Manufacturing Cost

Estimation
Variabl
e cost

2. Cushioning material - 10kgs

Material
s
3. Polish - 5 Gallons
4. Recorder
5. Adhesives , fastners and stitching
threads(Miscellaneous)

$15.00/
15*6
piece

90

20*1
$20/kg
200
0

50

50

4. Wood Lathe for wood work - 1 no.

5. Stitching macine

$99.99/ 99.99
99.99
piece
*1

6. Miscellaneous tools

1. Shop floor construction

2. Labor cost - Total man hour target per chair - 50
3. Power

$20/Gall
20*5 100
on

$106/pi 106*
106
ece
1

Direct
cost

Total
in $

1. Wood - 3mm 1/8x6x12" (6)

Fixed
Cost

Cost Reduction
Initiatives

$100

100

2500
0

50*3

150

50

$3 /
Man
Hour
_

$25,
Total Cost
996
Operating Cost(Excluding Fixed cost and shop floor construction
cost)
$690

Selection of shop floor

location in the outskirts
of the city
Recruitment of shop floor
workers from the local
close by areas resulting
reduced work commute
and hence transportation
cost reduction
Localization of raw
materials thereby
reducing import cost and
transportation cost
Waste reduction
initiatives by driving 5S
and Continuous
Improvement(CI)
programs in the shop
thereby improving
productivity and hence
ease of manufacturing

Total Cost reduction Target - 25% -

Product Introduction
in the Market Place

Expected
Challenges

Employee and Environment

1 -Safety ISO -140001
Certification
Customer satisfaction ISO
2
9001 Certification
3 Shop floor location selection
Re-design/validation from
4 Customer survey after the first
prototype is ready
Cycle time reduction during
5
production ramp up
Technical and on job training for
6
the blue collars
Vendor and supplier selection
7 for the best quote for the raw
materials
Introduction of Enterprise
8 Resource Planning Process in
the new
organization
Incineration
followed
by land fill of

Design For Environment(DFE)

scrap product due to quality issues, resulting in reduced pollution