However, a break-even analysis is required to determine the feasibility of instal- 

 ling machine banding and wrapping equipment because the amortization costs in table 1 

 are based on a fixed annual production volume of 9.75 million board feet (see page 3). 

 If a different production volume is used, then these amortization costs will be 

 different. Figure 3 shows that amortization costs per M board feet for the banding 

 machine vary inversely with production volume. 



Under the conditions observed in this study, the break-even point between hand and 

 machine banding occurs at 4.7 million board feet annual production. Where annual 

 banding production is not expected to equal 4.7 million board feet, it is not feasible 

 to install a semiautomatic banding machine. When further consideration is given to the 

 combined banding and wrapping process, a different situation occurs. The break-even 

 point for annual production volume shifts to 2.6 million board feet because machine 

 wrapping costs less than hand wrapping, as shown in figure 4. When the wrapping cost is 

 added to its respective banding cost, the break-even point shifts to a lower annual 

 production volume. 



2 4 6 8 10 12 14 



ANNUAL PRODUCTION (Million board feet) 



Figure 2. — Break-even comparison , hand vs. machine handing. 



6 



