It must be noted that the Imperial Range ICV-1 gas oven and the energy efficient gas model were the two cheapest in both lifetime maintenance cost and lifetime energy cost. Total Cost: Oven Model Imperial Range ICV-1 (gas) Base Model (gas) Energy Efficient Model (gas) Bakers Pride GDCO-R (electric) Base Model (electric) Energy Efficient Model (electric) Total Cost $ 14,178 17,466 15,573 23,401 22,620 20,853

After adding up the initial, maintenance, and energy costs, the Imperial Range ICV-1 gas model was the cheapest out of the six ovens. All three gas ovens were significantly cheaper than the electric ovens. The Imperial Range ICV-1 gas oven came out to be $6,675 cheaper than the least expensive electric oven. Most of the difference in price can be attributed to the significantly higher cost in energy for the electric ovens. By purchasing the Imperial Range ICV-1 gas oven, the savings from it can be used towards other outdated or faulty equipment. Performance: Since some specifications cannot be compared between gas and electric appliances due to the difference in energy measurements, they will only be compared to the same type of oven (gas/electric). For the gas ovens, the Imperial Range ICV-1 had the lowest required preheat energy, as well as the lowest idle energy rate. As for the electric ovens, the energy efficient model also had the lowest preheat energy and idle energy rate. By having a low required preheat energy and low idle energy rate, the appliance will use less energy throughout the day, resulting in decreased energy costs. Electric vs Gas Performance: When comparing the heavy load efficiency between the gas and electric oven models, the electric ovens are vastly more efficient by an average of 20%. For production capacity, the Bakers Pride GDCO-E electric oven had the largest capacity at 86.7 lbs/hr. However, the Imperial Range ICV-1 and both of the energy efficient oven models were not far behind at 82-83 lbs/hr, while both base models achieved 70 lbs/hr. Recommendation: After reviewing the potential ovens, I believe the Imperial Range ICV-1 gas oven is the most suitable choice. Although it is not as efficient as the electric ovens, it is far cheaper and also meets all of the requirements for our facility. With a production capacity of 82.9 lbs/hr, it is more than enough to handle our 100 8 oz servings during peak hours. Also, with the savings from purchasing the ICV-1 model, other outdated equipment can also be replaced to further increase productivity.