Overview
Casting Company has been in business since 1940.They make custom aluminum, iron, bronze and brass cast metal parts using a sand casting process.Traditionally the cost of a finished part is estimated on a per-pound basis for the finished part (a method the owners have used since the 1950s).It does not consider any waste that may occur as part of the casting process.
The final per-unit price to customers is currently quoted based on how difficult the part is to cast, in the opinion of the Production Manager, who is an expert in casting metal parts.The Manager bases the price a judgement of how difficult the part is to cast.Parts that are difficult to cast require more handling, more finish work and have higher scrap rates.
The problem Matador is facing is that they are losing money on many jobs.The per-pound method of costing does not accurately consider differences in labor and materials between different jobs and, as a result, it is unknown if the price determined by the Manager will be profitable.
Your Industrial Engineering team has been hired by Matador to analyze and propose more accurate methods for estimating prime costs (labor and material) for different jobs.You will provide your proposal in the form of the engineering design process using the template that has been provided.
You will follow the following sequence:
Define the PROBLEM.
Discuss current PRE-EXISTING KNOWLEDGE on determining labor and material costs (use the textbook, lecture, and independent research) and explain how these methods could be applied to the Matador problem.
- Come up with an example for a cast part and show Matador management how they would go about determining the cost of the casting using a couple of different alternative methods.This is MODELING of several alternative methods.It will help them better understand how new methods will be used.
- Finally, explain how you would EVALUATE the results of the Modeling to recommend the best method(s) (if you recommend more than one best method then explain under what circumstance they might use each method).
- Be clear, but concise in stating what the Problem is.It should only state the issue without describing how you will solve it (that is for the Pre-existing Knowledge and Modeling sections).
- Your report to Matador will help to clarify and educate them in cost estimating methods.
In the Evaluation section consider the implications for Matador if they should start quoting higher prices for some castings.Keep in mind that customers expect difficult castings to be more expensive but they will tend to choose the competitor with the best price (since casting quality tends to be pretty much the same between competitors.
One suggestion for this project is to check metal casting and foundry websites on the Internet to better understand the process and possibly how other companies may be determining how costs may be estimated.