Material Handling

Manual vs Conveyor Decision

Compare manual handling labor cost against conveyor cost with capital properly annualized over its useful life, not compared raw against one year of labor.

Manual handling

Conveyor

Conveyor wins$50,000/yr
Manual annual cost$352,000
Conveyor annual cost$50,000

Continue Analysis

Based on your results, these related decisions are available.

Resources

How this works

Manual cost is the number of handlers needed times labor rate times annual operating hours. Conveyor cost is capital cost divided by useful life, spreading the one-time cost across the years it is actually used, not compared raw against one year of labor.

Key terms

  • Annualized capital: one-time capital cost spread evenly across the equipment's useful life, so it compares fairly against a recurring annual labor cost.

Assumptions

  • Straight-line capital annualization, no conveyor maintenance cost modeled separately

Limitations

  • Single throughput level, does not model a hybrid manual-plus-conveyor approach

Sources

Standard capital-annualization cost comparison practice.

Worked example

Comparing raw capital ($500,000) against one year of manual labor ($352,000) wrongly makes conveyor look like the more expensive option. Annualizing capital over its 10-year life ($50,000/year) correctly shows conveyor is far cheaper than manual's $352,000/year.

Common use cases

  • Deciding whether to automate a manual handling process
  • Justifying a conveyor investment with a fair capital-vs-labor comparison
  • Checking whether current volume justifies conveyor capital at all