How To Sell a $1 Calculator

IE7993 Supply Chain Engineering

Professor Walker, Fall 2014
Sidharth Jain
Samana Tamraparni Vittal
Dan Volpe
Jiahao Ye

Requirements Specification for Network

Container
Specification
Throughput

Factory Limits
3,000,000 annually

Distributor Limits
1,000,000 annually

Cash-To-Cash

Factory Velocity in
days (Factory
Variability+/- days)

DC Velocity in
days(DC
Variability+/- days)
64.4 Cents

Price/Landed
Cost
Inventory
Delivery Lead
Time

Return on

Days of finished
Days of cycle stock
goods: 905 days
Vocalize from
Push/Pull Boundary in
days
Visualize to Push/Pull
Boundary in days
Factory Percent
DC Percent

Network Test
Accept
Reject
Accept
Reject
Accept
Reject
Accept
Reject
Accept
Reject

Accept

Distribution Center Network

Product: Calculator

BOM
CALCULATOR

Front housing
Back housing
LR1130 NL battery
Screw, self tapping, Phillips head, 2mm x 5mm
Button set, rectangle
Button set, ellipse
Button set, large rect
Button set, circle
Button & Housing Print
Silicon Button membrane
Foam pad, adhesive
Flexible printed circuit
MYLAR
Instruction sheet
Plastic bag
QC sticker
Electronics Assembly

LCD screen
Ribbon cable, 11 traces
Ribbon cable, 27 traces
Printed circuit board
IC
Resistor
Wire, 24 AWG, 1"
Battery holder A
Battery holder B
Tape, clear, 1"
Solder
Epoxy

Factory Requirements
MUSTs:
WANTs:
Plastic (PP) injection
Delivery/
JIT / Lean
Produce:
modeling
Schedule:
manufacturing
PMMA producing ability
Silk-screen print for PP &
Quality/General ISO 9000 / 6 sigma
Print:
PMMA
Management:
management
Circuit print on PET
Assembl
Electronic assembly
Risk:
Risk Management
y:
Part assembly
Own warehouse
Capacity
96,000 unit per month
Inventory:
and Inventory
:
control
Near to Harbor/
Quality:
Acceptable
Transportation: Express highway/
RR station
Delivery/
On Time within the std.
schedule
dev. range
:

Factory
Name
Location
Business
Type
Number of
Employees
Total Revenue
Part Assembly
Line
Electronic
Assembly Line
Injection Molding
Machine
Silk-Screen
Printing Machines
Circuit Printing
Machines

Guangzhou Junke
Electronics Co.,
Ltd.
Guangzhou,
Guangdong,
China
Manufactory
200
US$5 Million
15
10
32
5
8

Factory Selling Price

Material Cost

$ 0.24

Inbound Logistics

$ 0.01

Labor Cost

$ 0.07

Overhead

$ 0.09

Markup

$ 0.12

Selling Price

$ 0.53

Factory and Supply Base

Packaging
12 x 10 x 6 cartons = 120 calculators
0.56 $/carton = 0.0047 $/unit
144 cartons/pallet = 17,280 units/pallet
9 layers of cartons 4x4

40 pallets/container = 691,200

Road Distances
Factory to port
Port to DC

70.4 miles

22 miles

Midbound Freight and Duty Cost

Ocean Freight:
7% fuel surcharge, 3.7% import duty
2545 * 1.107 = 2817.315 $/container
Cost per unit = 0.0042 $/unit

Distance from factory to port = 22 miles

Cost per unit = $0.000044

Distance from port to DC = 70.4 miles

Cost per unit = $0.00014

Total cost per unit = $0.0044

Factory Cash to Cash Cycle

Cost Summary
Suppliers
M+L+OH
SG&A
Taxes
Supplier Net
Profit

Factory

$
0.24

Material

$ 0.24

Inbound
Logistics
Labor
Overhead
Markup

Distribution
Center

COGS
$
$
$
$

0.01
0.07
0.09
0.12
Outbound
Logistics

$
0.53

$
0.01

Questions?

No
Part Weight
Part Name
Qty Part Type Material
.
(gram)
1
1
Front housing
TOOL
PP
10.557
2
1
Back housing
TOOL
PP
10.863
3
1
LR1130 NL battery
PURCH.

4 Screw, self tapping, phillips 6

head
PURCH.

5
18
Button set, rectangle
TOOL
PMMA
0.301
6
3
Button set, ellipse
TOOL
PMMA
0.126
7
1
Button set, large rect
TOOL
PMMA
0.719
8
1
Button set, circle
TOOL
PMMA
0.343
9
1 silk-screen
Button & Housing Print

10 Silicon Button membrane

1
PURCH.

11
1
Foam pad, adhesive
PURCH.

12
1
Circuit
Flexible printed circuit
Printing

13
1
MYLAR
PURCH.
PET

14
1
LCD screen
PURCH.

15
1
Ribbon cable, 11 traces
PURCH.

16
1
Ribbon cable, 27 traces
PURCH.

17
1
Printed circuit board
PURCH.

18
1
IC
PURCH.

19
Resistor
1
PURCH.

20
2
Wire, 24 AWG, 1"
PURCH.

21
1
Battery holder A
PURCH.

22
1
Battery holder B
PURCH.

23
2
Tape, clear, 1"
PURCH.

24
Solder
1
PURCH.

25
Epoxy
1
PURCH.

26
QC sticker
1
PURCH.

27
Instruction sheet
1
PURCH.

28
Plastic bag
1
PURCH.

Unit Injecti Total

Price
on
Price
0.0137 0.0017 0.0154
0.0141 0.0017 0.0158
0.0083

0.0083
0.0008
0.0006
0.0003
0.0014
0.0007
0.0020
0.0333
0.0033

0.0002
0.0002
0.0002
0.0002

0.0050
0.0138
0.0013
0.0016
0.0009
0.0020
0.0333
0.0033

0.0030
0.0008
0.1000
0.0033
0.0017
0.0016
0.0040
0.0002
0.0017
0.0017
0.0017
0.0004
0.0004
0.0010
0.0017
0.0033
0.0067

0.0030
0.0008
0.1000
0.0033
0.0017
0.0016
0.0040
0.0040
0.0033
0.0017
0.0017
0.0007
0.0004
0.0010
0.0017
0.0033
0.0067

Factory Selling Prices Calculations

Material cost = 0.2394 $/unit

Inbound logistics = 6% of material cost
Labor cost = 2.15$/hr /60min/hr =0.03583 $/min
Labor time = 2 min/unit
Overhead = 120% of labor
Markup = 28% of total

Selling Price = (0.2394*1.06 + (.03583 * 2 * 2.2)) * 1.28

= $0.5828

Midbound Freight Assumptions

$1.38/mile operating cost

50% overhead
60 pallets/53 truck (double stacked)
$0.0345/pallet/mile = 1.38*1.5/60
$0.000002/unit/mile = 0.0345/17280
www.thetruckersreport.com/infographics/cost-o
f-trucking
/
Carton from Uline:
http://www.uline.com/Product/Detail/S-18340