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    Cost Estimation

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    khemraj deore
    This document discusses cost estimating in product design. It provides a 1-3-9 rule of thumb for estimating materials, manufacturing, and sales price costs. Materials typically account for 1/3 of total costs, while manufacturing accounts for 3/9 and sales for the remaining 5/9. Costs will vary by product and production volume, but manufacturing and total costs are always higher than material costs alone. Examples are given for estimating costs of bikes, electric motors, and machined steel components at different volumes. Tighter tolerances generally increase manufacturing costs.

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    Cost Estimation

    Uploaded by

    khemraj deore
    738 views5 pages
    This document discusses cost estimating in product design. It provides a 1-3-9 rule of thumb for estimating materials, manufacturing, and sales price costs. Materials typically account for 1/3 of total costs, while manufacturing accounts for 3/9 and sales for the remaining 5/9. Costs will vary by product and production volume, but manufacturing and total costs are always higher than material costs alone. Examples are given for estimating costs of bikes, electric motors, and machined steel components at different volumes. Tighter tolerances generally increase manufacturing costs.

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    This document discusses cost estimating in product design. It provides a 1-3-9 rule of thumb for estimating materials, manufacturing, and sales price costs. Materials typically account for 1/3 of total costs, while manufacturing accounts for 3/9 and sales for the remaining 5/9. Costs will vary by product and production volume, but manufacturing and total costs are always higher than material costs alone. Examples are given for estimating costs of bikes, electric motors, and machined steel components at different volumes. Tighter tolerances generally increase manufacturing costs.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    738 views5 pages

    Cost Estimation

    Uploaded by

    khemraj deore
    This document discusses cost estimating in product design. It provides a 1-3-9 rule of thumb for estimating materials, manufacturing, and sales price costs. Materials typically account for 1/3 of total costs, while manufacturing accounts for 3/9 and sales for the remaining 5/9. Costs will vary by product and production volume, but manufacturing and total costs are always higher than material costs alone. Examples are given for estimating costs of bikes, electric motors, and machined steel components at different volumes. Tighter tolerances generally increase manufacturing costs.

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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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