Reference no: EM13737309

Engineers are often tasked with determining the cost of manufacturing a product. Such cost modeling can be extremely detailed and extensive. You will perform a cost model analysis using an Excel Spreadsheet provided to you on BlackBoard. The spreadsheet contains all of the key costs for equipment, materials, labor, and facilities. There are 3 major process steps, and there are 3 different pieces of equipment (different vendors) available for you to use at each step. Each piece of equipment has a different cost, throughput, yield, support requirement, and space requirement. You will determine the set of equipment and the number of equipment sets to use for manufacturing. You must determine within reason the number of sets to use. For example, you might have 3 pieces of one type of equipment but not hundreds. Do not mix equipment from different vendors for the same process step, but you can certainly mix vendors for the different steps. The important factor is cost.

(1) Build your cost model but calculate labor, equipment depreciation, material, and facility costs separately. Then provide a total cost summary. You must choose the number of parts to fabricate (per year or per week). More parts results in lower depreciation costs for the facility but also requires more equipment.

(2) Use a 5 year depreciation for the equipment and 40 year for the facility

(3) Model the factory for Four shifts of 12 hrs/day and 7 days per week. Assume ONLY 20 hrs/day of actual operation for production but include labor costs for 24 hrs/day. The other 4 hrs is set aside for maintenance and down time.

(4) After creating your model to calculate the total cost, including yield, model the case by choosing the appropriate equipment sets for your factory. This process will be iterative. Find the lowest cost for each case.

(5) Note that if equipment requires 0.5 operators and if you only have one piece of equipment, you must round up to a full person.

(6) Include fringe costs for labor as given at 30%. Include "Other Factory" labor costs as provided. These costs represent administrative, accounting, management, safety, shipping, and janitorial services.

(7) Now create a summary of costs in your spreadsheet showing total labor, equipment, facility, material, and overhead costs. Use a Pie chart to show breakdown of costs by area: labor, equipment depreciation, materials, etc. Include net yield calculations.

(8) Write a short, professional quality, 5-6 page report summarizing your factory operation. The report MUST include an Executive Summary and an Introduction. Provide a summary table of equipment sets and tool costs along with labor requirements (# of people per area). Pie chart of the cost breakdown is required. Provide the final cost (table form) of the model. Provide a brief analysis of the approach that you took to minimize costs and analyze your results. What were the biggest cost factors and why?