Download - Practical Fast Charger Manufacturing
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Practical Fast Charger Manufacturing
Prepared by CAU Fast Charging System Team
August 2009
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TableofContents
Fast
Battery
Charger
Manufacturing
Management..
Turnkeyproductionmanagement Turnkeyproductdevelopment Componentssupply. Printedcircuitboardproduction Circuitboardassembly. Solderpastestencil. Producingplasticmoulding Metalenclosure. Cableassembly..
3
34
56
68
8
910
1011
1112
1214
14
InstructiontoCostEstimation.. 15 17
EstimateorProposalPlan,andTimeDuration.. 18
ProposalorEstimateMilestonesandSchedulePlan.... 18 20
FinalPriceNegotiation.......................................................................... 21
ProductRequirementsCheckingList... 21 23
OutliningtheManufacturingSequencesandProcesses.... 23 24
TheManufacturing
Operation
Process
Chart.
24
25
EquipmentandToolingRequirements 25 26
DeterminationofFacilityRequirements... 26
PricingtheBillofMaterial.. 26 27
EstimatingStandardPurchasedParts.. 27 28
DeterminingRawMaterialandBulkItemQuantities 28
EstimatingMaterialforTooling 29 30
LongLeadandHighDollarItems. 30 31
Subcontract(OEM)EstimatingandPricing.. 31 32
DirectLabourEstimatingTechniques.. 32 34
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CastingandFoundryOperations. 34
MechanicalAssembly.
34
35
ElectronicsAssembly.. 35
FinishingandPlating 35
InspectionandTesting 35 36
ManufacturingSupportLabourRequirements. 36 38
ToolingIssues 38 39
IndustrialEngineering. 39 40
Supervision.. 40
ProductionPlanningandControl. 40
CostStructureoftheFinal ManufacturingEstimate. 40 42
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FastBatteryChargerManufacturingManagement
The fast battery charging system enable a more environmentallyfriendly, energy and cost efficient
means of recharging electric airplane, forklifts and other mobile material handling equipment.
Eliminating the need for petroleumbased fuels commonly used in material handling vehicles, the
chargingstationisacleansystemthatemitsnoharmfulemissions;thetechnologiesarealsowellsuited
foralternativefueltransportationapplications,includingpluginhybridandelectricvehiclemarketsand
infrastructures. Unlike conventional charging methods that require changing batteries after they are
depleted,thefastchargingstationcanrechargebatteriesatopportunetimes,eliminatingtheneedfor
vehicleoperatorstoremovethemfromthefleetortruckduringbreaksandshiftchanges,resulting in
enhanceddriversafety,productivityandenergyandbatterycostsavings.
ElectricScooterFastchargingStation
Intoday'smarketplacesourcingparts&servicesfromoverseasarenolongertacticaloptionsthatcan
helpfirmstojustsavecosts;suchactivitiesareastrategicnecessityforanycompanythatcaresaboutits
longtermcompetitivenesswithintheindustry.Themanufacturingcandivideinfollowingsection:
Turnkeyproductionmanagement:Thecompanyengineeringteamhastodesignfromtheinitialstages
uptothemassproduction,assistingineverystepofproductdevelopmentcycle.Suchsupportcanbein
the form of: suggestions for component selection, sourcing alternative or replacement components,
assistance inPCBdesign, identificationofcriticalcomponents,schedulingoforders,rapidprototyping,
masterproductionplanning, logisticalplanning,upon finalising thecircuitdesign,abillof materials is
created. Usingthisbillofmaterials,components&parts aresourcedthroughournetworkofreliable
andcosteffectivemanufacturers&suppliers,worldwide.
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The management team should provide company with a rapidprototyping service. Upon approval of
theinitialprototypes(oranynumberofrequiredrevisions),aproductionmasterplanissetoutwhere
the product is prepared for massproduction. Through strict QC and QA systems, the highest quality
levelsaremaintained.Testandinspectionreportscanbesuppliedasrequired.
FastchargingStationOEMComponentsManufactureFacility
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Turnkey product development: The design team can take a client's idea and transform it into an
electronicproductstateofartfastcharger,fromconcepttoproduction.Aspartofthisprocess,the
services include electronics hardware design, software development, mechanical design, and
manufacturing.Thedesignteamcan turnmarkets idea intoa tangibleelectronicproduct thatwillbe
manufacturedandsoldexclusivelybacktothecompany.
Hardware Microprocessors and microcontrollers up to 32 bit including Microchip and Motorola
processors.
FPGAdesignandsimulation. Communicationperipheraldesign. Highpowerswitched modepowersupplies. TheproductsincludingfullACAcompliance. AllproductsaredesignedtopassEMCcompliancefirsttime. PCBlayoutusingCAD
Software PCsoftwareusingC++. Specialistsinapplicationcodetocommunicatewithhardwareperipherals. Allfirmwareisflowchartedatthebeginningandupdatedduringdevelopment. Flowchartingisdoneusingappropriatecommercialsoftware
Firmware Candassemblerfirmwareformostmicrocontrollers. Useincircuitemulatorsanddebuggerstooptimisetimetomarket. Canwritecodeforanyprocessor,from8bitto32bit. CodewrittenformanyapplicationsincludingTCP/IP,USBandmodemproducts. Allfirmwareisflowchartedatthebeginningandupdatedduringdevelopment. Flowchartingisdoneusingappropriatecommercialsoftware.
Mechanical Mechanicalandindustrialdesign. Plasticandmetalenclosuredesignfornewproducts. Accesstolowcostplasticandmetalcasestooledandtoolless.
Documentation Schematicdiagramsandwiringdiagrams. Softwareandfirmwaresourcecodesrichwithcommentstomakeunderstandingofthe
codeaseasyaspossible.
Manufacturingproceduresoutlininghowtheproductshouldbemanufactured. Testproceduresforendoflineandfieldtesting. MaterialsprocurementandBillsofMaterials(BOM). Designmanualsexplainingtheelectronichardwareandtechnicalaspectsoftheproduct. Software manuals with flowcharts explaining how the software and firmware is
structuredandhowitflows.
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Mechanicaldrawingsshowingallaspectsoftheproductsstructure. Servicemanualstofacilitatefieldandbacktobaserepair.
CAUEngineersTeam
Components supply: CAUprocurecomponentsrequested fromusby our fastchargermanufacturing
clients.All that is required is a BOMor listof componentsalongwith their specifications.Our highly
qualifiedelectrical
and
electronics
engineers
are
able
to
source
the
required
components
through
our
largenetworkofoffshoremanufacturers,worldwide.
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FastChargerStationMainController
Majorityofthecomponentssourcedforourclientsarecontainedwithinthefollowingcategories:
Semiconductors Optoelectronics(LEDs,LCDs) CrystalOscillators&Resonators Connectors(Alltypes) Acousticcomponents Transformers AC/DCPowerSupplies&PowerCords Relays Potentiometers Passivecomponents Keypads,Membranes,Polydome&MetaldomeKeypads,ConductiveRubberPads Lowcostplasticandmetalenclosures lowcostplasticandmetalfastchargingstationframes
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Allthatisrequiredarespecificationsandquantityrequirementstoenablethecomponentsourcingteam
begin theirtaskandprovideour fastchargermanufacturingclientswitha costeffectivesolution. Key
Benefitsasfollowing:
Significantcostsavings Shortenedleadtimes Highlyskilledsourcingengineers Detailedtechnicalunderstandingofyourneeds Quickresponse Negotiationsarecarriedoutonyourbehalf Directlyimprovingyourbottomline
Printedcircuitboardproduction:APrintedCircuitBoard(PCB)isthemostcriticalandusuallyoneofthe
moreexpensivecomponentswithinanelectroniccircuitassembly.CAUonlydealwiththemostreliable
PCBmanufacturersinChinathathaveprovedthemselvesovertime.Weareabletosourcehighquality
andcomplexPCBsfromsingletomultilayer. CAUwilltransferthemajorityofthecostsavingstoour
clients and at the same time ensure the quality of the PCBs. It is only through strong business
relationshipswith ourmanufacturers and a low cost business model that we are able to offer these
services.CAUsPCBsourcingserviceshelpourfastchargermanufacturingclientsachievethefollowing
businessgoals:
Reducecosts Increasereliabilityintheirproducts Shortenproductdevelopmentcycle GaindirectaccesstothemostreliablePCBmanufacturersinChina
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PCBmanufacturersinChina
Circuitboardassembly: CAUsoutsourcingservicesprovideourclientsthemeanstomanufacturetheir
products cost effectively by offering the ability to operate with a very low variable cost structure,
eliminatingalloverheads. Thisserviceincludesfullsupplychainmanagement,assembly,finaltest,and
shipping either to our clients facility or directly to the end user.Through outsourcing of electronics
circuitassembly
we
are
able
to
bring
about
significant
cost
savings
to
our
fast
charger
manufacturing
clients.UsingourelectronicscircuitassemblyserviceallowsourclientstotakeadvantageofCAU'sother
services,including:
PrintedCircuitBoardsSourcing SolderPasteStencilsSourcing CompleteBOManalysis(Electroniccomponentsourcing) Prototypecircuitassembly Productioncircuitassembly
CAUstechnicalcapabilities:
Surfacemount&Throughholeassembly FinepitchBGAassemblywithXrayinspection RFtestingfacilities
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CustomisedTestJigs Incircuittest (ICT), Functional testing, Temperature controlled burnin test and automatic
opticalinspection
(AOI)
services.
