2596701386

2596701386 - ME2004 Project (Design and Make) Dr. David...

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1 ME2004 Project (Design and Make) Dr. David Yuen Lecturer, ME
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2 Cost analysis of designs “Engineering is the art of doing well for one dollar what any bungler can do for two”
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3 Cost analysis of designs • Cost analysis is basically choosing the “best” approach from a number of options • Conceptual designer’s main concern • Analytical designer optimizes the system afterwards • Analytical designer selects components to reduce cost • Design engineer should take knowledge from multiple sources
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4 The Time Value of Money • Money saved is money earned • Idea is to save money by choosing an alternative that yields to most profit • Next is an example
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5 Example • An existing company has decided to manufacture a new product. A market study has produced estimates of sales volume, prices, etc. However, the method of manufacture has not yet been settled although all the possibilities except two have been eliminated for a variety of reasons. Regardless of how the product is made, its sale is expected to bring in an average of $200,000 per year. Furthermore, costs involved in sales, distribution, raw materials, etc. are expected to average $85,000 per year.
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6 Method A • One of the methods of manufacture uses semi-automatic machines. The additional yearly expenses for labor, maintenance, power (the "out-of of-pocket" expenses) are $50,000. The machines will cost $250,000 to buy and install and are expected to last 10 years (and be and are practically worthless after that time.)"
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7 Method B • The other method uses an automatic machine which is more expensive to buy($400,000 initial cost and 10 year life) but which cuts "out-of of- pocket" expenses to $30,000 per year."
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8 Comparison Method B • Gross income from sale of product $200,000 • Sales, distribution, materials, Sales, etc. $85,000 • Labor, maintenance, power, etc. $30,000 • Depreciation $40,000 • Total annual cost $155,000 • Profit (Income Profit (Income -Cost) $45,000 Method A • Gross income from sale of product $200,000 • Sales, distribution, material, etc. $85,000 • Labor, maintenance, power, etc. $50,000 • Depreciation $25,000 • Total annual cost $160,000 • Profit (Income Profit (Income -Cost) $40,000
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This note was uploaded on 04/06/2010 for the course ME ME2004 taught by Professor Dr.yuen during the Spring '10 term at NYU Poly.

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2596701386 - ME2004 Project (Design and Make) Dr. David...

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