Unit cost
Line capacity with OEE and bottleneck, unit cost by line item with the origin of each value, break-even, sensitivity and comparison with buying.
Preliminary estimate, not a contractual budget
Each value shows where it comes from: supplier quote, published price, historical estimate, index or own assumption. Only a firm, valid quote commits a price.
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Calculation version:industrial-cost@1.0.0.
How to use it
- 1Describe the process by stages: rate per machine and number of machines. The slowest sets the line's capacity.
- 2Enter shifts, days, stops and the OEE (availability, performance and quality), and the annual demand.
- 3Add materials with their scrap, labour, energy, equipment and other costs, and mark where each value comes from: quote, published price, historical estimate, index or assumption.
- 4If you're weighing make versus buy, turn on the comparison with the supplier's price.
How it calculates
- Planned hours = hours per shift × shifts × days × (1 − planned stops). OEE = availability × performance × quality.
- Capacity of each stage = rate × machines × planned hours × OEE; the line's is that of the slowest stage (bottleneck).
- Material per unit = quantity / (1 − scrap) × price. Labour = minutes / 60 × cost per hour.
- Depreciation = investment × (1 − residual) / service life; maintenance = % of the investment per year; both and the fixed costs are spread over the volume.
- Unit cost = direct costs × (1 + overheads) × (1 + contingency). Break-even = fixed costs with mark-ups / (price − variable with mark-ups).
- Make or buy: the purchase price (with extras and management) is compared with the variable cost of making plus the share of fixed costs that would disappear.
Verifiable example
With the tool's fictitious example (three stages, two 8-hour shifts, 220 days, 83.79% OEE), the line can make 238,902 units a year and painting is the bottleneck; with a demand of 200,000 it's at 83.7%. The unit cost comes to €10.55 and, selling at €15, break-even is 25,527 units. Buying at €11 plus 10% extras and €20,000 of management costs €12.20 per unit, against a relevant making cost of €10.22: with this data, making is €1.98 cheaper, and would be from 20,491 units a year.
Limitations
- It's a preliminary estimate, not a contractual budget or an offer.
- It models a serial line for a single product: it doesn't allocate costs between several products or account for inventories or changeover times.
- Make or buy only compares costs: it doesn't include quality, lead times, supplier dependence or what you'd do with the freed-up capacity.