seer dfm student paper

IENG 578

Cost Estimation of a GE Blender using SEER‐DFM

Team Leader: Lavanya Nyayapathi [email protected] Members: Sri Harsha Chintala [email protected] Vimala Goli [email protected] Bjorn Olof Jonsson [email protected] Navya Reddy Lenkala [email protected]

11/17/2008

Submitted to

Dr. Robert Creese

Department of Industrial and Management Systems Engineering West Virginia University, Morgantown

SEER‐DFM Model for a GE‐BLENDER Page 2

Abstract Seer‐DFM software was used to find the basic cost estimate of a GE blender. A bottom’s up approach was used to breakdown the work elements into sub assemblies and hierarchy of modules. The software demands appropriate values for parameters like tool amortization, material yield, operators’ experience, etc. The risk analysis is performed by changing the production quantities on the average system cost.

The procedure adopted here involves breaking down the blender into 2 subassemblies. The weight of every element in the sub‐assembly was determined and its volume was estimated. This data is entered into the software to develop the estimate of costs. Once the data has been validated, the software will give a basic as well as detailed estimate of the cost of the blender and of all its elements. The risk analysis, cost analysis, production cost, labor cost for individual elements and sub assemblies is also generated by the software.

The cost that SEER‐DFM estimates for the blender is $11.34 for 50,000 production units. This cost varies as the production units’ change. It also varies with the country of manufacturing. The GE‐Blender was made in China and hence the estimate in this report is made with China as the country of production and hence its labor rate at $16/hour.

The conclusions and risk analysis gives a detailed estimate of the price of the blender at different production quantities in both USA and China.


Table of Contents Abstract ..................................................................................................................................................... 1

1 Introduction ........................................................................................................................................... 4

1.1 What is SEER‐DFM: ......................................................................................................................... 4

1.2 Problem description: ....................................................................................................................... 4

2 Procedure ............................................................................................................................................... 5

2.1 General factors ................................................................................................................................ 7

2.2 Model Hierarchy ............................................................................................................................. 7

2.3 Lid .................................................................................................................................................... 8

2.4 Ingredient cap ............................................................................................................................... 10

2.5 Jar .................................................................................................................................................. 11

2.6 Pitcher base ................................................................................................................................... 12

2.7 Jar bottom/Blade holder ............................................................................................................... 13

2.8 Cog Wheel ..................................................................................................................................... 14

2.9 Blade ............................................................................................................................................. 15

2.10 Body ............................................................................................................................................ 16

2.11 Motor .......................................................................................................................................... 17

2.12 User Interface Panel .................................................................................................................... 18

2.13 Motor Control Board ................................................................................................................... 19

3 Results .................................................................................................................................................. 21

3.1 Graphs and Charts ......................................................................................................................... 22

4 Conclusions and Risk Analysis .............................................................................................................. 25


1 Introduction This is a project trying to estimate the cost of an electrical blender using SEER‐DFM

1.1 What is SEERDFM: SEER stands for System Evaluation and Estimation of Resources. It is a family of programs for cost estimation made by Galorath, a software company. The family consists of:

• SEER for Software

• SEER for Hardware, Electronics & Systems

• SEER for Manufacturing

• SEER for IT

This project has used SEER‐DFM which has been replaced by SEER for Manufacturing. SEER‐DFM is focused on giving the user tools to evaluate different manufacturing options and trough that analyze the best option. By modeling thru SEER‐DFM the user can evaluate more options at a much lower price than through test production series.

1.2 Problem description: This project aims to see how efficient SEER‐DFM is as an estimation tool for a commercial product. It is also an exercise in the use of a commercial cost estimation tool.

Figure 1 GE Blender Model 169169

• 14-speed blender • 600-watts • 48-oz jar • Pulse feature • Electric control panel • Jar and blade assembly are

dishwasher-safe

SEER‐DF

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Figure 2 Sch

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Figure 3 Motor

Figure 4 Lid, ingredient cap, pitcher base, Jar (Clockwise from left top)

Figure 5 Blade holder & blade, cog wheel, motor control board, user interface panel (Clockwise from left top)


2.1 General factors • Production quantity: 50,000 units

• All labor rates, including overhead: $16/hour

• Quantity per next higher assembly: 1

• Production Experience varies depending on the type of the product and manufacturing process used.

• Used part assembly contribution for each element. Method of assembly chosen as closest type.

• Functional tests for moving and electrical parts when assembled.

2.2 Model Hierarchy The work elements are divided into 2 sub assemblies, the Jar Assembly and the Motor Assembly. The Work Elements section is work region within the window frame, which allows the user to describe the structure of the hardware or the Estimating Breakdown Structure. The work element structure is described in Figure 6.