ICprogramming,MACaddressprogramming,productserializingandlabellingservices Handlingofalllogisticsrequirements
Solderpastestencil: CAUisabletosupplyhighqualityframedlasercutsolderpastestencilsmadeto
theclient'sspecificationsatverycompetitiveprices. Oursolderpastestencilsaresourceddirectlyfrom
reliableChinesemanufacturerswhohavebeeninthisbusinessforover20+yearsandtheyknowexactly
what is needed to get thejob done right first time. Our OEM manufacturers have a vast amount of
experienceinthisfieldandsupportthesolderpastestencilrequirementsofmajorassemblyhousesin
China.
SolderPasteStencilFactory
Electroformedand lasercutelectropolished stencils produce thebestprinting characteristicsamong
stenciltypes.Stencilaperturedesignisacrucialstepinoptimizingtheprintprocess.Thefollowingarea
few general recommendations that should be considered when designing and ordering solder paste
stencils:
Discrete components A 1020% reduction of stencil aperture has significantly reduced oreliminated the occurrence of midchip solder beads. The home plate design is a common
methodforachievingthisreduction.
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FinepitchcomponentsAsurfaceareareductionisrecommendedforaperturesof20milpitchandfiner.Thisreductionwillhelpminimizesolderballingandbridgingthatcanleadtoelectrical
shorts.Theamountofreductionnecessaryisprocessdependent(515%iscommon).
Aspectratioforadequatereleaseofsolderpastefromstencilapertures,aminimumaspectratioof1.5 isrequired.Theaspectratioisdefinedasthewidthoftheaperturedividedbythe
thicknessofthestencil.
CAUstechnologycapabilities:
FramedSMTStencilsare100%lasercut Materialused:Electropolishedstainlesssteel Standardstencilthickness:0.15mm(0.006") Otherthicknessesavailableonrequestorbetter Minimumcutwidth:0.05mm(0.002inches)orbetter TypicalFramesize:650x750mmorcustomizesizes Wemakeallaperturemodificationsnecessary Aperturetolerance:+/9um(0.0003")orbetter Allowanceforfiduciallydata Allowanceforpanellizeddata Suitable applications: All component pitches down to 0.4mm (0.016) and all discrete
componentsdownto0201s
Producingplasticmoulding: In order to provide our fastchargermanufacturing clients witha highly
competitivequoteis3Dmodelfilesofmanufacturingpartsalongwithkeydesignguidelines. Producing
Plasticmouldedpartscanbeacostlyexercisethroughlocalsuppliers.Usingourplasticmouldingservice
weareabletoprovideyouwithhighqualityplasticmouldedpartsatonlyafractionofthecostthatyour
companywouldnormallyhavetoincur.
CAUwillprocessallofthe informationandsource the mostsuitablemanufacturerformanufacturing
partsinAsiaandhandleallofthecommunicationscreatingavirtuallinkfromyourcompanytoreliable
manufacturersinChina.Andthebenefitsasfollow:
Significantcostsavingsonmouldtooling&unitcosts Highqualitymouldingservices Technicaldesigninputfromexperiencedmanufacturers
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Canproduceaslittleas100pcs/batch(Oncethetoolingiscomplete)
PlasticInjectionMouldingFactory
Metalenclosure: CAUaimtoofferyouthewidestrangeofservicesbasedaroundtheLaserprocessas
the heart of our business to enable our fast charger manufacturing clients to produce a quality
engineered fast chargerproduct, in the shortest time possible. Our flexible approach allows you the
latitude of manufacturing the way that suits manufacturing best, offering manufacturing clients the
choiceofthemostefficientsolutionforclientsownneedsandpreferredwayofworking.
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Lasercuttingmachinecontrolpanel
CAUs solution for product design helps all product manufacturers facilitate design innovation,
accelerate new product launches, and optimize cost in an ever increasing demand on competitive
pricingforfastchargingstationproducts.ExpressLaseroffersabroadsetoftoolsacrossallphasesof
productdevelopmentfromideationtomanufactureofthedesign.ExpressLaserprovidesawiderange
of 3D mechanical modelling services. In mechanical modelling, we provide specialized services in
conceptualproductdesign,developmentandfabricationworks.Ourmodellingservicespecializesinthe
3Dvisualization
from
free
hand
sketches
and
CAD
drawings.
Fastchargingstationmetalenclosurecomponents
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CAUsfabricationandassemblyservicesincludebutarenotlimitedto:
Welding SpotWelding NutInsertionincludingClinchandRivnuts
Cable assembly: The labour intensive nature of cable assemblies means that the cost savings made
through outsourcing such assemblies to China and rest of Asia regionare significant. CAU is able to
source&supplyindustrystandardorcustommadecableassemblyandharnessesatverycompetitive
pricesdirectfromthemanufacturers.Oursourceshavethehighestqualitystandardsandouraimisto
meet our clients' specific requirements through the most suitable, reliable and cost effective
manufacturer. The range of cable assemblies that we can supply includes the following industry
standardtypes:
CoaxialRForMicrowavewithSMA/SMB/MCX/MCCard/IPEXConnectors MonitorSCSI,PS2,RGB,VGA,DVI,A/V,USB,IEEE1394LAN, DigitalOptical IDC/Flatribbon HighvoltageAC/DCPower
Ofcourse,as well as any customisedassemblies thatour clientsmay require.TheCAUs service Key
Benefits:
Significantcostsaving Highqualitycableassemblies ShortLeadtimes CustomizedAssemblies
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InstructiontoCostEstimation
To maximize the benefits of the product line approach to an organization, several issues related to
productcreationmustbeconsideredduringthecostestimateoftheproductionplan:
Whatisthemostefficientorganizationofthecoreassetsforproductbuilding? How can coreasset creation be coordinated to support consistent and effective product
developmentinaproductline?
Whatinformationaboutthecoreassetswouldbemosthelpfultotheproductdevelopers?
What
variation
mechanisms
do
the
core
assets
provide?
Howcantheproductdevelopersefficientlyutilizethevariabilitymechanismsinthecoreassets? Howmuch flexibility should theproductdevelopers have in modifying thecore assets of the
productline?
Wherecanhelpbefoundwhenspecificproblemsariseduringintegrationofassets? Howcanthespecificproductrequirementsbeusedtoestimatecostandschedule?
The fastbatterychargingsystemmanufacturingcostestimate is thekey inneworfollowonbusiness
acquisitionand
the
continued
growth
of
the
company.
It
must
be
built
around
asound,
well
thought
out
manufacturingplan. Itmustaddress the cost of facilities,equipment, tooling, materials,and support
labour,as wellasdirect labour toactually fabricateandassemble the product.Theestimatemustbe
responsive to customer delivery requirements and production rates, and reflect manufacturing a
productofthedesiredqualityandreliability.Thecostestimateisapredictionofwhattheproductwill
cost tomanufactureatsome futurepoint in time. Estimating isnot anexactscience,yetagoodcost
estimatewillcomeveryclosetoactualcostsincurred.Theaccuracyofanycostestimatedependson:
1. Thetimeallocatedforthepreparationoftheestimate
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2. Theknowledgeandskilloftheestimator3. Thedepthandcompletenessofpreproductionplanning4. Theamountofproductdescriptioninformationavailable5. Theaccuracyofthematerialestimate
The higher the percentage of labour cost in the estimate, the greater is theneed forprecise labour
standards. If engineered standards or estimated standardsare notavailable, the estimator must use
historicaldataandhisorherownjudgment,experience,andknowledgetodevelopthelabourestimate.
Producing the fast charging station, the material and subcontract costs can be as much as 70% of
product cost. This means that these costs must be examined very carefully at the time the
manufacturing cost estimate is prepared. For best results, direct quotes should be obtained from
suppliersand
subcontractors.
Time
constraints
in
completing
the
cost
estimate
may
not
allow
sufficient
time to solicit thesequotes, forcing the use ofhistorical cost data for thesameor similar parts and
materials,factoredforinflationandanticipatedcostgrowth.
Once the basicestimates of labourhoursandmaterialdollarshavebeenput together, thejudgment
exercisedindeterminingtheinitialcostsandtherateofimprovementtoachievetheeventualcostwill
haveamajoreffectonthefinalaccuracyoftheestimate.Animportantpartoftheestimatorsjobisto
prevent illadvisedmanagementdecisionsby makingcertain thatthemethodology, assumptions,and
groundrulesareunderstood.Managementmustlookbeyondtheestimateandconsiderabiggerpicture
thanthecostestimatesathand,butshouldunderstandtherisksassociatedwitharbitrarychangestoa
wellprepared
manufacturing
cost
estimate.
