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 IET 418 Page - Group 4

PROJECT DESCRIPTION

Hi-Tech Incorporated is soliciting bids for purchase of a new product.  You are part of a team from Super-Tech Plant No. 2, Inc that was formed to estimate the cost of producing the new product and to prepare a proposal which includes the product cost and price in response to the Request for Proposal from Hi-Tech, Inc.  The customer has provided your team with a rough sketch of the product.  Note that the sketch may be incomplete or include some incorrect dimensions.  The product is to be manufactured from metal bar stock that is two inches in diameter by 12 foot long.  The density of the material is 0.2553 pounds per cubic inch.  On one end of the part, 1/8” is not usable as it is needed to square off the end.  The material can be purchased for $6.50 per pound and salvaged for 10% of the original cost.  The long-term quantity required is 10,000 units, produced in lots of 1,000 units.  Your company has 75 full-time employees who each work an eight-hour day, five days per week, and 52 weeks per year.  The company provides eight paid holidays and ten days of vacation.  Four additional days are allowed for sick leave.  FICA is at the rate for the current year, workmen’s compensation is 3% of the first $30,000, accident insurance is $1500, and medical insurance is $1,000.  Turning and drilling are light machining and milling is heavy machining.  For drilling operations, assume a drill point angle of 118 degrees.  A safety distance of 1/16” is used for all machines.  The wage rate is $17.50 per hour for the light machining department, $45.70 per hour for the heavy machining department, and $33.00 for other machining.  Similar products have indicated an 87% learning rate.  The calculated cycle time is assumed to be the time to produce the first part.  There is a 90% utilization rate for light machining, 80% utilization for heavy machining and 95% for other machining.

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