1-3-9 Rule of Thumb for Cost Estimating in Design by jwt19013

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									         1-3-9 Rule of Thumb for Cost Estimating in Design




     Materials               Manufacturing                 Sales Price
(Includes raw materials,   (Includes labor for mfg   (Includes salary and benefits
  purchased parts and         and assembly and          for design, finance and
         scrap)               related overhead,         accounting, utilities and
                           packaging materials for    building costs and all other
                                  shipping, )         overhead needed to run the
                                                     company, plus profit margin)

        This is a rough guideline for companies whose products are
    manufactured primarily in house at high volume. It will vary based on
       the product, the company and the production volume, but it is
    important to realize that the manufacturing cost and the total cost are
           always significantly higher than the cost of materials.
                  Ref: The Mechanical Design Process, 2003, Ullman
Some details on Cost Estimating in Design – Bike Example




          Ref: The Mechanical Design Process, 2003, Ullman
Volume Discount – Electric Motor Example




                                                     Electric
                                                     Motors


  Ref: The Mechanical Design Process, 2003, Ullman
Volume cost reduction for a Steel Machined Component with 3 turned surfaces and
    7 other surfaces and some tight tolerances and surface finish requirements




               Ref: The Mechanical Design Process, 2003, Ullman
   Tolerance vs.
   Manufacturing
     Process
        Tighter tolerance =
           Higher cost
C ost




                Tolerance


                              ME471, Dr. Kremer

								
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