Design Selection for a Product and Solved problem
Design Selection for a Product
The design modification of a product may result in reduced raw material requirements, increased machinability of the materials and reduced labor. Design is an important factor which decides the cost of the product for a specified level of performance of that product.
Example problem for design selection
Two alternatives are under consideration for a tapered fastening pin. Either design will serve the purpose and will involve the same material and manufacturing cost except for the lathe and grinder operations. Design A will require 16 hours of lathe time and 4.5 hours of grinder time per 1,000 units. Design B will require 7 hours of lathe time and 12 hours of grinder time per 1,000 units. The operating cost of the lathe including labor is Rs. 200 per hour. The operating cost of the grinder including labor is Rs. 150 per hour. Which design should be adopted if 1,00,000 units are required per year and what is the economic advantage of the best alternative?
Given Data
Operating cost of lathe including labor = Rs. 200 per hr
Operating cost of grinder including labor = Rs. 150 per hr
Total No of units = 1,00,000
Design A
No. of hours of lathe time per 1,000 units = 16 hr
No. of hours of grinder time per 1,000 units = 4.5 hr
Design B
No. of hours of lathe time per 1,000 units = 7 hr
No. of hours of grinder time per 1,000 units = 12 hr
Solution
(a) Cost of design A
Cost of lathe operation for 1,000 units = 16*200 = Rs. 3200
Cost of grinder operation for 1,000 units = 4.5 * 150 = Rs. 675
Total cost of design A for 1,000 units = Cost of lathe operation for 1,000 units + Cost of grinder operation for 1,000 units
= 3200 + 675 = Rs. 3,875
Total cost of design A for 1,00,000 units = 3,875 x (1,00,000/1,000)
= Rs. 3,87,500
(b) Cost of design B
Cost of lathe operation for 1,000 units = 7*200 = Rs. 1400
Cost of grinder operation for 1,000 units = 12 * 150 = Rs. 1800
Total cost of design B for 1,000 units = Cost of lathe operation for 1,000 units + Cost of grinder operation for 1,000 units
= 1400 + 1800 = Rs. 3,200
Total cost of design B for 1,00,000 units = 3,200 x (1,00,000/1,000)
= Rs. 3,20,000
Decision
The total cost for l,00,000 units of design B is less than that of design A. Hence, design B is recommended for making the tapered fastening pin.
Economic advantage of the design B over design A for 1,00,000 units = Total cost of design B for 1,00,000 units - Total cost of design A for 1,00,000 units
= Rs. 3,87,500 - Rs. 3,20,000 = Rs. 67,500.
