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Machining Economics - 2

ver. 1

ME 6222: Manufacturing Processes and Systems 1


Prof. J.S. Colton © GIT 2009
Overview

• Machine operation costs


• Single point tool costs
• Sh practice
Shop ti
• Economic lot size
• Equipment replacement

ME 6222: Manufacturing Processes and Systems 2


Prof. J.S. Colton © GIT 2009
Shop practice

Shops may not use V and T


rather,
rather
N, spindle speed (rpm)
P number
P, b off satisfactory
ti f t parts
t before
b f tool
t l
is worn out

ME 6222: Manufacturing Processes and Systems 3


Prof. J.S. Colton © GIT 2009
Shop practice

• First, establish the maximum practical


feed rate,, f*

• N = V/πd [rpm]
• P = T/tm [#]

ME 6222: Manufacturing Processes and Systems 4


Prof. J.S. Colton © GIT 2009
Shop practice

• Rewriting Taylor’s tool-life equation, for


a fixed value of f*

NPA = B

• A = n/(1-n)

ME 6222: Manufacturing Processes and Systems 5


Prof. J.S. Colton © GIT 2009
Shop practice

• If we have two speeds N1 and N2, we


can calculate P1 and P2 with

ln ( N1 N 2 )
A= B= N1 ⋅ P1A
ln (P2 P1 )

ME 6222: Manufacturing Processes and Systems 6


Prof. J.S. Colton © GIT 2009
Shop practice - Ex.
Ex 4-1
41

• When turning a large roll, the


maximum p practical feed,, f*,, is
0.005”/rev. Using the following
data,, determine the optimum
p N*,,
P*, and corresponding tm.

ME 6222: Manufacturing Processes and Systems 7


Prof. J.S. Colton © GIT 2009
Shop practice - Ex.
Ex 4-2
42

• N1 = 100 rpm • Rm = $0.52/min


• P1 = 9 pparts • Dg = $0.20/edge
g
• N2 = 125 rpm • tc = 1 min
• P2 = 3 pparts
• Dave = 10”
• L = 30
30”
• f* = 0.005”/rev

ME 6222: Manufacturing Processes and Systems 8


Prof. J.S. Colton © GIT 2009
Shop practice - Ex.
Ex 4-3
43

ln ( N1 N 2 ) ln (100 125)
A= = = 0 .2
ln (P2 P1 ) ln (3 9 )

B= N1 ⋅ P1A
= 100 ⋅ 9 0 .2
= 155 rpm

ME 6222: Manufacturing Processes and Systems 9


Prof. J.S. Colton © GIT 2009
Shop
pppractice - Ex. 4-4

• Ttm = ((1/n) -1) x tc

• n = A/(1+A)= 0.2/(1+0.2) = 0.167

• Ttm = ((1/0.167)-1) x 1 = 5 mins

ME 6222: Manufacturing Processes and Systems 10


Prof. J.S. Colton © GIT 2009
Shop practice - Ex. 4
4-5
5

• P*
P = Ttmt /tm
• tm = L/f*N*
• N* = 155/P*0.2
02

• P* = Ttm x f* x N* / L
• P* = 5 x 0.005 x 155 / (30 x P*0.2)
• P* = 0.18 parts

ME 6222: Manufacturing Processes and Systems 11


Prof. J.S. Colton © GIT 2009
Shop practice - Ex.
Ex 4-6
46

• P* = 0.18 parts
• N* = 155 / 0.180.2 = 218 rpm
p
• tm = L/f*N* = 30 / (0.005 x 218)
= 27.5
27 5 mins/part

ME 6222: Manufacturing Processes and Systems 12


Prof. J.S. Colton © GIT 2009
Shop practice - Ex.
Ex 4-7
47

• Now, we may not want a tool change in


the middle of a cut ((P* = 0.18),
), as this
would leave a mark on the part, so P*
needs to be an integer.
g Pick P* =1.

ME 6222: Manufacturing Processes and Systems 13


Prof. J.S. Colton © GIT 2009
Shop
pppractice - Ex. 4-8

• P*
P =1
• N* = 155 / 10.2 = 155 rpm
• tm = L/f*N* = 30 / (0
(0.005
005 x 155)
= 38.7 mins/part

• An increase in time (38


(38.7
7 vs
vs. 27
27.5
5 mins)
mins),
but a higher quality part results.

ME 6222: Manufacturing Processes and Systems 14


Prof. J.S. Colton © GIT 2009
Economic lot size (n)
( )

• Many y times, a machine can


produce product at a rate that is
greater than its sales rate.
g
• It is not always wise to carry a
year’s
year s worth of inventory.
• So, one needs to calculate the most
economic batch of parts from a
machining standpoint.

ME 6222: Manufacturing Processes and Systems 15


Prof. J.S. Colton © GIT 2009
Yearlyy cost ((CY)

⎛D⎞ ⎡⎛ T + I ⎞ ⎤ ⎛ D⎞
CY = D ⋅ CP + ⎜ ⎟ ⋅ C f + ⎢⎜ ⎟ ⋅ C P + C S ⎥ ⋅ ⎜1 − ⎟ ⋅ n
⎝n⎠ ⎣⎝ 2 ⎠ ⎦ ⎝ P⎠

• D = estimated annual demand (parts/year)


• CP = optimum manufacturing cost ($/part )
• Cf = fixed cost per lot per year ($/lot)
• CS = storage cost per part per year ($/year/part)
• n = lot
l t size
i (# off parts)
t )
• T+I = annual rate for taxes, insurance, and interest
• P = production rate (parts/year)
ME 6222: Manufacturing Processes and Systems 16
Prof. J.S. Colton © GIT 2009
CY assumptions
p

