An economic assessment on two investment options for bulk sugar dispensing methods in the warehouse of a seaport firm

Abstract

This study compares the economic pros and cons of two bulk sugar dispensing methods for a particular firm, which will be referred in the rest of the paper as “The company”. Bulk sugar dispensing is the process of transporting sugar from a warehouse at any port to berth for loading onto a cargo ship. Currently, the company has already implemented both methods in different warehouses. Type-1 starts with a backhoe scooping sugar into a rotainer, which will be loaded onto a flatbed truck (Toil). Next, the rotainer will be transported from warehouse to a buffer point, where all rotainers will be lifted by a reach stacker, and be transferred to a trailer. Then the trailer will carry the rotainer to berth, and unload the sugar onto the cargo ship. With Type-2, sugar will be transferred by a conveyor system and stored in a hopper. Next, sugar will be dispensed from the hopper to a trailer carrying a rotainer, then got transported to berth, and then unloaded onto a cargo ship. We found that the Type-2 took 35.38 minutes less than the Type-1 on average, while the Type-2 has a higher investment about 72 million baht. In our economic study, we found that labor cost increases by 5 % per year, the net present value (NPV) will be 19,280,248.69 baht, the internal rate of return (IRR) 27.50 %, the benefit-cost ratio (B/C) 4.85, and the payback period (PB) 6 years 1 month. Our economic study results indicate that Type-2 is more beneficial for the firm to invest.