Cost Justification: Model CC-3

In addition to cost reduction, a cost justification analysis was done. Distribution centers have been interviewed and more will be interviewed to determine their current expenditures and, in the centers where a case cutter is in use, their savings in labor and injury costs. To date, four distribution centers have been questioned. Two of the distribution centers were contacts received from HMC. The other two were initially contacted through a top fifty list of grocery distributors. The two distribution centers supplied by HMC, namely Center "A" in California and Center "B" in Arkansas, have been interviewed and estimates of labor costs, injury costs, and production speed have been received. Labor costs at Center "B" are $11-$12 an hour plus benefits per man, and labor costs at Center "A" are $26-$28 an hour plus benefits per man (union). Center "A" estimates that with the case cutter 800-900 cases can be cut per hour as opposed to 125 cases per hour by hand. With this data it is estimated that the case cutter is able to pay for itself in 58 days for Center "A" and 125 days for Center "B". Reference Table 4 below.