When prime cost is added to manufacturing overhead, we obtain factory cost, or cost of goods
manufactured. Total product cost, then, is the sum of selling expense, general and administrative
expense,developmentcost,andfactorycostcontingencies.Theadditionofprofityieldsthepricetothe
customer.Theproblemsencounteredindevelopingasoundmanufacturingcostestimatecanbemany;
however,theycanusuallybecategorizedintothefollowingsevencategories:
1. Inadequatedataonwhichtodevelopthecostestimate2. Inadequatestaffandtimetopreparetheestimate3. Poorestimatorselection4. Carelessestimating5. Optimisticestimating6. Inadequatepreproductionplanning7. Managementinertia
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Theabovesevenproblemcategoriesarenot listed inorderof importance.Anyoneorseveralcanbe
criticalto thedevelopment ofasound manufacturingcostestimate, dependingonthe circumstances
and the situation thatprevails at the time.The cost estimatormay beamanufacturingengineer,an
industrialengineer,oramanufacturingtechnicalspecialistwithheavyexperienceinthemanufacturing
technology inwhichheorshe ispreparingcostestimates.Costestimating ishighlydemandingwork,
often requiring extended overtime and short deadlines. It requires the ability to quickly formulate a
preproductionplan,andtovisualizeworkflows,equipment,andtooling.Alabourestimatethatcomes
close toactually incurred costs must then beacceptedby management.Not only must thisbe done
underconsiderablepressure,butitmusthandlelastminutechangestotherequirementstheestimate
wasbuilton,aswellasmanagementdirectedchanges.
Thecostofpreparingtheestimatemustbebornebythecompanywhetheritresultsinnewbusinessor
not.Mostnewcontractsformanufacturedproductsareawardedbasedonlowestcost,bestdelivery,
andquality
of
the
product,
not
necessarily
in
that
order.
Management
must
decide
the
win
probability
onanyestimatefornewbusiness,andfromthatdecidetheefforttobeexpendedinpreparingthecost
estimate.Itmayevendecidenottosubmitabid.Managementshouldprepareabidstrategyandplan
that includesreviewsatcriticalstagesinthepreparationofthecostestimate.Thereareseveralgood
reasonsforthis:
1. Basic errors or omissions can be found and corrected before the estimate goes beyond thepreliminarystage,whenchangeswouldbecostlyandtimeconsuming.
2. Thepreliminaryestimatemaybesufficienttosatisfytherequirements,andearlymanagementreview
ensures
that
no
further
cost
estimating
effort
will
be
authorized
beyond
the
preliminary
stage.
3. Managementreviewbringsthebestmindsandtalentavailableinthecompanytobearonthemanufacturingcostestimate,servingasacheckontheestimateanditsassumptions.
Constraintsoftimeandcostoftenleavenoopportunitytoexploreandverifymanyofthepremisesand
the assumptions used in preparing the estimate. In spite of this, cost estimates for manufactured
productsare prepared everyday thataccurately reflect manufacturingcosts for theproduct andare
truly competitive in bringing in new business for the company. The steps required to prepare a
manufacturingcostestimatethat isbothaccurateandcompetitiveareexplained.Thecostestimating
datain
practical
form
are
also
provided
to
help
in
preparing
estimates.
Themajorityof manufacturingcostestimating involvesjoborderproduction inthemetalworkingand
alliedindustriesinAustraliaandtherestoftheWesternworld.Castings,forgings,formedandmachined
parts, and assemblies are produced by thousands of small and mediumsized firms to exacting
specificationswithinthelimitsoftheestimatedcost.Solicitationsareusuallyfirmfixedprice,which
meansthatifthecostestimateisinerroronthelowside,thedifferenceisabsorbedbythecompany.A
highestimatemaymeanextraprofitforthecompany,oritmaymeanthatthecontractisawardedto
anotherfirmwhosepricewasmoreinlinewithwhattheitemshouldcost.
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EstimateorProposalPlan,andTimeDuration
Itseemsthatthere israrelysufficienttimetopreparethemanufacturingcostestimate.Thecustomer
wantsaresponsewithindaysorevenhoursafterrequestingpriceanddelivery,andmanagementmust
havetimetoreviewandapprovethecostestimate.Thisoftencreatesasituationrequiringlonghoursof
overtime and much pressure on the estimating team. Temptation is strong to provide expedient
answers and estimates that cannot be supported when analysed in depth by management and
supervision.
Akeydecisionofhowmuchtimeandmoneytoinvestinpreparationofthemanufacturingcostestimate
is required, since this investment may not result inwinning the new business. A cost estimate for a
manufacturedproductcanbeusedforanumberofreasonsotherthantoestablishthebidpriceofa
productforquotation.Theseinclude:
1. Toverifyquotationssubmittedbyvendors2. To determine whether a proposed product or item can be manufactured and marketed
profitably
3. Toprovidethebasisforamakeorbuydecision4. Todeterminethemosteconomicalmethods,processes,tools,ormaterialsforamanufactured
product
5. Asanaidinevaluatingdesignalternatives6. Todeterminewhethertobid
Preparationofthecostestimatewillalsoaidinthedeterminationofresourcestobefinallyexpendedin
its preparation. One criterion used to determine the resources to be expended in cost estimate
preparation is the value of the new business acquisition. Management may review a preliminary
estimate and decide that no further time or effort shouldbe expended. The preliminary estimate is
deemedsufficienttosatisfytherequirements.
ProposalorEstimateMilestonesandSchedulePlan
Keyeventsinpreparationoftheestimateshouldbelisted,andatimespanassignedforaccomplishment.
Keymilestonesformostcostestimatesofamanufacturedproductinclude:
1. Availabilityofengineeringdrawingsandspecifications2. Completionoftheengineeringpartslistandthemanufacturingbillofmaterial3. Preparationofthemakeorbuyplan
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4. Completionofthelistingofneededshopequipmentandfacilities 5. Completionofthepreproductionplanning6. Preparationofthelistingofneededshopequipmentandfacilities7. Preparationofthetoollist8. Identificationoflongleadprocurementitems9. Completionofmaterialandsubcontractpricing10.Completionofmanufacturinglabourestimate,includingsupportlabour11.Completionofthetotalmanufacturingcostestimate12.Scheduledestimatechecks,reviews,andapprovals13.Finalpricingandcosting14.Submissiontotheprospectivecustomer
CAUsFastChargingStationStructure
An essential managementcontrol of the costestimating function is the identificationand analysis of
previousestimatecostdeviationsversusactualcosts.Recordsofthesedeviationsshouldbemaintained
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and plotted to determine trends and to pinpoint areas of weakness in the cost estimating function.
Theremaybemanyreasonsforcostestimatesthataretoohigh,toolow,orsimplyunrealistic.Oneof
the first areas to examine is arbitrary cuts or reductions made by management, or unrealistic
contingency factors applied toanotherwise soundcost estimatewhich results in others winning the
award.Otherreasonsthatestimatesaretoohighinclude:
1. Beingdeliberatelyhightodiscouragebusinessthecompanydoesnotwant2. The tendency tobeoverlycautious withnewproducts,processes, technologies,etc. that the
estimatorisnotfamiliarwithordoesnotunderstand
3. Preproductionplanningthatcallsformoreprocessingstepsormoresophisticatedtoolingthanisactuallyrequired
4. Poormaterialpricingpractices,suchasfailingtoconsiderpricebreaksonquantitypurchasesofmaterial
5. Overestimating labour costs by assuming higherthannormal startup costs, a shallowerlearning curve slope than would actually be incurred, or by using loose labour standards in
buildingtheestimate
High estimates sometimes result in greater profits than anticipated,but may also lose business that
could have beenprofitable.Other problems caused byhigh estimates are loss of customer goodwill,
greaterinvestmentofresourcesincostestimatingbecausemoreestimatesmustbeprocessedtobooka
smaller
volume
of
work,
and
eventually
being
priced
out
of
the
market.
Some
of
the
more
significant
reasonsforlowcostestimatesinclude:
1. Incomplete or incorrect product design information, or a new design that grows after theestimate, in partscount, in complexity,and indesignchanges thatoccurafter theproduction
cyclehasstarted
2. Higher labour costs than anticipated, possibly due to delays that resulted in productionstoppages,higherthananticipatedreworkduetodesignortoolingproblems,orpoorplanning
inthepreproductionphase
3.
Higher
material
costs
than
anticipated,
due
to
such
factors
as
unplanned
material
price
increases,designchangesthatcausematerialrequirementstochange,andhigherthanplanned
scrapandlinelosses
Whenthecostestimateforamanufacturedproductistransmittedtothepotentialcustomer,itshould
alwaysbebywrittenquoteorotherformalmeansoftransmittal.Thepriceanddeliverymaybegiven
verbally,butshouldalwaysbefollowedwiththeconfirmingwrittenquote.Theformalquotationshould
list and explain all assumptions and contingencies, and for how long a time the price given in the
quotationisvalid.
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FinalPriceNegotiation
Inmost instances,thepriceanddeliveryquotedare eitheracceptedby the customer,or thework is
donebysomeoneelse.Thereisnofinalpricenegotiation.Ontheotherhand,thelargerthejobintotal
dollarprice,andthelongertheproductionrun,themorelikelytherewillbeanegotiationprice.Insuch
negotiations,profitmarginsandcontingenciesmaybereducedinordertoobtainthejob.Theestimated
costtoactuallydotheworkshouldneverbepartofthenegotiatingprocess.
