TRIAS : Decision on Cable Ladder production

Winning tender price : $ 1.680 /kg

Margin : 5%

Production Cost (Existing)

Raw Material cost : $ 0.65 /kg
Cut and Weld cost : $ 0.25 /kg
Rework cost (20%) : $ 0.07 /kg
HDG cost : $ 0.48 /kg Current Method
Transportation cost : $ 0.10 /kg $1.59
Waste (mishandling) cost : $ 0.01 /kg
Waste (failed QC) cost : $ 0.03 /kg
Total cost $ 1.59 /kg
1
Production Cost (New)
Raw Material cost PSC : $ 1.18 /kg New Method
Raw Material cost NSH : $ 1.09 /kg $1.42
Fabricatiion cost : $ 0.10 /kg
Rework cost : $ 0.01 /kg
Total cost PSC : $ 1.29 /kg
Total cost NSH : $ 1.20 /kg
Penalty (delay) : $ 0.56 /kg
 $1.59
2

Current Method no delay 75%

Purchase raw material from PSC $1.29
###
4

$1.85
0.5 delay 25%
New Method
3 no delay 60%
$1.20
0.5
5
Purchase raw material from NSH $1.76
### delay 40%
Davanrik (Merck)

Phase I
cost $ 30.00 (include fee $5M)
chance 60% success
duration 2 years

Phase II
cost $ 40.00 (include fee $2.5M)
chance 10% (for depression only)
15% (for weight loss only)
5% (for depression and weight loss)
duration 2 years

Phase III
cost $ 200.00 (for depression only) - include fee $20; chance 85% of success, fail 15%
$ 150.00 (for weight loss only) - include fee $10; chance 75% of success, fail 25%
$ 500.00 (for depression and weight loss) - include fee $40; chance 70% of success,
15% depression only, 5% weight loss only, fail 10%
duration 3 years

Launch
cost sales npv gross profit
depression $ 250.00 $ 1,200.00 $ 950.00
weight loss $ 100.00 $ 345.00 $ 245.00
depression and weight loss $ 400.00 $ 2,250.00 $ 1,850.00
 depression & w

Enter Phase II
Enter Phase I success ###
### 5 7
License Davanrik 60% $ 43.30
2 4
$ 13.98
1 40% fail
6
Not License Davanrik
3
$ -

ccess, fail 15%

ccess, fail 25%
e 70% of success,
 4 $ 1,280.00

Enter Phase III 70% $ (325.00)

5
depression & weight loss
$ 500.00 5%
15% 6 $ 380.00
1
depression & weight loss $ 879.75
8
5% weight loss 10% 7 $ (570.00)
$ 150.00
nter Phase II weight loss 9 2 75% 8 $ 25.00
15% $ (36.25)
depression 25% 9 $ (220.00)
depression 0 $ 200.00
10% $ 537.50 3 85% 0 $ 680.00
fail 15%
70% 1 $ (270.00)

$ (70.00)

$ (30.00)

$ -
depression & weight loss

weight loss

depression

fail

weight loss

fail

depression

fail

fail

fail

not decide