Quoting 120 MS flanges from bar stock
An order for 120 MS flanges is to be quoted from Ø80 mm bright MS bar at ₹68/kg (ρ = 7850 kg/m³). Each flange finishes 22 mm long; a 2 mm facing allowance is left on each end, and the hacksaw removes a 3 mm kerf per cut. Bar is supplied in 3 m random lengths, and any remainder goes back to stores. The lathe cycle is 6.5 min per flange, including facing both ends and boring; the machine-hour rate is ₹450/h, which already includes labour and power. Factory overhead is charged at 18% of the direct material plus machining cost. Rejects run at 2% of good pieces and have no scrap value. The customer asks for a price with 10% profit on total cost, and mentions that a competitor is quoting ₹150 per piece.
1. Calculate the mass per piece, the number of pieces per bar, the bars required and the material cost per good piece.
Read the worked answer
Cut length = finished length + facing allowances + kerf = 22 + (2 × 2) + 3 = 29 mm per cut.
Mass
- Area = π/4 × 0.080² = 0.0050265 m²
- Volume = 0.0050265 × 0.029 = 1.4577 × 10⁻⁴ m³
- Mass = 1.4577 × 10⁻⁴ × 7850 = 1.144 kg
Pieces per 3 m bar = 3000/29 = 103.4 → 103 pieces, with a 13 mm offcut (the remainder is scrap, since it is shorter than one cut length).
Pieces to start = 120/0.98 = 122.5 → 123 pieces (2% rejects).
Material = 123 × 1.144 = 140.7 kg × ₹68 = ₹9 571 for the order → ₹79.8 per good piece before overheads. Two bars of 3 m are drawn (206 pieces of capacity); only the material consumed is charged, and the balance of the second bar returns to stores, which is why the calculation uses mass consumed and not full-bar mass.
2. Build up the total cost per piece and the quoted price, and compare with the competitor at ₹150.
Read the worked answer
Machining. 123 pieces × 6.5 min = 799.5 min = 13.33 h × ₹450/h = ₹5 996.
Direct cost = 9 571 + 5 996 = ₹15 567. Overhead at 18% = 15 567 × 0.18 = ₹2 802. Total cost = ₹18 369 for 120 good pieces → ₹153.1 per piece.
Quoted price with 10% profit = 153.1 × 1.10 = ₹168.4 per piece (about ₹20 200 for the order).
Comparison. The competitor's ₹150 is below our total cost of ₹153.1 - not just below our price. Quoting ₹150 would lose about ₹3.1 per piece plus the profit, i.e. roughly ₹370 on the order, and it also hides the fact that 52% of the cost is material and 33% is machine time.
Judgement: do not match the price as it stands. Either re-engineer the cost (next task) and re-quote, or decline. Never cut the price by trimming the overhead recovery - the overhead is spent whether or not this order runs.
3. Identify where the cost can realistically be reduced and quantify the best single change.
Read the worked answer
Cost structure: material ₹79.8 (52%), machining ₹50.0 (33%), overhead ₹23.4 (15%). Material is the biggest lever, and the 29 mm cut length is 7 mm more than the finished 22 mm.
Option 1 - reduce facing allowance from 2 mm to 1 mm per end. Cut length = 22 + 2 + 3 = 27 mm; mass = 0.0050265 × 0.027 × 7850 = 1.065 kg; material for 123 pieces = 131.0 kg = ₹8 909 → saves ₹662 on the order. (Using a 1.5 mm thin-kerf bandsaw instead of the 3 mm hacksaw saves a further ≈ ₹330.)
Option 2 - buy Ø76 bar instead of Ø80. Area falls by (76/80)² = 0.9025, so material cost falls about 10%, i.e. ₹950 on the order - but only if the finished OD allows 1 mm radial cleanup and the rate per kg is unchanged.
Option 3 - reduce cycle time. A collet with a dead-length stop and a combination facing/boring tool could take 6.5 min to about 5.5 min, saving 123 × 1 min × ₹7.5 = ₹923 plus 18% overhead ≈ ₹1 089 - the largest single gain, and it needs no drawing change.
Best combination: options 1 and 3 together cut total cost to roughly ₹16 500, i.e. ₹137.5 per piece, allowing a quote near ₹151 that just matches the competitor at a real profit.