Thenegotiatingprocessisbeyondthescopeofthischapter,butitrequiresthebesttalentthecompany
hasinmanagementandincostestimating.Theymusthavesufficientlydetailedknowledgeofthecost
estimateandhowitwasprepared,beabletoansweranyquestions,andfaceuptoanychallengethatis
presented.Asuccessfulnegotiationshouldresultinacontractawardveryclosetothepriceanddelivery
presented before the negotiations began. Additional negotiations may occur after contract award
shouldthere
be
achange
in
work
scope,
such
as
accelerated
delivery,
or
an
increase
in
number
of
units
tobeproduced.
ProductRequirementsCheckingList
Themanufacturingcostestimatemustbeginwithamanufacturingplan.Thethoroughnessandaccuracy
ofthisplandeterminestoalargemeasurehowgoodtheestimatewillbe.Thecostestimatormustbe
abletoconceptaworkablemanufacturingplanforanyproductthefirmmanufactures.Suchaplanmust
begin with an understanding of the product requirements. As the cost estimator goes through the
drawing package to do the preproduction planning, or what we know as the manufacturing plan,
producibility
problems
may
be
apparent.
In
such
cases,
the
problem
should
be
noted,
and
if
time
permits, a cost trade study should be initiated. This is to determine if the desired change would
generatesufficientsavingstooffsetthecostofmakingthechange.Producibilitychangesthattakeplace
after thedrawingsare releasedmaynot beasattractiveas theyappear initially, after the impact on
schedule,tooling,retrofit,andthecosttochangetheengineeringareallconsidered.
A checklist for reviewing producibility of an electronics product or assembly represents the kind of
questionsthecostestimatorshouldbeaskingasheorshegoesthroughthedrawingpackage:
1. Doesthedimensioningfacilitatemanufacturing,andarethetolerancesrealistic?2. Isallmarkingandstencillingdefinedandvisible?3. Areassemblynotescompleteanddefinitive?4. Isinternalwiringcritical?Ifso,isthelocationofthewiringspecified?5. Aretestpointsandadjustmentsaccessible?6. Is harness development required? If so, can the harness be fabricated outside the unit, and
installedlaterasasubassembly? Doesthewirerunlistcontainwirelengthinformation?
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7. Doesthedesignlenditselftomechanizedorautomatedassemblytechniques?8. Doesthedesignavoidtheneedforselectattestcomponentmatching?9. Are component parts accessible for assembly? Can all assembly and wiring be done without
restriction?
10.Canrequiredtestingbeperformedwithoutdisassemblingtheunit?11. Ifwirewrapisused,doesthedesignfacilitateautomaticassembly?12.Arestandardconnectorsandassemblyhardwareused?13. Ifelectronicscircuitassembliesareinstalledaspartoftheassembly,aretheydesignedtoplugin,
ormusttheybewiredin?
14.Aretheremechanicalloadssuchthatprintedcircuitepoxyglassboardsareincompression?15.Hasconsiderationbeengiventousingprintedcircuitflexcable,ormouldedribbonwirecabling
insteadofhardwiringoftheassembly?
Asaminimum, thecostestimatorshouldreview the drawingsofafabricatedproducttoensure that
they:
1. Are dimensionedand have datumsurfaces thatare compatible withacceptedmachining andfabricationpractices
2. Have sufficient stock allowances on castings, forgings, and stampings to provide for anymismatchordistortionthatmayresultfromheattreating
3. Havemaximumallowabletolerancesonnonfunctionalfeaturesandcharacteristics4. Haverealistictolerancesonfunctionalcharacteristics5. Haveadequateprovisionforclampingandlocating6. Providesufficientclearanceandaccessfortheassemblyofallcomponentparts7. Call out standard parts and materials, which canbe processedand assembled usinggeneral
purposemachines,equipment,andtools
Theestimatormustnextprepareamanufacturingbillofmaterialfromthepartslist,andthemakeor
buyplanthathasbeenestablished.Nexttheestimatorproceedstoconceptthestepsandsequencesof
manufactureforeachpart,subassembly,andassemblytobemadeinhouse.Then,foreachstepinthe
process,heorshedeterminesthemachines,equipment,andtoolsthatwillbeneeded.Finally,heorshe
determinessetupandruntimesforeachsteporsequenceinthemanufacturingprocess.
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Purchased parts and materials, as well as subcontracted items, can account for as much as 70% of
manufacturedproductcost.Itisthereforeimportantthattheinitialmakeorbuyanalysisbemadebya
qualified costestimatingprofessionalbasedonknowledgeoftheplantcapabilitytomanufactureornot
tomanufacturetheitemsonthebillofmaterial.Forexample,ifthecompanyisprimarilyanassembly
house,thenallfabricatedandmachinedmetalpartswouldbeclassifiedasmustbuyitems,inaddition
to hardwareandbulk material items suchaspaintsandsolvents.Only those itemsthatcanbe either
made or bought will require a detailed analysis from cost and shop load standpoints. In larger
companies, a formal makeorbuy committee with key people from all of the functions is chartered,
chairedbythesenioroperationsormanufacturingexecutive.Thiscommitteethenmakesfinalmakeor
buydeterminationsbasedonrecommendationsfromalldisciplinesconcerned.
MustBuy Items: Obvious buy items based on shop capability to perform the process ofmanufactureare the easiestdecisions tomake. However, management may decide tocreate
theprocess
or
capability
in
house
to
have
adegree
of
control
not
possible
when
the
work
is
placedoutside. Iftherequirementexistsforonlyashorttime,thismayunnecessarilycommit
companyresourcestoaprocesscapabilitythatwouldstandidlemuchofthetime.
MustMakeItems:Thereareusuallyanumberoffabrication,assembly,andtestingoperationsonanymanufacturedproductthatarecriticaltoitsmanufactureandperformanceinthefield.
Thesearetheoperationsandprocessesthatmustbedoneinhousetoensureproductintegrity
and control. Such operations usually include product final assembly and test, and fabrication
andassemblyofclosetoleranceormatingparts,amongothers.
ItemsThatCanBeEitherMakeorBuy:These items aretheonesrequiring investigationandanalysispriortothedecisiontomakeorbuy.Usuallydecisionsonthesepartsandassemblies
arebasedoncost,promiseddeliveries,andshopcapacityorload.Costtradestudiesaremade,
quotesareobtainedfromvariouspotentialoutsidesources,andthefinalmakeorbuydecision
ismadeeitherbyseniormanagementorthemakeorbuycommittee.
OutliningtheManufacturingSequencesandProcesses
The operationprocesschart is the bestway to clearly visualize allof the steps in themanufacturing
process. This chartdepictsgraphicallythepoints intheprocesswhere materialsarebrought into the
process, andthesequencesofallmanufacturing, inspection, andtestoperations.This chartmayalso
containsuchdetailandinformationasthestandardtimeforeachoperation,productionequipmentand
toolingrequiredforeachoperation,andapplicableprocessspecifications.
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FastChargingStationAssemblyLine
Withthecompletedoperationprocesschart,theentireprocessofmanufacturecanbevisualized.The
processcanthenbereviewedandanalysedforoptimumsequencing,alternativemethodsoffabrication,
assembly inspection and test, and most efficient methods of production. Equipment and tooling
requirementsat
each
step
in
the
flow
can
be
readily
envisioned
and
recorded.
TheManufacturingOperationProcessChart
Allstepsshouldbelistedinpropersequenceforeachpartorcomponent,workingverticallyfromtopto
bottom.Themajorassemblyorcomponentisalwaysshownatthefarright,andallothercomponents
areallottedspacetotheleftofthismaincomponentorassembly.Thepresentationissimilartothatofa
mechanized assembly line, with parts and material, and subassemblies fed into the top assembly in
proper sequence and at the correct point in the process. The operation and inspection descriptions
shouldbebrief,utilizingshopterminologysuchasdrill,tap,ream,weld,assembly,solder,andtest.
Timevalues,whenassignedtoeachoperation,shouldbebrokendownintosetupandruntimes.Other
usefuloramplifyinginformation,suchasproductionmachinesandequipmentused,toolsrequired,and
specialprocessprovisions for each operation, completes the operationprocess chart. Thecompleted
operationprocesscharthighlightsmaterial,operations, inspections, tests, and time.The visualization
process needed to construct the operation process chart is fairly straightforward. The primary
requirement, besides knowledge of the principles of chart construction, is a working proficiency or
knowledge of the various processes involved and the ability to read and correctly interpret the
requirements of the engineering drawings. The process of visualizing the steps of the product
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manufacture,andconstructionoftheoperationprocesschart,definesthemanufacturingplanforcost
estimating.
Equipmentand
Tooling
Requirements
Capital and other production equipment costs to support the production of a new manufactured
productoftencanbequitehigh.Thisisespeciallytruewhennocomparableequipmentexistswithinthe
company. Many times the cost of new equipment to manufacture a new product, or to continue
manufacturinganexistingproductlineandremaincompetitive,issuchthatitcannotbewrittenoffover
thelifeofasingleorevenseveralproductlines.Insuchcases,managementmaychoosetoinvestinthe
newequipmentwiththeknowledgethatsomeriskmaybeinvolved,oritmaydecidetosubcontractthe
worktooutsidesources.
