Chloe Duvall

MagBoard Production
EngM 274, Fall 2014

MATERIALS
It is possible that materials would be cheaper from other sources, however,
there is the concern that about from South Korea. Therefore, wherever possible,
materials will be purchased within the United States. Many of the materials have
already been purchased, such as the McMaster-Carr bearings, shafting, couplings,
and fasteners. In addition, the Delco wiring harnesses, Lipo Packs, and speed
controllers. Therefore, the items that still must be ordered are the aluminum plates,
motors, and magnets.
The steel plates will be purchased from the website (discountsteel.com) that
the previous project manager suggested. Although the previous manager suggested
ordering 500 4 x 6 sheets, 250 of the 4 x 12 will be purchased for this project
instead. Due to the large number of sheets, the unit cost was discounted down from
$548.07 to $432.98 for a total of $108,245.00. The cut to order 4 x 6 sheets would
have cost $112,570. Thus it is more cost effective to order the larger sized sheets.
The company offers 4 x 12 sheets of " thickness at a unit cost of $1096.15. 2 of
these sheets will be ordered for a total cost of $2,192.30. Shipping to the 37235 zip
code for both types of plate is $2090.70. Accounting for the subtotals of the plates
and the cost of shipping, the total for the aluminum plates is $112,528. The
estimated time of shipment for the materials is the next business day if the order is
placed before 11am. Thus, if the order is placed early October 30th, the order can be
expected to ship the following Monday, November 2nd.
The Scorpion HKIII-5025-440KV Motors will be ordered from the Scorpion
Systems website. The unit price of one motor is $299.99. For a quantity of 2200, the
total cost pre-discount is $659,978. At 40% off, the cost is lowered to $395,986.80.
With such a large quantity for the order, the items are on backorder for 2 weeks.
Scorpion Power offers free FedEx shipping which has an estimated deliver time of 23 days. Combining both the backorder delay and the time to ship, the estimated
time for delivery is 16-17 days.
8000 magnets will be ordered at a unit cost of $30 for a subtotal of $240,000.
The magnets will be shipped for free so the total cost for the magnets is just the
$240,000. It was not possible to get an exact shipping estimate. However, it is
assumed that the components are not on back order and will ship via FedEx in 2-3
days. With the order placed on October 30th, which is a Thursday, it is assumed that
the magnets will arrive on Monday to account for the weekend.
Material
Aluminum Plate (Testing Area)
Plate (Boards/Disks)
Scorpion Motors
Bearings/Shafts/Fasteners/Etc.
Delco wiring harness/switches
Lipo Packs
Speed Controllers
Magnets
Total

Components
2
250
2200
2200
525
1100
520
8000

Unit Cost
1096.15
432.98
299.99

Total Cost
$2,192.30
$108,245.00
$395,986.80
$50,000.00
$12,000.00
$200,000.00
$10,400.00
$240,000.00
$1,018,824.10

Shipping
$2,090.70
$$$$$$$$2,090.70

EMPLOYEES
I will pull a total of 11 skilled and 5 full-time employees from other facilities
to work on the MagBoards. The total cost of this labor is $23,829.12 before benefits.
In order to supervise these employees, I will employ 3 supervisors. This will allows
for a supervisor ratio of a little over 5. At a 10% increase from base pay, the
supervisors salaries will be $33/hour. Over the course of the 20 week project, the
supervisors will each make $26,400 for a total of $79,200. Finally, I will employ one
supervisor of the supervisors. At an additional 10% increase, the supervisors
supervisors salary will be $36.30/hour. The supervisor of the supervisor will make
$29,040 over the course of the Magboard production.
No part time employees were hired for production because they work at only
25% efficiency. In addition, using full-time employees allows for a 40-hour
workweek without having to pay for overtime. The skilled workers will be working
on the cutting of the boards and disks, grinding the disk edges, drilling holes in the
disks, drilling the boards, and testing each board. All of these actions require skilled
workers. The base full-time employees will be responsible for attaching the
magnets, attaching the Delco wiring harnesses, and the final packaging of the boards
and chargers.
Workers
Time
(min)

Time
(hr)

