Old Main Group

KaLee AllenMike BerryJen DronettiGreg HofmannCharlie Miracola

Business Counterparts:Jeff DrobishMark LeberknightAshley Tasker

Business Plan

Authored in Spring 2001

Overreaching instruction for management of business

Detailed information for six product groups

-Financials

-Market Research

Units Produced Per Month 5Machining Cost Per Hour 40Machine Time Required Per Product (hrs) 3.5Cost of Material Per Product 306.76Total Cost Per Month 2233.8

Total Cost Per Year 26805.6

Markup (Retailers) 20%Markup (Individuals) 1.4Percentage sold to retailers 80%Percentage sold to individuals 20%

Sales Growth Per Year 20%

Product Sale Price (Retailers) 536.11$ Product Sale Price (Individuals) 1,072.22$

Cost of Free Product Giveaway -$

Old Main Clock Assumptions

Old Main FinancialsSpring 2001

Old Main FinancialsSpring 2001

Market ResearchA survey of 60 people found:

52% would pay up to $4922% would pay $50 to $9915% would pay $100 to $1495% would pay $150 or greater

• The mean suggested price was: $62.50

(65% of those surveyed were alumni)

New Market ResearchInterviews were conducted of five State College retailers

The mean retail price suggested was: $156.11

115 Surveys were conducted:

(70% of those surveyed were alumni) The average suggested price was $132.50

Product Features: IME I

Features Old Main Replica sculptureClock in tower where the clock is located in the actual buildingPush button activated projecting and retracting lion

One button to make lion come out, one button to retract lion

Estimated Cost: IME ITotal Cost: $100 (not including machining and labor)

Cost of Materials for Old Main: $60• Total Weight of Structure: about 15 lbs.

• Cost per pound of Stock Aluminum: $1.75• Total cost includes other preparation

Cost of Materials for Lion Mechanism: $40• Cost of Motor: $25• Cost of Clock: $7• Misc. Costs: $8• Lion Cost: $4

Total Machining Cost: $350• Total Machine Hours: 7 hours

Labor Hour Cost : $10

Improvements for Future: IME I

RedesignSides should not be solid, too much weightUse Box Tubing for sides

Redesign Mechanical and Electrical Components

Use a less expensive motor Easy to mount motor

Possibly Cast

Redesign: IME IIRedesign on overall structure

Smaller clock will be incorporated, which will change overall dimensions to look more proportional.Tower is not as massive as it was, a little more realistic.Dimensions of pieces helped ease ordering of pieces close to near net shape for ease in machining, which will help reduce cost.

Redesign: IME IIRedesign of Roof

The depth of the structure is now much smaller, making it more 2-D.This will reduce the weight of the overall building.Roof is also being done as a combination of more than one piece, an improvement in the process since last semester.

Redesign: IME IIRedesign of Side Pieces

Side pieces will now be made of extruded tube aluminum, greatly reducing the weight of the structure.With reduced depth, all of the focus now will be on the front of the structure.

Final Cost Breakdown: IME IIMaterial Cost (per Old Main): $27.98

Roof: $12.45Building (sides, front, back): $3.39Tower: $7.30Base: $2.50Columns (8): $2.47

Clock: $6.95Machine time and Labor: $90

Total Cost: $125.04

Lessons Learned: IME I&II

How much is actually involved in designing and prototyping a product from scratchHow to combing efforts in group to put out a final productHow to take constructive criticismHave a better understanding of the design process of a new product

Lessons Learned: IME I&II

How to take a prototype and make changes to improve the machinability of a product.How to make changes based on cost, i.e. reduce weight, machine time, material cost.Understanding how to implement changes for manufacturing.Understanding the target market’s needs and accommodating them through a product.

IME: Why take it?Presents students with real life situations, i.e. relationships with vendors, communication with business side.Entails entire creative process from initial stages of brainstorming to final production of product.Develops skills of working in teams and ability to work towards a consensus.Hands on experience.

Units Produced Per Month 18Machining Cost Per Hour 30Machine Time Required Per Product (hrs) 3Cost of Material Per Product 44.15Total Cost Per Month 2417.78

Total Cost Per Year 29013.36

Markup (Retailers) 20%Markup (Individuals) 1.4Percentage sold to retailers 80%Percentage sold to individuals 20%

Sales Growth Per Year 20%

Product Sale Price (Retailers) 250.00$ Product Sale Price (Individuals) 321.96$

Cost of Free Product Giveaway -$

Old Main Clock Assumptions

Old Main FinancialsFall 2001

New Financials

Average Cost Per Unit:

Number of units: Price:12 $140.0318 $134.1524 $127.59100 $127.23200 $126.00500 $125.27

New Financials

Net Income (after taxes):

Number of units: Net income: 12 $1,082.76 18 $1,710.92 24 $2,410.47 100 $10,073.37 200 $20,348.39 500 $49,434.98

New Financials

Absence of expenses: No depreciation No licensing No plant/maintenance

New FinancialsScenario Unit Sales Cash FlowWorst Case 12 $1,082.76Base Case 18 $1,710.92Best Case 24 $2,410.47

Net Present Value$3,000.00$4,500.00$6,000.00

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