Toolingspreparation
Tooling requirements are identified concurrently with the machine and other production equipment
requirements.Workingfromtheestablishedtoolingphilosophy,thecostestimatorcandeterminethe
toolingapproachtotake.Heorshemustknowwhethertoplanthejobaroundminimalshopaidtype
tooling,orafullhardtoolingtypeapproach,orevenanotoolingapproach,byfabricatingonsetup.Itis
essential
that
this
tooling
philosophy
or
approach
be
fully
defined
at
the
outset.
Once
the
tooling
philosophyhasbeendetermined, toolsrequiredateachstep in theprocessaredefinedand listed.A
drillingoperation,forexample,mayrequireadrilljigandaholdingjigorfixture,whereasanassembly
operationmayrequireweldfixtures,holding fixtures,and/orbrazing fixtures.A carefulpartprintand
assemblyprintanalysisisrequired,withspecialattentiongiventothemanufacturingsteporoperation,
part or assembly shape and geometry, and peak planned production rate. In planning tooling
requirements,thecostestimatorshouldkeepinmindthattoolsfallintooneofseveralcategories:
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Specialpurpose tooling: Tooling peculiar to the product it makes. This usually requires tooldesign,followedbyspecialfabrication.Itisgoodforthelifeofthelifeoftheproductionrunonly.
Itcanbeconsideredaonetime,nonrecurringchargetotheproduct,orcanbeproratedover
theproductsdelivered.
Generalpurposetools:Toolsthatcanbeusedintheproductionofmanydifferentproducts.Nospecial design is required. This kind of tooling is commercially available and is much less
expensive than specialpurpose tooling. Some examples would include small hand tools, tool
balancers, and standard assembly and motion economy devices. They may sometimes be
charged to the product being estimated, but more often are considered part of the
manufacturingoverheadandneednotbeaddedtotheproductcost.
Expendable tools: These tooling items are actually consumed over the life of the job orproduction
run.
They
are
usually
considered
part
of
manufacturing
overhead,
and
are
not
chargedtotheparticularjob.
DeterminationofFacilityRequirements
Theoperationprocesschart,whichdescribesthemanufacturingprocessusedtobuildtheproduct,also
definesthelayoutofthefactorytosupportproductmanufacturing.Theamountoffloorspacerequired
is a function of the size of machines and of the equipment in the manufacturing process, the area
requiredtoworkandservicethemachinesandequipment,andthenumberofunitsofproductinflow
andinprocessattheplannedpeakproductionrate.
Once floor space requirements have been determined, the next step is to identify special facility
requirements. These may include clean rooms; requirements for hoods, vents, and other similar
openings in therooforalongoutsidewalls;specialpowerrequirements;and requirements forsound
andnoiseprotection.
The operationprocesschartdetermines product flow and howdedicated areas would be laid out. If
timepermits,anoverallblock layoutplanandmostofthedetailedarea layoutsshouldbedeveloped.
Theprimarypurposeofthisistoidentifytomanagementtheimpactonproductionfacilitiesshouldthe
newjobbewon.Nomanufacturingplanshouldbeconsideredcompleteuntilthishasbeendone.
Insummary,
the
manufacturing
plan
is
the
baseline
for
the
manufacturing
cost
estimate.
Identification
of theprocess, thesequencesofmanufacture, themachines,thetools,and the facilitiesneeded lead
logically to the next steps in the cost estimate: the estimate of the setup and run times for each
manufacturingoperation,costofmaterial,etc.
PricingtheBillofMaterial
Inthemajorityofcostestimatesformanufacturedproducts,thecostofpurchasedparts,rawmaterials,
commodity items,and items thatare subcontractedconstitute thebiggestpart of thecost estimate,
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oftenconstituting 75%of the total costof theproduct.The importanceofaccuratelypricing thebuy
items onthebillof materialcannotbe emphasized stronglyenough.Thematerialestimatororbuyer
mustthoroughlyunderstandthepotentialpitfallsthatcommonlyoccurinestimatingmaterialcosts:
1. Inadequateproductspecificationsmayresultinpricesformaterialatanincorrectqualitylevel.2. Incorrectdeliveryrequirementsmayforcetheuseofmoreexpensivesubstitutes,orproduction
changesthatrequiremoresetups,orthatcauseproductiondelays.
3. Incompleteproductspecificationsmayresultinmaterialestimatesthatdonotcovertheactualmaterial costs involved in the final engineering design or product quality or reliability
requirements.
4. Material price levels may change upward and exceed the estimated material costs. This is aparticularly
acute
problem
when
estimating
material
costs
for
products
with
long
manufacturing
leadtimesorfordeliveryatafuturetime.
5. Material price breaks may be anticipated and planned but not realized, because of deliveryschedulechangesorrevisionstoinventorypolicy.
FastChargingStation(10KW35KW)MetalEnclosures
The purchasing function is the primary support to the manufacturing cost estimator in determining
material costs. For best results, direct quotes from vendors and subcontractors should be obtained.
Wheretime
to
prepare
the
estimate
is
limited,
purchasing
must
use
cost
history
for
commonly
used
purchased parts and material. If historical cost data is used, it must be factored for inflation and
anticipatedcostgrowth.
EstimatingStandardPurchasedParts
Includedinthecategoryofstandardpurchasedpartsareitemssuchascommonhardwareandfasteners,
electronic components, certain types of bearings, gears, pulleys, belts, chain drives, electric motors,
electricalconnectors,wire,cable,clutches,batteries,powersupplies,switches,relays,andsimilaritems.
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Theseitemscanbepurchasedbyorderingfromcatalogueorcommercialspecificationspublishedbythe
manufacturer,andareusuallyavailablefromstockinventory.Theyaresometimespricedfromstandard
price lists provided by the manufacturer, with discounts or price breaks for quantity buys. In many
instances such standard parts are available from local sources of supply such as distributors or
manufacturersagentsorrepresentatives.
DeterminingRawMaterialandBulkItemQuantities
Theestimatoranalyseseachitemtodeterminetheamountofrawmaterialthatmustbepurchasedto
manufacturetherequirednumberofunits.Theamountofrawmaterialforagivenpiecepartusually
comesfromdeterminingtheweightofrawstockusedperpiece.Apartthatismachinedwouldinclude
the finished dimensions of the part plus the amount of stock removed by machining. The overall
dimensionsofsuch a piece ofstockwould be determined and the volume calculated. The volume is
multipliedby
the
density
of
the
material
(weight
per
unit
volume)
to
obtain
the
weight.
A
piece
that
is
irregularinshapeisdividedintosimplecomponents,andthevolumesofthecomponentsarecalculated
andaddedtogethertogivetotalvolume.
Thetotalvolumeismultipliedbythedensityofthematerialtoobtaintheweight.Thematerialcostis
thenobtainedbymultiplyingtheweightbythepriceperpoundofthematerial.Inthecaseofasheet
metalstampingfabricatedfromaluminiumsheetstock,theprocedurewouldbeasfollows:
1. Weightofsheet=gaugexwidthxlengthxdensity2. Numberofpiecespersheet=lengthofsheetlengthofmultiple3. Weightperpiece=weightofsheetpiecespersheet4. Piecepartmaterialcost=piecepartweightxaluminiumprice/kg.
Whenestimatingbarstock,thelengthofthepiece,plusfacingandcutoffstock,shouldbemultiplied by
theweightorpriceperinchofthestockdiameter.Scrap,buttends,chips,etc.thatislostinprocessing
mustbeconsidered intheestimate.These lossesvaryfrom3%to10%dependingonthejob,current
shop practices, and the material itself. Bulk items such as spooled core solder can also be easily
estimated by determining the weight of solder used for each solderjoint, then multiplying by the
numberofsolderjointstoarriveatthetotalweightofsolderusedperassembly.Whenthisnumberis
multipliedby
the
total
number
of
assemblies,
the
total
weight
of
solder
needed
is
determined.
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20KW45KWFastChargingStationEnclosure
EstimatingMaterialforTooling
Thecostofmaterialfortoolingisasignificantpartofthetotalnonrecurringcostforanynewprogram.
Toolingmaterialrequirementsaretakenfromthebillofmaterialorpartslistingonthetooldrawing,or
areestimatedfromthetoolingconceptsenvisionedbythemanufacturingcostestimator.Includedare
suchitemsastoolsteel,drillbushings,quickreleaseclamps,holddownbuttons,andsimilar itemsfor
thefabricationofspecialdesigntooling.Toolingmaterialalsoincludesstandardperishabletooling,such
asdrillbits,cutters,endmills,punches,reamers,broaches,andothersimilaritemsthatareconsumed
overthe
life
of
the
program.
Ifpossible,thesematerialsshouldbe calculatedexactlyfromtooldrawingsandperishabletoolusage
experience. If such documentation or tool history is not available, then tooling material costs on
previouslybuiltsimilartoolsshouldbeused,andperishabletoolusageestimatedfromexperienceon
earlierjobsorprogramsthathadsimilarrequirements.Itshouldbementionedthatthecostofspecial
designtoolingcanbeheld toaminimumbyusing inexpensivetooling materialssuchaswood,sheet
metal,andaluminiuminsteadofexpensivetoolsteelstofabricatemanytoolssuchasholdingfixtures,
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assemblyjigs,andmotioneconomydevices.Also,many timesa standard, offtheshelftoolorfixture
withminormodificationwilldothesamejobasaspecialdesigntool,atafractionofthecost.