Cut boards/disks

60

$30.00

$5,000.00

Grind edges

30

0.5

$30.00

$3,750.00

Drill holes in disks

Drill board/attach motor &
battery
Attach magnets to disks
Attach Delco wiring harness

60

$30.00

$5,000.00

50
15
30

0.833
0.25
0.5

2
3
1

$30.00
$15.00
$15.00

$6,250.00
$2,500.00
$3,750.00

Test/adjust each board

Pack board & charger

15
5

0.25
0.083

1
1

$30.00
$15.00

$3,750.00
$625.00

Labor

Number Temporary Fulltime Skilled

16

Labor
Costs

11 $30,625.00

Components
500
500
500
500
2000
500
500
500

Workers
3
2
3
2
3
2
1
1

Units/Worker
166.67
250.00
166.67
250.00
666.67
250.00
500.00
500.00

Time w/
Efficiency
143.46775
103.8375
142.675
172.99875
128.7625
103.8375
98.65
32.75

Time (Hrs)
114.77
83.07
114.14
138.40
103.01
83.07
78.92
26.20

Supervisor Ratio
Weeks Left for Project
Number of Systems
Supervisor Salary
Supervisor of Supervisor
Salary

7
20
500
$33.00

$79,200.00

$36.30

$29,040.00

Productivity
Full-Time Efficiency
Par- Time Efficiency
Full-Time Learning Curve
Part-Time Learning Curve

0.8
0.25
0.95
0
Labor

Base
Supervisor
Supervisor of supervisors
Total

$23,829.12
$79,200.00
$29,040.00
$132,069.12

Salary
$4,304.03
$3,115.13
$4,280.25
$5,189.96
$1,931.44
$1,557.56
$2,959.50
$491.25
$23,829.12

PRODUCTION PHASE COST

Accounting for a 20% profit from the production phase cost of the project,
the total price before the contingency fee is added is $1,690,765.80. In order for the
contingency fee to be calculated, a risk consequence matrix was made for Task B
through Task G. This matrix can be seen below. The risk associated with Task B is
that the material would be late. One of the materials is on back order, which
increases the risk associated with this task. The impact was estimated a one weeks
salary for the employees. The risk associated with Task C is that training would take
longer than expected due to a slow learning curve. The impact was estimated at one
days salary for the employees. The probability of this is low because, as stated in
the given information, we are relatively confident that this can be completed in the
time specified. The risk for Task D is that the assembly line setup would take longer
than expected or that it would be setup wrong. The risk for this task is low because
this is a simple task to complete. The impact was estimated as one days salary. The
risk for E is that there would be delays during the assembly of the MagBoards. This
is the most probable risk because there are so many parts that need to be assembled
in order to complete the system that there is a high change of delays. In addition,
accidents or machine failure could occur which would increase the length of
assembly. The impact of this could range anywhere from a weeks worth of salaries
for employees to the cost of repairing machining equipment. The impact was
determined by estimating the cost of labor for 2 weeks at $48,000 and the cost of
replacing equipment at $100,000. The risk associated with Task F is that systems
would fail final testing. This is a low impact and low probability risk and does not
have a large impact on the contingency fee. Similarly, the packaging of the systems,
which occurs in Task G, is also low impact and low probability. The impact for both
Task F and Task G were estimated at one days salary for all employees.
Risk
B
C
D

Probability
0.2
0.1
0.1

Impact
$(24,000.00)
$(4,800.00)
$(4,800.00)

Ex$V
$(4,800.00)
$(480.00)
$(480.00)

E
0.4 $(148,000.00)
F
0.1
$(4,800.00)
G
0.1
$(4,800.00)
Risk Exposure
$
Contingency Reserve
$

$(59,200.00)
$(480.00)
$(480.00)
(65,920.00)
65,920.00

The total cost of labor before benefits is $132,069.12. Vanderbilt has a

benefit rate of 20%. Therefore, the actual total cost of labor is $158.482.94. The
overhead rate is 17%. There is no materials overhead because all of the materials
are stored on-site and the shipping is to be included in the material costs.
Therefore, the overhead rate is only applied to the labor costs. At 17%, the
overhead cost is $26,942.10. The G&A costs are 14% of the labor, labor overhead,
and material costs. The G&A costs are $204,722.35. The total production phase cost
of the project before accounting for contingency or profit is therefore $1,408,971.50.

