Dollar Tree V3

How To Sell a $1 CalculatorIE7993 Supply Chain EngineeringProfessor Walker, Fall 2014

Sidharth JainSamana Tamraparni VittalDan VolpeJiahao Ye

Requirements Specification for Network Container

Specification Factory Limits Distributor Limits Network Test

Throughput 3,000,000 annually 1,000,000 annually Accept Reject

Cash-To-Cash Factory Velocity in days (Factory Variability+/- days)

DC Velocity in days(DC Variability+/- days)

Accept Reject

Price/Landed Cost 64.4 Cents Accept Reject

Inventory Days of finished goods: 90±5 days

Days of cycle stock Accept Reject

Delivery Lead Time Vocalize from Push/Pull Boundary in daysVisualize to Push/Pull Boundary in days

Accept Reject

Return on Invested Capital

Factory Percent DC Percent Accept Reject

Distribution Center Network

Product: Calculator

BOM• CALCULATOR

▫ Front housing▫ Back housing▫ LR1130 NL battery▫ Screw, self tapping, Phillips

head, 2mm x 5mm▫ Button set, rectangle▫ Button set, ellipse▫ Button set, large rect▫ Button set, circle▫ Button & Housing Print▫ Silicon Button membrane▫ Foam pad, adhesive▫ Flexible printed circuit▫ MYLAR▫ Instruction sheet

▫ Plastic bag▫ QC sticker▫ Electronics Assembly

LCD screen Ribbon cable, 11 traces Ribbon cable, 27 traces Printed circuit board IC Resistor Wire, 24 AWG, 1" Battery holder A Battery holder B Tape, clear, 1" Solder Epoxy

Factory RequirementsMUSTs: WANTs:

Produce:Plastic (PP) injection modeling

Delivery/ Schedule: JIT / Lean manufacturing

PMMA producing ability

Print:Silk-screen print for PP &

PMMA Quality/General Management:

ISO 9000 / 6 sigma management

Circuit print on PET

Assembly:Electronic assembly

Risk: Risk ManagementPart assembly

Capacity: 96,000 unit per month Inventory: Own warehouse and Inventory control

Quality: Acceptable Transportation:Near to Harbor/

Express highway/ RR station

Delivery/ schedule:

On Time within the std. dev. range

FactoryName Guangzhou Junke

Electronics Co., Ltd.Location Guangzhou,

Guangdong, ChinaBusiness Type Manufactory

Number of Employees 200

Total Revenue US$5 Million

Part Assembly Line 15

Electronic Assembly Line

10

Injection Molding Machine

32

Silk-Screen Printing Machines

5

Circuit Printing Machines

8

Work hour 16hrs (2 shifts)

Monthly Target 96,000

Factory Selling Price

Material Cost $ 0.24

Inbound Logistics $ 0.01

Labor Cost $ 0.07

Overhead $ 0.09

Markup $ 0.12

Selling Price $ 0.53

Factory and Supply Base

Packaging

•12” x 10” x 6” cartons = 120 calculators•0.56 $/carton = 0.0047 $/unit•144 cartons/pallet = 17,280 units/pallet

▫9 layers of cartons 4x4•40 pallets/container = 691,200

Road Distances

•Factory to port•Port to DC

22 miles

70.4 miles

Midbound Freight and Duty Cost

•Ocean Freight:▫7% fuel surcharge, 3.7% import duty▫2545 * 1.107 = 2817.315 $/container▫Cost per unit = 0.0042 $/unit

•Distance from factory to port = 22 miles▫Cost per unit = $0.000044

•Distance from port to DC = 70.4 miles▫Cost per unit = $0.00014

•Total cost per unit = $0.0044

Factory Cash to Cash Cycle

Cost Summary

Suppliers Factory Distribution Center

M+L+OH

$ 0.24 Material $ 0.24

COGS $ 0.53

SG&A

Taxes

Supplier Net Profit

Inbound Logistics $ 0.01

Labor $ 0.07

Overhead $ 0.09

Markup $ 0.12

Outbound Logistics $ 0.01

Landed Cost $ 0.54

Questions?

No. Part Name Qty Part Type Material Part Weight (gram) Unit Price Injection Total Price

1 Front housing 1 TOOL PP 10.557 0.0137 0.0017 0.01542 Back housing 1 TOOL PP 10.863 0.0141 0.0017 0.01583 LR1130 NL battery 1 PURCH. 0.0083 0.00834 Screw, self tapping, phillips head 6 PURCH. 0.0008 0.00505 Button set, rectangle 18 TOOL PMMA 0.301 0.0006 0.0002 0.01386 Button set, ellipse 3 TOOL PMMA 0.126 0.0003 0.0002 0.00137 Button set, large rect 1 TOOL PMMA 0.719 0.0014 0.0002 0.00168 Button set, circle 1 TOOL PMMA 0.343 0.0007 0.0002 0.00099 Button & Housing Print 1 silk-screen 0.0020 0.0020

10 Silicon Button membrane 1 PURCH. 0.0333 0.033311 Foam pad, adhesive 1 PURCH. 0.0033 0.003312 Flexible printed circuit 1 Circuit Printing 0.0030 0.003013 MYLAR 1 PURCH. PET 0.0008 0.000814 LCD screen 1 PURCH. 0.1000 0.100015 Ribbon cable, 11 traces 1 PURCH. 0.0033 0.003316 Ribbon cable, 27 traces 1 PURCH. 0.0017 0.001717 Printed circuit board 1 PURCH. 0.0016 0.001618 IC 1 PURCH. 0.0040 0.004019 Resistor 1 PURCH. 0.0002 0.004020 Wire, 24 AWG, 1" 2 PURCH. 0.0017 0.003321 Battery holder A 1 PURCH. 0.0017 0.001722 Battery holder B 1 PURCH. 0.0017 0.001723 Tape, clear, 1" 2 PURCH. 0.0004 0.000724 Solder 1 PURCH. 0.0004 0.000425 Epoxy 1 PURCH. 0.0010 0.001026 QC sticker 1 PURCH. 0.0017 0.001727 Instruction sheet 1 PURCH. 0.0033 0.003328 Plastic bag 1 PURCH. 0.0067 0.0067

Factory Selling Prices Calculations

•Material cost = 0.2394 $/unit• Inbound logistics = 6% of material cost•Labor cost = 2.15$/hr /60min/hr =0.03583 $/min•Labor time = 2 min/unit •Overhead = 120% of labor•Markup = 28% of total

Selling Price = (0.2394*1.06 + (.03583 * 2 * 2.2)) * 1.28

= $0.5828

Midbound Freight Assumptions

• $1.38/mile operating cost• 50% overhead• 60 pallets/53’ truck (double stacked)• $0.0345/pallet/mile = 1.38*1.5/60• $0.000002/unit/mile = 0.0345/17280• www.thetruckersreport.com/infographics/

cost-of-trucking/

• Carton from Uline: http://www.uline.com/Product/Detail/S-18340/Corrugated-Boxes-32-ECT/12-x-10-x-6-Lightweight-32-ECT-Corrugated-Boxes