3KW5KWOnboardCharger
Tooling material may often be purchased directly by the tool design or manufacturing engineering
organizationwithoutgoingthroughthepurchasing,receiving,andreceivinginspection groups,andasa
resultwouldnotcarrythenormalmaterialoverheadorburden.
LongLead
and
High
Dollar
Items
Oneofthemostimportanttasksinthepreparationofanycostestimateforamanufacturedproductis
the identification of the longlead and highdollar material items. This information is basic to the
developmentoftheproductionstartupscheduleandwillbeakeyfactor indeterminingwhetherthe
requesteddeliveryschedulecanbemet.Thematerialitemsthatarethehighdollaritemsinthecostof
product materialare theonesthatneed tobeworkedby thebuyerandmaterialestimator toobtain
firm quotes,and if possible,competitive quotes. How well this is done will have a major bearing on
whetheracompetitiveandwinningcostproposalisfinallysubmitted.
Iftimepermits,qualifiedbackupsourcesofsupplyshouldbelocatedforeachandeverylongleaditem
onthebillofmaterial.Thisensuresthatthefailureofanylongleadsuppliertomeetdeliveryofanitem
ofacceptablequalitywillnotshutdowntheproductionline.Thereisacertainamountofriskinanycost
proposal or estimate. Risk that the work will cost more than the estimated cost, risk that promised
deliveries will not be met, and risk ofnotgetting theworkatallbecause it wasawarded toa lower
bidder,oronewhopromisedabetterdeliveryschedule,arethemajorrisks inanycostestimatefora
manufacturedproduct.Anythingthatcanbedonetodevelopawinning, lowriskcostestimateshould
beaprimeconsideration.Any itemwith adelivery promiseof4monthsor longercanbeconsidered
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longlead.Itismoredifficulttodefinehighdollaritems,excepttosaythatanysingleitemonthebillof
materialthatcostssignificantlymorethantheothersishighdollar.
15KW25KWWallMountFastChargerFrame
Subcontract(OEM)EstimatingandPricing
Therecanbemanyreasonsforsubcontractingpartofthemanufactureofaproduct,rangingfromthe
useofthespecialexpertiseofthesubcontractortosignificantcostsavings,usuallyinlabour,byusinga
subcontractor.Whateverthereason,everyconsiderationmustbetakentoensurethatthecontractor
willperformaspromisedatareasonablecost.
With a subcontract, theoutside source isdoingmore thanprovidingmaterial.He or she is providing
material
and
a
portion
of
the
work
to
be
performed
on
the
manufactured
product.
He
or
she
may
provide a major subassembly, an operating part of the total system, or a specialized manufacturing
processnotavailable inhouse.Thesubcontractormustprovideadetailedcostestimateforhisorher
productandservices,whichbecomepartofthetotalmaterialestimateforthemanufacturedproduct.
Thiscostestimatewilldetailthesubcontractorsstartupcosts,includingsuchthingsasspecialtooling
andtestequipment,leadtimesrequired,manufacturinglabour,material,burden,andprofit.Hisorher
deliveryscheduleshouldtieindirectlywithyourproductionschedule,withdeliveriesfeedingintoyour
productionatthepointneededintheprocess.
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OutdoorFastChargingStationOnsiteInstallation
Managementandcontrolofsubcontractorsismaintainedbyformalreportingrequirements,visitstothe
subcontractors facility, telephonereports, andstatusreview meetings.Suchtechniquesprovidereal
timecommunicationsanddata flowto provideeffectivemeans ofassessing subcontractstatus,early
detection of problems, and initiation of any needed corrective action. The cost of providing this
informationshouldbeincludedinthesubcontractorscostestimate.
DirectLabourEstimatingTechniques
Cost
estimating
for
manufacturing
can
be
done
using
any
one
or
a
combination
of
three
generalmethods. The first method uses cost history and statistical methods. This technique, when properly
applied,andwheretherequireddataexists,canbeareliablemethodofpreparingthelabourestimate.
The problem with this method is that such data includes delays, shop inefficiencies, and time lost
through a variety of reasons. Its use is recommended where standards do not exist, for budgetary
quotes,andasacheckagainstestimatesdevelopedusingothermethods.
Thesecondmethod,usingsimilaritywithotherproducts,assemblies,andparts,and/orusingestimator
experience,canbequitesatisfactorywhennopreviousproductionexperienceexists,whentheproduct
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hasneverbeeninproductionbefore,orwhenthedesignisnewandmaystillbeintheconceptstage.
Theaccuracyofsuchestimatesvariesdirectlywiththeknowledgeandexperienceoftheestimatorand
thetimeallocatedforpreparationoftheestimate.Thecompletenessoftheproductdefinitionalsoplays
alargepartindeterminingtheaccuracyoftheestimate.
Thethirdmethodisbyusingstandardtimedata.Inthismethod,allofthepossibleelementsofworkare
measured,assignedastandard time,andclassified inacatalogue.Whenaspecificoperation is tobe
estimated,thenecessarystandardtimevaluesareaddedtogethertodeterminethetotaltime.There
can be little doubt that the use of standard time data is the most accurate and reliable method of
estimating manufacturing labour. The use of standard time data promotes consistency among cost
estimators,andrequireslittleinthewayofestimatorexperiencewiththeworkbeingestimated.
Standard timedata is a compilationofall theelements thatareused forperforminga givenclass of
workwith
normal
elemental
time
values
for
each
element.
Without
making
actual
time
studies,
the
data
areusedasabasis fordetermining timestandardsonworksimilarto thatfrom whichthedatawere
determined. Its use in manufacturing costestimating offers certainadvantagesover other estimating
methods.Theseadvantagesinclude:
1. It is farmoreaccuratethananyotherestimatingmethod. It is basedonworkcontent,ratherthanhowmuchworkistobedoneandhowlongitwilltaketodo.
2. Itiseasiertojustify,becauseaseriesofindividualelementsandoperationsaddinguptoagivennumberofhoursiseasiertojustifythanoneoveralljudgmentofagivennumberofhours.
3. Standard data promotes consistency between estimates and cost estimators. Standard data,however,willshowwherethereisalegitimatedifferencebetweensimilarequipment.
4. Estimatorexperiencewiththeoperation isnotarequirementwhenusingstandarddata.Suchexperienceandknowledge,however,isextremelyhelpful.
5. Standarddatacoupledwith learningcurvescanbeusedtoestimatemanufacturing labourforanyproductionquantity.Thecostestimatorcanuseexperiencetobuildanestimateinthe5to
50unitsrange,butfindsitdifficulttoestimatethesameproductat1000units.Standarddata
pluslearningcurveswillcovertheentirequantityspectrum.
The
majority
of
cost
estimates
for
manufactured
products
in
the
developed
countries
today
are
preparedbyexperiencedcostestimatorsusingtheirprofessionaljudgment.Theirexperience,basedon
detailedknowledgeoftheirproduct,shopprocesses,andmethods,isperhapsthemostimportantsingle
requirementforacorrectestimate.Newproductsareestimatedmuchthesameway,byacomparison
ofsimilarproductswiththenewproductbeingestimated.Inmanysmallshopstheestimatingmaybe
donebytheshopforemanoreventheownerofthebusiness.Thereisnoattempttousedatafromtime
standards,oranyoftheother,moresophisticatedmethods,toprepareestimatesfornewbusiness.
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Suchtechniques,ifsuccessful,maybeallthatarerequired.Theshopmaybesmall,theproductmaybe
producedinjoborderquantities,ortheprocessmaybehighlyspecializedandverypredictable.Insuch
casesthereisnoneedforabetterestimatingapproach.Asthefirmgrowslargerandthecostestimating
isdonebymorethanoneperson,consistencyamongestimatorsmaybecomeaproblem.Astheproduct
line becomes more diversified or the volume of production work grows, estimatingjudgment and
experienceexercisedbyoneortwoknowledgeableindividualsmaynotdothejob.
The ideal cost estimating situation is the experienced cost estimator using standard time data to
developandvalidatethecostestimate,andprofessionaljudgmentandshopknowledgetodetermine
whetherthecostestimateisreasonableandattainable.Thefinalquestionsarewhethereverything is
included,andwhethertheestimatecanbesoldtomanagementandsupportedinnegotiationswiththe
customer.
Castingand
Foundry
Operations
The cost of manufacturing sand castings consists of material, foundry tooling, moulding costs, core
makingcosts,grindingcosts,cleaningandfinishcleaningcosts,heattreatingoragingcosts,inspection,
and foundry overhead or burden costs. The most important factors in the cost of producinga sand
castinginclude:
1. Thecostofcastingmetalandweightofmetalpouredpermould2. Themeltingcost3. Themethodofmoulding(afunctionofthenumberofcastingsproduced)4. Thetypeofpatternused(alsodependentonnumberofcastingsproduced)5. Theweightofthecasting6. Thenumberofcastingspermould7. Thenumberofcorespercastingandpercorebox8. Thecorematerialandweight9. Thecoremakingmethod10.Thenumberofrisersused11.Thetypeandamountoffinishingrequired
MechanicalAssembly
Modern weldingprocessesprovidea means ofjoining andassemblingmanydifferent typesof metal
parts.Mostmetalscanbeweldediftherightequipmentandprocessesareselected.Availablewelding
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processesrangefromgasorelectricarcfusionweldingtospotandseamresistanceweldingtoelectron
beam welding. Methods of applying the processes also vary widely. Work piece thickness and
compositionusuallydeterminethetypeofweldingprocessthatcanbeused.
