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SourcingApps Cost Analysis
for
Energy
for
Price Productivity Calculator ,
Macro ,
Micro
for
Break-Even
for Learning Curve
Analysis ,
Stanford-B
for
Economic Production Quantity
for
Yield Calculators
for
Total Cost of Ownership
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SourcingApps
Energy Surcharge Calculator
Show Example
How large of an increase do suppliers need to recover lost profits due
to increased energy costs?
The idea behind calculating energy surcharges is to use dependable data to
determine energy costs as a percentage of a supplier’s net sales billed.
This data is not normally known to the salesperson delivering the price
increase due to energy cost increases so SourcingApps support includes
data from the Annual Survey of Manufacturers so this calculation can be
made. Once this calculation is made the difference between the cost
increase requested by the supplier and the cost increased needed using
industry data can be compared.
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SourcingApps
Price Productivity Calculator
Show Example
Can your supplier at least match industry standards when adjusting
parameters that give customers more value yet maintain supplier operating
income?
The price productivity calculator is designed to calculate how
great a reduction in fixed costs, variable costs or increases in unit volume
is needed to allow a supplier to maintain their operating income percentage
while reducing their price. Each 1% improvement in:
Price gives a 11.1% income improvement; Variable Cost gives
a 7.8% income improvement; Volume gives a 3.30% income improvement;
Fixed Costs gives a 2.30% income improvement
The ratios used for these calculations were published in the Harvard Business
Review article "Managing Price Gaining Profit", Sept-Oct 1992. |
SourcingApps
Price Productivity Macro
Show Example
Calculate the actual impact on operating income from changes to net
sales billed, and variable/fixed costs for a specific company's
financial data.
Price productivity macro allows the user to see the impact of various changes
to price, fixed and variable costs on operating income (assumes unit volume
is constant).
Income statement ratios for fixed costs, variable costs and profit in percentage
format maybe found in the Quarterly Financial Report for U.S. Manufacturing
Corporations (http://www.census.gov/ftp/pub/mp/mfg/msmfg13a.html).
For additional information on this subject see: "Managing Price, Gaining
Profit", Harvard Business Review, Sep-Oct 1992. |
SourcingApps
Price Productivity Micro
Show Example
Calculate the impact on operating income from changes in net sales
billed, direct material, direct labor, manufacturing overhead and fixed
costs for a specific company's financial data.
Income statement ratios for fixed costs, variable costs and profit in percentage
format maybe found in the Quarterly Financial Report for U.S. Manufacturing
Corporations and is available as SourcingApps data. (http://www.census.gov/ftp/pub/mp/mfg/msmfg13a.html).
For additional information on this subject see: Managing Price Gaining Profit,
Harvard Business Review, Sept-Oct 1992 |
SourcingApps
Break
Even Analysis
Show Example
At what unit of production do total cost and total revenue intersect.
The earlier in the production run the higher a company's profit margin.?
Break-even analysis determines the point where total costs equals total
revenue. This worksheet provides the user with the capability of testing
the impact of changes to costs and selling prices
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SourcingApps
Learning Curve Analysis
Show Example
Determine prices for various quanities based changes in labor paced
processing time due to volume changes.
The "Learning Curve" rule states that whenever the quantity of units manufactured
doubles, then the average time to produce a unit is reduced by a constant
percentage. Many types of learning curves have been observed, we are using
the "Cumulative Average Curve" (Wright Curve) versus the "Unit Theory Curve"
(Boeing Curve) because the Wright Curve is a better predictor of purchase
prices.
Abernathy, William J., and Kenneth Wayne, Limits of Learning Curve, Harvard
Business Review, Sept-Oct 1974
Belkaui, Ahmed, The Learning Curve, Quorum Books
Cochran, Edward B., Planning Production Costs: Using the Improvement Curve,
Chandler Publishing
Teplitz, Charles J., The Learning Curve Deskbook, Quorum Books |
SourcingApps
Stanford-B Analysis
Show Example
Can the learning acquired from making a similar part be applied to a
"new" part?
The "Stanford-B" effect assumes that prior learning can be captured and utilized
on new designs given that the new design is consistent with old design and
its complexity is similar. "Stanford-B" factors generally range from 1 to
10 with four being the most commonly used. Agreement needs to be reached between
the buyer and seller on the "B" factor. After the "B" factor has been agreed
to it is possible to estimate the cumulative average labor hours needed to
produce the a quantity of parts of the new design. |
SourcingApps
Economic Production Quantity
Show Example
Determine the optimum production
quantity, balancing setup and carrying inventory costs.
Economic production quantity analysis is
used to determine the impact of fixed costs (order entry, setup, equipment
depreciation), variable costs (material labor and manufacturing overhead)
and inventory carrying costs impact the production quantity. Sensitivity
analysis assists sellers in determining the impact of changes in the factors
affecting the EPQ. It would seem that buyer's and seller's would want to
construct a production system where EPQ = EOQ. Small lot production
techniques such as cell manufacturing, demand flow manufacturing or SMED
(single minute exchange of die) assist in lowering the EPQ. |
SourcingApps
Yield Calculators for
Theoretical Minimum Weight, Sheets, Coils, Reels, Wires, Bars
Are you paying more than you should because the sheet is thicker, wider or
longer than your specification? or because the coil is thicker or wider than
your specification? or the diameter of the wire is larger than your
specification?
Four yield calculators will give quick
answers to these questions.
Show Example
(Sheets)
Show Example
(Coils)
Show Example
(Wires)
Show Example
(Bars) |
SourcingApps
Total Cost of Ownership
The task in developing a total cost model for direct material is to define
and capture all costs associated with a specific company for a particular
item. By creating this total cost model sourcing/selling decisions are made
based on total costs versus price. Since costs are spread across many
functions, a team approach is suggested to ensure that all the costs of
doing business with a particular company are identified and captured. After
total costs are accumulated for an item and a particular company they can be
converted into a "bid factor." A "bid factor" assumes past behavior will be
repeated in the future as such you can compare the total cost of doing
business with different companies.
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