Quoting 60 GI Trays Against a Cheaper Competitor
A small shop receives an order for 60 open-top rectangular galvanised iron trays, 300 × 200 × 80 mm deep, from 1.0 mm sheet, with corners welded and a 10 mm folded edge on all sides. GI sheet costs ₹68 per kg, density is 7.85 g/cm³, and sheet is bought only in 8 ft × 4 ft sizes (2438 × 1219 mm). Labour is 0.25 h per tray at ₹180/h. Overheads are charged at 15 % of material plus labour and profit is 12 %. The owner estimates material as "about 1.3 kg per tray plus 10 % wastage" and quotes ₹170 per tray. A competitor has quoted ₹165. The owner asks whether the shop should match the competitor and whether the estimate is safe.
1. Calculate the blank size, the mass of one tray, and the true material consumption per tray after nesting on standard sheets.
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Blank. For a tray of base 300 × 200 mm and depth 80 mm on all four sides (the 10 mm folded edge is part of the wall height, not an addition):
- Length = 300 + 2 × 80 = 460 mm
- Width = 200 + 2 × 80 = 360 mm
- Area = 460 × 360 = 165 600 mm² = 0.1656 m²
Mass of one net blank. Volume = 165 600 mm² × 1 mm = 165 600 mm³ = 165.6 cm³. Mass = 165.6 × 7.85 = 1300 g = 1.30 kg. (Shortcut: 1 m² of 1 mm steel = 7.85 kg, so 0.1656 × 7.85 = 1.30 kg.)
Nesting. On a 2438 × 1219 mm sheet: 460 mm along the length gives 5 blanks (5 × 460 = 2300 ≤ 2438); 360 mm across gives 3 blanks (3 × 360 = 1080 ≤ 1219). So 5 × 3 = 15 blanks per sheet, exactly 4 sheets for 60 trays. The sheet area is 2.972 m² and 15 blanks use 15 × 0.1656 = 2.484 m², so actual waste is 0.488 / 2.972 = 16.4 %, not 10 %.
True material per tray. 4 sheets × 2.972 m² × 7.85 kg/m² = 93.32 kg for 60 trays, i.e. 1.555 kg/tray, not 1.43 kg. Corrugation or a different sheet size could improve this, but not with the stock on hand.
2. Build up the true cost per tray and decide whether the shop should match ₹165. Show the calculation.
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Using true nested material (1.555 kg/tray):
- Material: 1.555 × ₹68 = ₹105.74
- Labour: 0.25 h × ₹180 = ₹45.00
- Prime cost = ₹150.74
- Overhead: 15 % × 150.74 = ₹22.61
- Total cost = ₹173.35
- Profit: 12 % × 173.35 = ₹20.80
- Selling price = ₹194.15 ≈ ₹194 per tray, i.e. ₹11,649 for 60 trays.
Using the owner's estimate (1.43 kg/tray): material ₹97.24, labour ₹45.00, overhead ₹21.34, cost ₹163.58, profit ₹19.63, price ₹183.21. Even on the owner's own optimistic figures the floor is about ₹183, so the ₹170 quote is already below cost.
Decision: do not match ₹165 and do not accept ₹170. At ₹165 the shop loses about ₹8.35 per tray on the true figures – about ₹500 on the order – before any rework. Either re-quote at about ₹194, or reduce cost: ask the customer to accept a slightly different depth or base size that nests better, buy cut-to-size sheet, or use offcuts from other jobs. A competitor's price is not evidence of your cost.
3. Where does the 10 % wastage assumption break down, and what would you change in the estimate before the quote goes out?
Read the worked answer
The 10 % wastage allowance was applied to a net mass of 1.30 kg, giving 1.43 kg. The real constraint is the sheet size: 460 × 360 mm blanks cannot fill a 2438 × 1219 mm sheet, so 16.4 % of the metal is lost as offcut before any cutting error, and the true mass is 1.555 kg/tray. The 10 % figure is roughly right for a well-nested rectangular blank on a large sheet, but it is invalid where the blank geometry leaves a 138 mm and a 139 mm strip unusable.
Changes to make before quoting:
- Convert wastage into a nesting calculation on the sheet actually bought, not a flat percentage.
- Add a separate allowance (2–3 %) for shear trim, weld preparation and rejections; the 16.4 % nesting loss does not cover a scrapped tray.
- Add consumables – welding wire, gas, sealant, grinding discs – as a line item or an explicit percentage.
- Check whether the folded edge changes the blank (here it does not, but state it in the estimate so the assumption is visible).
- Record the basis of the estimate so that a change in sheet size or batch quantity can be re-priced quickly.
Selling offcuts as scrap recovers a small amount, but it does not change the fact that the quote must be built on nested, not net, material.