Figure 6 Model Hierarchy


2.3 Lid The lid was identified as a first element under the jar assembly. The process type is Fold/Cast/Forge/Powder Metals. The manufacturing process considered in this case is the injection molding. The material of the casing was determined as Polyvinyl Chloride. The finished weight of the component is 0.29 pounds. The parameter inputs are as follows.



2.4 Ingredient cap The ingredient cap is a part of the jar assembly. The process type is Fold/Cast/Forge/Powder Metals. The material of the casing was determined as Acrylic. This part is considered to be manufactured by the injection molding process. The most likely number of cavities for the production quantity of 50,000 units was considered to be 10. The finished weight of the component is 0.048 pounds. The parameter inputs are as follows.


2.5 Jar The jar is chosen to be added as a purchased part, this because SEER‐DFM is not supporting calculations for glass manufacturing. An assumption of the price was made using similar sized jars available on the consumer market. The assumed price of the jar is $2 since similar sized glass jars in retail are available from $3.


2.6 Pitcher base The Pitcher base is made of ABS ‐ Acrylonitrile Butadiene Styrene and is identified as Fold/Cast/Forge/Powder Metals process type. An injection molding process was considered for the manufacturing process. The most likely number of cavities for the production quantity of 50000 units was considered to be 10. The finished weight of the pitcher base was determined as 0.99 pounds.


2.7 Jar bottom/Blade holder The jar bottom or the blade holder is made of polyetheylene and is manufactured with an injection molding process. The finished weight of the component is 0.125 pounds.


2.8 Cog Wheel The cog wheel is made of nylon and the manufacturing process is identified as injection molding. The finished weight of the component is 0.006875 pounds.


2.9 Blade The blade set is introduced as a machining element. The radial mill, end mill and drilling process along with angled faces were considered in the machining process. The material of the blade is steel stainless steel. The finished weight of the product is 0.05 pounds.


2.10 Body The body is determined as ABS and its weight is 1.25 pounds. The manufacturing process is injection molding. The body also includes the buttons and the base of the blender.


2.11 Motor The blender motor drives the blade. This is identified as a purchased part. An assumption of the price was made using similar sized motors available on the consumer market. The assumed price of the motor is $3.


2.12 User Interface Panel To supply power and converting AC voltage to DC there is an electronic circuit (PC Board) incorporated in the assembly. The length and width of the board is determined as 3 and 4 inches respectively. The material for this is determined as Alumina‐Thin film. A Go/No Go test is used for testing the user interface panel.


2.13 Motor Control Board Motor control board has 20 odd components on it along with the resistors and capacitors. The material for this is determined to be Alumna‐Thin film. The length and width of the motor control board is 3 and 5 inches respectively. A Go/No Go test is used to test its functionality.



3 Results With the blender produced in China and an assumed quantity of 50,000 units we get a unit cost of $11.34. It represents the cost of designing, developing and manufacturing the blender in lots of 50,000 units. The detailed analysis of the blender cost is given in the below table.

Figure 7 Detailed Analyses

The detailed analyses of costs of blender at different production units can be found in the Appendix V.

The total cost of every work element for 50,000 units produced in China is as follows. The quick estimate of every work element can be found in Appendix IV.

Table 2 Total cost for 50,000 units.

Total Cost for 50000 units

Part Cost ($)

Blender 566,947.03

Jar 130,531.47

Lid 29,127.91

Pitcher Blade 30,254.34

Blade 16,461.32

Cog Wheel 27,871.54

Jar Bottom 32,352.90

Ingredient Cap 27,402.98

Body 106,267.01

Motor Control Board 4,140.27

Motor 151,184.64

User Interface Panel 11,352.65

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Figure 9 Probability Risk Chart

3.1.2 Cost Sensitivity Chart

Based on the production experience the cost for the individual component varies. As can be seen for the

blade from the below chart, the cost varies as follows

Table 3Cost Sensitivity of Blade

Blade

Range Lowest Likely Mean Highest

Cost in Dollars 0.275 0.3 0.315 0.375

Figure 10 Production Experience VS Cost

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4 Conclusions and Risk Analysis The cost is dependent on the production quantity and the labor rate, therefore estimates have been done for different amounts of units produced and at different labor rates. Calculations have been done for both China, labor rate $16/hour, and USA, labor rate $80/hour at different production quantities. The results are as follows. The detailed cost estimate for different production quantities is found in the Appendix III.

Table 4 List of unit cost with production quantity and labor rate.