Benefits (20%)
OH (Labor)
Material
Subtotal Total
G&A
Subtotal Total
20% Profit
Contingency Fee
Total Cost
Unit Cost

$158,482.94
$26,942.10
$1,018,824.10
$1,204,249.14
$204,722.35
$1,408,971.50
$281,794.30
$65,920.00
$1,756,685.80
$3,513.37

As seen in the Table on the previous page, the risk exposure was -$65,920.
Therefore, the contingency fee was $65,920. With the addition of a 20% profit, the
total cost was $1,756,685.80. With 500 units, the unit cost of one MagBoard is
$3,513.37.
TIMELINES
The following table shows the order of events for the assembly of one
MagBoard. The table corresponds to the AON diagram. It can be seen that the
critical path consists of activities ABCEGH with a total length of 180 minutes. It can
also be seen that both activity D and F have total slack of 25 minutes. In addition,
there is 25 minutes of free slack for activity F.
Event
A
B
C
D
E
F
G
H

Description
Cut boards/disks from plates
Grind edges/apply decals
Drill holes in disk
Drill board/attach motors & battery
Attach magnets to disks
Attach Delco wiring harness
Test/adjust board
Pack for shipping

Length (min)
60
30
60
50
15
30
15
5

Predecessor(s)
A
B
A
C
D
E, D
G

AON Diagram for Individual Magboard Production

The following table shows the order of events for the entire production
process of the MagBoards. Data included in this table includes the length of the
event and the events predecessors.
Event
Description
Length (days) Predecessor(s)
1
Place Contract
2
2
Money Transfer
0
1
3
Order Aluminum
3
1
4
Order Motors
17
1
5
Order Magnets
3
1
6
Reassignment/Training
1
2
7
Cut Boards/Disks
25
3,6
8
Grind Disks/Apply Decals
18
7
9
Drill Holes in Disks
25
8
10
Drill Boards/Attach Motors
30
4,7
11
Attach Magnets
23
5,9
12
Attach Delco Wiring
18
10
13
Test/Adjust Board
17
9,10
14
Pack Boards
6
13
The following Gantt chart corresponds to the above table of events to show
the order of events more clearly.

This Gantt charts shows that the project is estimated to be completed on

March 11, 2015. Therefore, it will cost $20,000 for going one week over the desired
end date of March 6, 2014.
In order for the project to be completed as fast as possible, I have chosen to
have my employees work 18 hours a day, 7 days a week. In addition, it was
assumed that the material that was on backorder would actually arrive in 3 days
rather than the 2 week backorder. This would push up the end date of the project
up to December 15th. However, it would also increase the cost of the project
because the employees would be entitled to overtime pay. We would however, save
the $20,000 that was lost with the original schedule due to exceeding the desired
end date.
The project can be done the most inexpensively by not packing the boards
until everything is assembled. This will allow the employee assigned to packaging
to be placed at the drill boards/attach motors assembly station. That would reduce
the time for that task from 30 days to 25 days. In addition, with every employee
packaging, that would reduce the time of that task from 6 days to 1 day. Overall, the
end date of the project would be moved up to March 4, 2014 and the company
would not lose the $20,000 for being one week late. In addition labor would be
reduce by the cost of one weeks worth of salaries.
PROBABILITY OF ON-TIME COMPLETION
The estimated length of the project is 21 weeks. This length, 21 weeks, is the
most likely length of the project. The optimistic estimate is 19 weeks (assuming the
material isnt actually backordered and will arrive in 3 days rather than 2 weeks)
and the pessimistic estimate is 25 weeks (this is just an arbitrarily chosen value
because it is unknown how long an accident or equipment failure could delay the
project).
( )(

The following calculations were performed to determine the length of time to

be 95% sure that the project will be done by this time.

Using the calculated length of 21.33 weeks and the calculated variance of 1, it
is 95% certain that the project will be completed within 22.93 weeks.
8

The following calculations were performed to determine the expected length

of time for the project with a 50% chance of success.

With a 50% chance of success, the project is estimated to be completed in

under 21.33 weeks.

APPENDIX

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