ElectronicsAssembly
Theelectronicsassemblyworkisverylabourintensive,andstandardtimesforcostestimatingandother
usesshouldbe based on soundengineeringworkmeasurement if atall possible. The standard times
thatfollowmeetthiscriterion,although,asbefore,standardsshouldreflectoperationsinyourplantor
facility.Industrystandardtimessuchasthesecanoftenbetightened upthroughmoreefficientmethods,
tooling,and/orautomation.
FinishingandPlating
There are numerous finishing operations, ranging from mechanical buffing and polishing to
sophisticated metal chemical processes for passivation and surface protection. Buffing is a form of
surface finishing inwhichvery littlematerial isremoved.Thesole purpose istoproducea surface of
high lustreand anattractive finish. Abrasives such as aluminiumoxide, emery, ferrous oxide, rouge,
pumice, and lime are applied to the rotating face of a buffing wheel. A composition containing the
abrasive is pressed with the workagainst the faceof the buffing wheel. The abrasive is replenished
periodically.
InspectionandTesting
Inspection labour is normally estimated as a percentage of total manufacturing labour. These
percentagescanrangefrom5%toahighof14%,dependingontherequirements;thecriticalityofthe
part,product,orassembly;andmuchmore.Ofteninspection isperformedbytheproductionworkforce,
and time is allowed for this in the standard and the cost estimate. A safe rule of thumb, where no
previous actual data may exist, is to use 7% of fabrication labour and 5% of assembly labour for
inspection.
Test time is a function of the testing performed, the degree of test automation, whether
troubleshootingisrequired,whethertestdataisrequiredandmustberecorded,whetherthetestingis
destructiveornondestructive,whetheritismechanicalorelectrical,andahostofotherconsiderations.
Testlabourcanbemeasuredbystandardizingtheoperation,applyingelementaltimestandards,adding
timestudyallowances,andaddingatimefactorfortroubleshootingandsubsequentretesting.Someof
the electronicstesting industryaverage timedata isprovidedas follows forcost estimating (Thetime
durationwillfillinbythelocalestimator):
Testsetupandmakeready/teardowntimes:
Pickupandlayasideunit:xmin.
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Removeandreassemblecovers:xmin. Hookupandunhookalligatorclip:xmin. Hookupanddisconnectplugorjack:xmin. Assembletestadapter/fixture:xmin.
Testequipmentadjustments:
Toggleorrotaryswitch:xmin. AdjustVariance:xmin. Knobfrequencyadjustment:xmin. Scopeadjustmentforphasing,etc.:xmin. Observescopeandanalysepattern:xmin.
Unitundertestadjustments:
Circuitcheckwithprobe/voltmeter:xmin./point Circuitcheckwithcurrent:xmin./point
Adjust
trim
pots:
x
min.
Troubleshooting and retest will vary greatly depending on the maturity of the product design, the
qualityoftheassembledunitand itscomponentparts,andmore.Thiscanrangefrom15%to50%of
normaltesttime.Thepercentageusedmustbelefttotheprofessionaljudgmentandknowledgeofthe
costestimator.
ManufacturingSupportLabourRequirements
Manufacturingsupportlabourisamajorcostdriverinanycostestimateforamanufacturedproduct.It
includes the cost of the key functions needed to plan and tool for production of the item to be
manufactured.
Support
labour
includes
manufacturing
engineering,
tool
design
and
build,
industrial
engineering,supervision,andproductionplanningandcontrol.Insomecases,thecostofsupportlabour
may be equal to or greater than the costof the factory direct labour. In other cases,manufacturing
supportlabourmaybetreatedasanindirectcostandincludedinfactoryoverhead.Thisisthecasein
manyfirmsthatdo100%oftheirbusinessinthecommercialornondefenseareas.
Theamountofsupportlabourrequiredonanyjobisafunctionofthematurityoftheproductdesign,
the technology or technologies involved, and the size of the company or program involved. In the
aerospaceanddefenceindustries,supportlabourrequirementsaredrivenbygovernmentrequirements
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fordocumentation, reports, and a host of other requirements that would not otherwise beneeded.
Manufacturing support labour may be estimated by first determining the tasks that must be
accomplished,thetimeavailabletoaccomplishthetasks,andthelevelofsupportrequired.
Supportlabourcostsareseparatedintorecurringandnonrecurring,dependingonwhetherthesupport
providedisaonetimecostneededtoplanandstartupproductionoracontinuingservicetoproduction
over the life of thejob. The design and fabrication of tools are nonrecurring support costs, but the
maintenanceandrepairofthesametoolsarerecurringcosts.
Manufacturingengineeringincludesthefollowingactivitiesandservices:
1. Selectionanddesignofmanufacturingprocesses2. Determinationofsequencesandmethodsforproductfabrication,assembly,andtesting3. Selectionanddesignofproductionequipment4. Selectionanddesignoftoolsandtestequipment5. Layoutoffactorybuildings,machines,equipment,materials,andstoragefacilities6. Determinationofstandardtimesformanufacturingoperations7. Selectionanddesignofmanufacturingsystemsandcomputeraidedmanufacturingtechniques8. Manufacturingcostestimating,costanalysis,andcosttradestudies9. Manufacturingresearchanddevelopment10.Review of product designs and specifications to ensure manufacturing producibility (or
participationinconcurrentengineeringdesignteam)
11.Management,coordination,andcontrolofmanufacturingoperationsTheprimaryrecurringandnonrecurringtaskstobeperformedbymanufacturingengineeringmustbe
identified,thestaffinglevelsmustbeestimatedforeachtask,andthentheseestimatesmustbeman
loadedandtimephasedtodeterminetheestimatedmanufacturingengineeringlabourhours.
Manufacturingengineeringsupportduringdevelopmentisforthereviewofproductdesignasitevolves
throughthevariousphasesfromconcepttodesign layout,andtoensureproducibility in itsfinalform
when released to manufacturing. Manufacturing engineers also plan the building of any engineering
modelsorpreproductionunitsthataretobefabricatedbythemanufacturingshops.Atthesametime,
the manufacturing engineers work on and develop the preproduction planning that is implemented
aftertheproductisreleasedtoproduction.
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Thismanufacturingengineeringeffortduringtheproductdesignanddevelopmentphasehasbeenoften
overlooked in the past. It should be estimated and funded as part of the engineering development
programforanynewproduct.Asindicatedearlier,thebestwaytoestimatethiseffortistodetermine
the task requirement and the staffing that is required to perform the task. The total manufacturing
engineeringhoursarethestaffingleveltimesthenumberofweeksormonthsneededtocompletethe
project.
Preproduction planning starts with the production plan prepared as the basis for the estimate, and
modifyingitandaddingdetailstoupdateitastheactualrequirementsofthejobbegintodevelop.This
includes selecting and designing the process of manufacture; planning the sequences of fabrication,
assembly, and test; selecting equipment and facilities needed; determining tooling requirements,
methods,andfactorylayout;andanythingelseneededtodecidehowtheproductwillbemanufactured.
Thepreproductionplanningeffortshouldbeginduringtheproductdevelopmentphase,andthemethod
ofestimating
this
effort
is
the
same
as
for
development,
by
man
loading.
ToolingIssues
Tooling can be a significantelement ofcost in theproduction ofa manufactured product. Tooling is
primarilyafrontend,nonrecurringcost.Thetoolingphilosophyestablishedbymanagementduringthe
earlyphasesof the proposal or cost estimate will largely determine what the tooling should cost. A
heavy upfront tooling investment may ensure a lowcost product in production. A minimal tooling
effortmaystillbethemostcosteffectiveapproach,dependingonthecircumstancesandthelengthof
the production run. Certain types of manufacturing, such as investment casting and ordinary sand
casting,are
by
their
very
nature
tooling
dependent,
and
as
such
will
always
request
alarge
up
front
investmentintooling.Otherprocessesmaynotrequireaheavytoolingeffort,butwithoutaneffective,
upfronttoolinginvestment,cannotbeproducedeffectivelyinproduction.Thelengthoftheproduction
runcanbeabigdeterminantinhowmuchtoolingiseconomicallyjustified.
Unfortunately,mostcompaniesspendfarmoreontoolingthanisreallynecessary.Althoughthetooling
requiredmayappearobviousorapparent,anothermethodmayexist,orperhapsshopaidtoolingcan
beimprovisedtoavoidthisapparentexpense.Toolingcosts,andhenceproductcosts,canbekeptas
low as possible by utilizing standard tools and tooling components wheneverpossible, and by using
inexpensivetoolingmaterials.