• Taxes, insurance, and interest on the


average inventory:
(n/2) x (1-D/P)
(1 D/P)
• Storage costs for the maximum
inventory:
n x (1-D/P)
• Inventory drops to zero before production
begins.
ME 6222: Manufacturing Processes and Systems 17
Prof. J.S. Colton © GIT 2009
Economic lot size (n)

∂CY
∂C ∂ 2CY
• Using =0 and 〉0
∂n ∂n 2

D ⋅Cf
n=
⎛ D ⎞ ⎡⎛ T + I ⎞ ⎤
⎜1 − ⎟ ⋅ ⎢⎜ ⎟ ⋅ C P + CS ⎥
⎝ P ⎠ ⎣⎝ 2 ⎠ ⎦

ME 6222: Manufacturing Processes and Systems 18


Prof. J.S. Colton © GIT 2009
Economic lot size - Ex.
Ex 5-1
51

• Assume that we can sell 1010,000


000
parts/year (D), but that we can
produce parts 10x that fast (P =
100,000).

• Determine the economic lot size (n).

ME 6222: Manufacturing Processes and Systems 19


Prof. J.S. Colton © GIT 2009
Economic lot size - Ex.
Ex 5-2
52

• CP = $0.50 / part
• CS = $0.10
$0 10 / year / part
• Cf = $25 / lot
• T I = 0.15
T+I 0 15 (15%)

ME 6222: Manufacturing Processes and Systems 20


Prof. J.S. Colton © GIT 2009
Economic lot size - Ex.
Ex 5-3
53

• Evaluating the equation for n


10,000 ⋅ 25
n=
⎛ 10,000 ⎞ ⎡ 0.15 ⎤
⎜⎜1 − ⎟⎟ ⎢ ⋅ 0.50 + 0.10⎥
⎝ 100,000 ⎠ ⎣ 2 ⎦

• n ≈ 1,420 parts
• CY = $5,352

ME 6222: Manufacturing Processes and Systems 21


Prof. J.S. Colton © GIT 2009
Economic lot size - Ex
Ex. 5-4
6100
6000
5900
CY (($/year)

5800
5700
5600
5500
5400
5300
0 2000 4000 6000
n (p
(parts/lot))

• From the plot, we can see that the CY varies only 1%


(($5,352 - $5,405)) for 850 < n < 2,500.

ME 6222: Manufacturing Processes and Systems 22


Prof. J.S. Colton © GIT 2009
Equipment replacement

• You are considering replacing two


old machines with one new one
that can produce parts at twice
the speed.
p
• Should you buy it?

ME 6222: Manufacturing Processes and Systems 23


Prof. J.S. Colton © GIT 2009
Equipment replacement
Old machine New machine
IInitial
iti l costt $47 000 (6 years ago))
$47,000 $62 000
$62,000
Depreciation life 10 years 10 years
Labor ($30/hour) 1 person/ 2 machines 1 person/ machine
Overhead (burden) 330% 330%
rate
Interest 8% 8%
Taxes and Insurance 7% 7%
Maintenance 8% 6%
Production rate 930 1860
(parts/shift/machine)
Tool cost/ part $0.027
$ $0.069
$
Operation (2 shifts) 4000 hours 4000 hours

ME 6222: Manufacturing Processes and Systems 24


Prof. J.S. Colton © GIT 2009
Operating
p g costs - two old machines
• Depreciation, taxes, insurance, interest,
maintenance:
⎛ 0.07 + 0.08 + 0.08 11 ⎞
2 ⋅ ⎜ 0 .1 + ⋅ ⎟ ⋅ (47,000 ) = 21,291
⎝ 2 10 ⎠
• Labor and overhead:
4000 ⋅ (30 ) ⋅ (1 + 3.3) = 516,000
• Tooling:
2 ⋅ (0.027 ) ⋅ (930 ) ⋅ (500 ) = 25,110

• Total: $562,401/year
, y
ME 6222: Manufacturing Processes and Systems 25
Prof. J.S. Colton © GIT 2009
Operating
p g costs - one new machine
• Depreciation, taxes, insurance, interest,
maintenance:
⎛ 0.07 + 0.08 + 0.06 11 ⎞
⎜ 0.1 + ⋅ ⎟ ⋅ (62,000 ) = 13,361
⎝ 2 10 ⎠

• Labor and overhead:


4000 ⋅ (30 ) ⋅ (1 + 3.3) = 516,000
• Tooling:
(0.069 ) ⋅ (1860 ) ⋅ (500 ) = 64,170
• Total: $593,531/year
, y
ME 6222: Manufacturing Processes and Systems 26
Prof. J.S. Colton © GIT 2009
Operating costs

Depreciation, Labor Tooling Total


etc.
2 old machines 21,291
21 291 516,000
516 000 25,110
25 110 562,401
562 401
1 new machine 13,361 516,000 64,170 593,531
Difference 7,930 0 -39,060 -31,130

• So,, it looks like you


y should not buy
y the
new machine, based on yearly costs.

ME 6222: Manufacturing Processes and Systems 27


Prof. J.S. Colton © GIT 2009
Operating costs
• We’ve ignored salvage value of
machines.
• We’ve assumed all other costs are
equivalent.
– The labor rate might
g be different if yyou
have to hire a better operator.
• We’ve
We ve ignored the useful life of the
machine tools - we only looked at the
average
a e age annual
a ua cost/yea
cost/year.
ME 6222: Manufacturing Processes and Systems 28
Prof. J.S. Colton © GIT 2009
Summary

• Machine operation costs


• Single point turning costs
• Shop practice
• Economic lot size
• Equipment replacement

ME 6222: Manufacturing Processes and Systems 29


Prof. J.S. Colton © GIT 2009
ME 6222: Manufacturing Processes and Systems 30
Prof. J.S. Colton © GIT 2009

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