Production Quantity

Unit cost ($/unit)

Country

USA CHINA

10,000 30.23 25.28

25,000 19.71 14.82

50,000 16.22 11.34

75,000 15.05 10.18

100,000 14.47 9.6

Table 5 Unit cost of every element with the units of production

Components Units of Production

10000 25,000 50,000 75,000 100,000

Jar 2.61 2.61 2.61 2.61 2.61

Lid 2.72 1.12 0.58 0.4 0.32

Pitcher Blade 2.72 1.13 0.61 0.43 0.34

Blade 0.35 0.33 0.33 0.33 0.33

Cog Wheel 2.66 1.08 0.56 0.38 0.29

Jar Bottom 2.81 1.19 0.65 0.47 0.38

Ingredient Cap 2.65 1.07 0.55 0.37 0.28

Body 4.88 2.81 2.13 1.9 1.78

Motor Control Board 0.31 0.14 0.08 0.06 0.05

Motor 3.02 3.02 3.02 3.02 3.02

User Interface Panel 0.55 0.31 0.23 0.02 0.19

Blender 25.28 14.82 11.34 10.18 9.6

With a production quantity of 50,000 units SEER‐DFM estimates the unit cost of the blender to $11.34. This can be compared to the price of the blender at Wal‐Mart which is $29.88. If the assumption that the consumer price is roughly a third of the production cost is made the blenders actual production cost is assumed to be $9.96. This gives a difference between the estimate and the “real” value to be $1.38 or the estimate to be 113 % of the cost.


The reasons for the assumption of a market price three times the production are many. The product needs packaging, shipping and handling to reach the store. Every step in the hierarchy of distribution also involves and adds costs to the product. It is not only the store that shares the difference between production cost and consumer price. In this case, the blender is bought at Wal‐Mart which are famous for low overheads and though negotiations with suppliers. This could mean that we are underestimating the production cost with a third of the consumer price. The production cost could as well be a bit higher.

There are several ways to explain this difference, and it is due to many reasons. The following are some of many:

• Real production cost unknown

• Production quantity unknown

• Production methods etc. unknown

• Inputs in SEER‐DFM estimations

• SEER as a model not perfect

One thing that can be seen is how heavy the price relies on the production quantity. If the guessed “real” production cost is used as a target it can be seen that as you move towards more units produced the unit cost decreases and actually fall below $9.96. This can be shown in the following table.

Table 6 Unit cost at different production quantities for China.

Production Quantity Unit cost ($/unit)

10,000 25.28

25,000 14.82

50,000 11.34

75,000 10.18

100,000 9.6 The following graph depicts the same information, but also with the cost for the higher labor rate, USA.

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Figure 6 Un

As can beinvestmenthe same part of th

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Table 7 Cos

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Going back to Table 4 the unit cost is more in USA compared to China as the labor cost are higher in USA. This leads to a higher cost for the product if it is made in the USA. It is likely that there is more automation involved in USA production plants than in China which might contribute to a lower cost on high volume products i.e. if the product is to be produced in USA a higher automation level is required to get a competitive production cost.


APPENDIX I

Figure 2 Blender Cost Allocation

Figure 3 Jar Assembly Cost Allocation

Figure 4 Jar Cost Allocation


Figure 5 Lid Cost Allocation

Figure 6 Pitcher Base Cost Allocation

Figure 7 Blade Cost Allocation


Figure 8 Cog Wheel Cost Allocation

Figure 8 Jar Bottom Cost Allocation

Figure 9 Ingredient Cap Cost Allocation


Figure 10 Motor Assembly Cost Allocation

Figure 10 Body Cost Allocation

Figure 12 Motor Control Board Cost Allocation


Figure 13 Motor Cost Allocation

Figure 14 User Interface Panel Cost Allocation


APPENDIX II Figure 11 Cost Risk Chart of Jar

Figure 12Cost Risk Chart of Lid

Figure 13Cost Risk Chart of Pitcher Base

Figure 14Cost Risk chart of Blade


Figure 15 Cost Risk chart of Cog Wheel

Figure 16 Cost Risk chart of Jar Bottom

Figure 17 Cost Risk chart of Ingredient Cap


Figure 18Cost Risk chart of Body

Figure 19Cost Risk chart of Motor Control Board


Figure 20 User Interface panel

Figure 21Cost Risk chart of Motor


APPENDIX III


Figure 1 Cost of 10,000 units China






Figure4 Cost of 75,000 units China




APPENDIX IV

Figure 22 GE Blender Quick Estimate

Figure 23 Jar Assembly Quick Estimate

Figure 24 Jar Quick Estimate


Figure 25 Lid Quick Estimate

Figure 26 Pitcher Base Quick Estimate

Figure 27 Blade Quick Estimate

Figure 28 Cog Wheel Quick Estimate


Figure 29 Jar Bottom Quick Estimate

Figure 30 Ingredient Cap Quick Estimate

Figure 31 Motor Assembly Quick Estimate

Figure 32 Body Quick Estimate


Figure 33 Motor Control Board Quick Estimate

Figure 34 Motor Quick Estimate

Figure 35 User Interface Board Quick Estimate


APPENDIX V

Detailed Analysis for 10,000 units manufactured in US







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