ToolDesign:Thedesignof specialpurpose tools is estimatedbydetermininghowmanytoolsaretobedesigned,thensubdividingthisnumberintotoolsthatarehighlycomplex,toolsthat
are of intermediate level of complexity and detail, and those that are the most simple and
straightforward.Averagetimevaluesforeachofthethreecategoriesare:
Highlycomplex:24.0to40.0hr./tool Intermediate:16.0to24.0hr./tool
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Simpledesign:8.0to16.0hr./toolIfa lowcostorminimaltoolingapproach istobeused,oronethatutilizes littleornoformal
tooldesign
documentation,
then
the
cost
estimator
should
figure
2.0
to
4.0
hr./tool
to
prepare
a
concept sketch ordiagram toaid the toolmaker in building the tool. The time includes shop
followup and liaison while the tool is under construction to clarify any details not clearly
depictedonthetooldrawing,andforthecorrectionofanyerrorsordesignoversights.
ToolFabrication:Toolfabricationincludestheconstructionandtryoutofthetool.Thetoolbuildhoursalmostalwaysexceeddesignhoursbyanorderof3to1.Coremakingtoolsmakeupmost
ofthecoreestimateinfoundrywork.Apatternissetinthemouldingsand,andsandispacked
aroundittoproducetheimpressionintowhichthehotmetalispouredtoproducecastingsofa
desiredshape.Patternplatesseparatethetwohalvesofapatternduringmoulding,andflasks
arethe
containers
for
the
moulding
sand.
Flask
size,
method
of
construction,
and
construction
materialareallkeycostdriversinfoundrytooling.
Tools to be fabricated for most manufacturing operations other than foundry, investment
casting,diecasting,etc.areestimatedonanindividualtoolbasis.Thatis,thecostofeverytool
is estimated individually. As indicated earlier, a good rule of thumb for the estimate of
fabricationcostistousethreetimesthedesignestimate.Toolfabricationcostalsoincludestool
tryoutandanysubsequenttoolmodificationsthatmayberequiredasaresult.
Tooldesignandtoolfabricationcostsarenonrecurringsupportcostsinthetotalmanufacturing
costestimate.Theyareconcernedonlywithspecialpurposetoolingpeculiartoagivenproduct,
butdonotincludestandardtooling,orperishabletoolssuchasdrills.
Tool Maintenance: Another element of manufacturing cost that is often overlooked by theestimator is the costof tooling maintenance.This isa recurring elementof costand includes
everythingfromtheinitialtoolsetupandcleanup,ifthejobhasbeeninproductionbeforeand
toolingexists,torepair,lubrication,painting,andotherroutinemaintenanceonoperatingtools
used in production. This can be a major cost element if the production tooling includes
automatic,specialdesignmachinesandtheirtools.Italsoincludesthecostoftoolpreservation,
and preparationfor storageafter thejob iscomplete.Toolmaintenance, ifadirectcharge, is
estimatedasapercentageofthetotalfactorydirectlabour.Itusuallyrangesfrom3%to5%of
factorylabour,
depending
on
the
degree
of
mechanization
or
automation
of
the
process.
IndustrialEngineering
Industrial engineering for manufacturing includes work measurement, standards setting, and
maintenance, along with methods improvement, operations analysis, and cost analysis. In many
companiesthisisanindirectfunctionthatisincludedinplantoverhead.Ifthisfunctionistreatedasa
directcharge,thecostestimatorshouldhandle itbymanloadingtheindustrialengineeringpersonnel
workingon thejob being estimated, and calculate manhours by multiplying thestaffing by the time
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periodduringwhichtheserviceswillbeperformedandconvertingthistohours.Industrialengineering
supportisarecurringcost.Inmanyinstancesindustrialengineeringservicesareprovidedaspartofthe
manufacturingengineeringeffort.
Supervision
Firstlinemanufacturing supervision isoftenadirectcharge incompanies that produce manufactured
products,especiallyindefence/aerospaceindustries.Assuch,itisarecurringcosttothejoborprogram,
and should beestimatedasapercentageof the total factory labour hourson thejob. Unlessbetter
information is available in your company, 10% of factory labour is the recommended norm for
estimatingsupervisioncosts.
ProductionPlanningandControl
Productionplanningandcontrolincludesmanufacturingscheduling,materialordering,materialcontrol,
material kitting, and issue to manufacturing, shop floor control, manufacturing status reporting and
expediting,toolcontrol,materialhandlingandmovement,workorderrelease,packaging,andshipping.
Even with todays sophisticated MRP software programs, the input and output is by people. The
effectivenessofthisfunctioniscriticaltothesuccessofmanufacturingoperations.Withoutaneffective
productionplanningandcontrolsystem,manufacturingbecomesadisjointed,uncoordinatedgroupof
activities. In ajob order machine shop, for example, the scheduling and loading of the machines is
criticaltomeetingpromiseddeliveryonalljobs.
Productionplanningandcontrollabour isoftenestimatedasaflatpercentageoftotalfactory labour.
This percentage can range from 7% to as much as 15%, depending on the functions and degree of
control exercised over manufacturing and production operations. It is also possible to estimate
productionplanningandcontrol labourdirectlyby listingthefunctions,manloadingthestaffing,and
thentimephasingtoarriveattotalhours.
CostStructureoftheFinalManufacturingEstimate
Inordertoarriveatthefinalsellingpriceofthemanufacturedproduct,costsbeyondfactorycostsand
profitmarginsmustbedetermined.Primecostplusmanufacturingoverheadyieldsfactorycost,orcost
of goods manufactured. Total product cost is obtained by adding selling expense, general and
administrativeexpense,
engineering
or
development
costs,
and
contingencies
to
the
factory
cost.
Several methods of pricing a product that is manufactured have been derived from the field of
managerialeconomics.Thesepricingmethodsrangefromcomparisonofsimilarproductpricestoselling
pricebasedontotalcost,witheachproductyieldingthesamepercentagegrossprofit.Althoughmany
variationsexist, there isusually somerelationshipbetweensellingpriceand total cost.However,unit
selling price is greater than total unit cost in all successful manufacturing firms. In cost estimates
preparedforgovernmentauditafterthecontracthasbeenawarded,themaximumprofitmayregulated
bysomecountriesauthority.
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Infastchargingsystemfactorytheestimatingdepartmentsresponsibilityfortotalmanufacturingcost
ends with establishing the direct labour, tooling, equipment, facilities, and material costs. The
accountinggroupormarketingdepartmentaddswageandoverheadratesfromthevariousapplicable
cost centres, and performs the extension of the numbers to develop the final manufacturing cost
estimateandprice.
In structuring the final manufacturing cost estimate, care must be exercised in identifying those
elementsofcostthatarerecurringandthosethatarenonrecurring.Inmanyinstancesthenonrecurring
elements of cost, such as tooling, must be clearly identified to the prospective customer. Should a
productioncontractresultfromthecostestimate,thetoolsso identifiedmaybecomethepropertyof
thecustomer,tobedeliveredtothecustomeratcontractcompletion?Thismodeofoperationisfairly
standardforcontractsinvolvinggovernmentwork,andsomeofthemajorhighrateOEMcompanies.
Ifall
of
the
nonrecurring
costs
are
prorated
into
the
final
cost
of
the
manufactured
product,
and
no
ownership of tools passes to the customer, it is still vitally important that management know and
understand which costs are recurring and which are nonrecurring. Nonrecurring or onetime costs
includethefollowing:
Tooling that is specially designed and peculiar to the product but is not consumed inmanufacturingtheproduct,suchasmillingfixtures,drilljigs,andcableharnessformboards
Manufacturing engineering services to do the initial and final production planning formanufacturing theproduct (thiswould includeprocess plans,methodsheets, factory layouts,
workstationlayouts,manufacturingbillsofmaterial,assemblypartslists,routings,andmore)
Inspection plans and instructions, test procedures, test fixtures, and tooling peculiar to theproduct
Engineering and development costs incurred in the design of the product, includingmanufacturing drawings, product performance specifications, parts lists, and prototypes and
models
Recurringcostsincludeallcoststhatarecontingentonthenumberofproductionunitsbuilt,andinclude:
Labourand material to manufacture the product, including factory labour, inspection labour,and
supervision
and
test
labour,
plus
all
materials
and
parts
needed
to
build
the
product,
even
bulkandconsumableitemssuchassolvents,solder,paint,andplatingchemicals
Perishable tools consumed in building the product, including cutting tools, drill bits, millingcutters,reamers,broaches,andsimilaritems
Support labour, including manufacturing engineering, production control, engineering liaison,and other labour required to support the manufacture and assembly of the product on the
productionfloor
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Recurringandnonrecurringcostscanbeeitherdirectorindirect.Productioncontrollabour,forexample,
wouldbebothadirectchargeandarecurringcost.Perishable tools arean indirectchargebut alsoa
recurringcost.
Sellingpriceofthechargingstationtothecustomerisdeterminedbyaddingtheprimemanufacturing
costtothegeneralandadministrativeexpenseplusprofit.Thisexampleissomewhatsimplified inthat
no consideration is given to contingency factors, delivery schedule, or peak production rate
requirements,allofwhichcouldaddtothefinalsellingpriceofthechargingstation.