Economic analysis of heavy equipment supply for fulfilling raw materials

In this paper, the problem to be resolved is how to choose a strategy to supply additional heavy equipment needs to meet the needs of limestone by considering economic aspects. The company recently have conducted limestone mining in three locations: A, B and C. It is estimated that by the end of 2020 limestone reserves in the Area A will be exhausted, and hence all limestone must be gotten from Area B and Area C. The transport distance from the blasting area to the crusher area is getting further away. The impact is that the needs for heavy equipment, particularly dump trucks and excavators, are increasing. The alternative for fulfilling heavy equipment that can be identified are explained as follows: Doing investment for the need of additional heavy equipment, rent of additional heavy equipment, choosing mining services contract. Based on the lowest Net Present Value or Present Worth of Cost calculation, it can be concluded that the alternative chosen to supply additional heavy equipment is through a mining service contract. The company will get another benefit, namely not needing to provide a large investment cost up front. The company can distribute the burden of investment cost into operational cost.