The engineers believe that, compared with the conventional sheet metal blanks, LBW would result in significant savings for the following reasons:
1. Scrap reduction through more efficient blank nesting on coil since the parts to be stamped out of the sheet metal can be patterned more closely.
2. Scrap reclamation since the unused sheet metal can be re-welded by laser into a usable blank.
On the basis of an annual volume of 3,000 blanks, Ford engineers have estimated the financial data provided in the table below.
Blanking Method
Description
Conventional
Laser Blank Welding
Weight per blank (lb / part)
63.764
34.870
Steel cost / part
$14.98
$8.19
Transportation cost / part
$0.67
$0.42
Blanking cost / part
$0.50
$0.40
Die investment
$106,480
$83,000
The LBW technique appears to achieve significant savings, so Fordâs engineers are leaning toward adopting it. However, the Ford engineers have no experience with LBW, so they are not sure whether producing the windshield frames in this manner is a good strategy. For this windshield frame, it may be cheaper to use the services of a supplier that has both the experience with and the machinery for laser blanking. Fordâs lack of skill in laser blanking may mean that it will take six months to get up to the required production volume. If, however, Ford relies on a supplier, it can only assume that supplier problems will not halt the production of Fordâs cars. To be clear, Ford can select one of 3 options:
1) make the parts using conventional techniques;
2) make the parts using LBW techniques themselves; or
3) buy the parts from a subcontractor who will charge Ford a price per part with no volume discounts.
The subcontractor will use the LBW technique but does not disclose to Ford their costs. They will produce and deliver the parts to Ford in exchange for a per-part charge.
Assume a lifetime of 10 years and an interest rate of 16% to recommend the best course of action. If you use a Rate of Return approach, use 16% as the MARR. Assume that neither the conventional nor the LBW technologies have any salvage value. If Ford uses the subcontractor, what range of prices per part should they be willing to pay?
Please show work. Make assumptions when needed. Thanks
The engineers believe that, compared with the conventional sheet metal blanks, LBW would result in significant savings for the following reasons:
1. Scrap reduction through more efficient blank nesting on coil since the parts to be stamped out of the sheet metal can be patterned more closely.
2. Scrap reclamation since the unused sheet metal can be re-welded by laser into a usable blank.
On the basis of an annual volume of 3,000 blanks, Ford engineers have estimated the financial data provided in the table below.
| Blanking Method | ||
| Description | Conventional | Laser Blank Welding |
| Weight per blank (lb / part) | 63.764 | 34.870 |
| Steel cost / part | $14.98 | $8.19 |
| Transportation cost / part | $0.67 | $0.42 |
| Blanking cost / part | $0.50 | $0.40 |
| Die investment | $106,480 | $83,000 |
The LBW technique appears to achieve significant savings, so Fordâs engineers are leaning toward adopting it. However, the Ford engineers have no experience with LBW, so they are not sure whether producing the windshield frames in this manner is a good strategy. For this windshield frame, it may be cheaper to use the services of a supplier that has both the experience with and the machinery for laser blanking. Fordâs lack of skill in laser blanking may mean that it will take six months to get up to the required production volume. If, however, Ford relies on a supplier, it can only assume that supplier problems will not halt the production of Fordâs cars. To be clear, Ford can select one of 3 options:
1) make the parts using conventional techniques;
2) make the parts using LBW techniques themselves; or
3) buy the parts from a subcontractor who will charge Ford a price per part with no volume discounts.
The subcontractor will use the LBW technique but does not disclose to Ford their costs. They will produce and deliver the parts to Ford in exchange for a per-part charge.
Assume a lifetime of 10 years and an interest rate of 16% to recommend the best course of action. If you use a Rate of Return approach, use 16% as the MARR. Assume that neither the conventional nor the LBW technologies have any salvage value. If Ford uses the subcontractor, what range of prices per part should they be willing to pay?
Please show work. Make assumptions when needed. Thanks
