Product Costing Guidelines

Integrated Product Development (IPD)

OMS/IOE 548, ArtDes 300
University of Michigan

October 2005
Revised November 2008, November 2010

Compiled by
William Lovejoy
Sebastian Fixson
Shaun Jackson
IPD Product Costing Guidelines Rev Sep 2007

Table of Contents

1 Introduction................................................................................................................. 1
2 Required Costing Documents ..................................................................................... 2
3 Process Descriptions ................................................................................................... 3
3.1 Casting processes ................................................................................................ 3
3.1.1 Sand casting ................................................................................................ 3
3.1.2 Investment casting ...................................................................................... 7
3.1.3 Thermoset casting ....................................................................................... 9
3.14 Die casting 12
3.2 Molding Processes ............................................................................................ 13
3.2.1 Injection Molding...................................................................................... 13
3.2.2 Blow molding (Extrusion) ........................................................................ 20
3.2.3 Compression molding ............................................................................... 24
3.2.4 Insert molding ........................................................................................... 27
3.2.5 Rotational molding.................................................................................... 29
3.2.6 Thermoforming (Vacuum forming).......................................................... 32
3.3 Bulk Deforming Processes................................................................................ 36
3.3.1 Extrusion ................................................................................................... 36
3.3.2 Stamping ................................................................................................... 39
3.3.3 Sheet metal forming ……………………………………………………. 44
3.3.4 Rod, pipe or tube bending ……………………………………………….45
3.4 Machining Processes......................................................................................... 47
3.5 Joining Processes .............................................................................................. 49
3.5.1 Clinching................................................................................................... 49
3.5.2 Press fit...................................................................................................... 52
3.5.3 Sewing....................................................................................................... 54
3.5.4 Shrink fit ................................................................................................... 56
3.5.5 Snap fits (including retaining rings) ......................................................... 57
3.5.6 Threaded fasteners .................................................................................... 58
3.5.7 Adhesive bonding ..................................................................................... 60
3.5.8 Brazing (Silver brazing)............................................................................ 62
3.5.9 Gas welding (Tungsten inert gas) ............................................................. 64
3.5.10 Vinyl bonding ........................................................................................... 66
4.0 Hand Assembly ……………………………………………………………...67
5.0 Paperboard packaging ...………………………………………………………...67
IPD Product Costing Guidelines Rev Sep 2007

1 Introduction

This document describes the economics of common manufacturing processes, and some
design considerations and constraints for each. It contains a list of processes and the
following information for each: description of the process, cost information, design
guidelines, and sources for further information. The list of processes allows a selection
from a large set of existing possibilities. If you decide to use a process not listed here,
often one of the listed processes can serve as a baseline from which you can develop your
own proposed costing data. If you develop your own cost models to estimate the cost of
your product, your model should be validated by the instructors.

The design guidelines are meant to avoid stark mistakes. To master any particular
manufacturing process obviously requires much more in-depth knowledge. However,
this broad overview can suggest the choice of economical processes and help avoid
unnecessarily costly product designs.

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IPD Product Costing Guidelines Rev Sep 2007

2 Required Costing Documents

The costing documents to be handed in with your fully functional prototype must include
the following:

a) Summary Excel page that shows for all parts in the product, no matter how small,
its fixed tooling and variable manufacturing, procurement or assembly cost. The
list should also indicate for each part where (what page number) to look in the
costing documentation for detailed costing information. The final fixed and
variable cost should be reported clearly in summary form on this spreadsheet.

b) On the internal pages indicated on the summary page, justify the reported fixed
and variable cost for each part or subassembly.

For sourced parts, this means justifying your costs with receipts or valid quotes
(DO NOT abuse vendors, be honest about your intentions in all interactions with
vendors).

For manufactured parts (this should be most of them) use these costing guidelines
and clearly show your assumptions and calculations.

For assembly costs, show the sequence (a sketch is clear) of steps to assemble
parts into subassemblies, and subassemblies into your finished product. Use the
costing guidelines to cost out the steps.

Finishing operations. Provide the necessary buffing, painting, etc. activities and
cost them out using these guidelines.

c) Any additional documentation relevant to support the product cost estimate.

In practice, unclear or confusing documentation results in miscommunication, errors and

rework. Therefore, the instructors will adjust your variable cost based on the accuracy,
clarity and completeness of your costing documentation relative to those handed in by
other teams.

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IPD Product Costing Guidelines Rev Sep 2007

3 Process Descriptions

3.1 Casting processes

3.1.1 Sand casting

a) Process description and potential materials

Process description
Sand casting can be used for just about any metal that can be melted. A sand mold is formed by
packing sand around a wood or metal pattern which has the same shape as the part to be cast.
The pattern, and the sand box that it is embedded in, are usually made in two halves that can be
separated to remove the pattern once the sand is packed in, and holes are made for pouring
molten metal in and for allowing gas to escape.

Metal is melted, poured into the holes to fill the mold, and it is left to cool. When the cast part
has cooled, the box is opened and the part removed. The sand is disturbed when the part is
removed, so that the set up operation must be repeated for each part. Hence, variable costs tend
to be high for sand casting, and this method is usually used for large parts in low volumes that,
because of their size, are not suitable for other processes.

Sand castings tend to have a grainy surface with poor dimensional control. Most often castings
are machined in post processing operations for smoothness and dimensional integrity.

Process schematic

<Source: CES (Cambridge Engineering Selector) Ver. 4.5>

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IPD Product Costing Guidelines Rev Sep 2007

Process flow chart

Patte r n Mate r ial Pour ing

making me lting

Cle a ning, Re moval Solidification /

Ins pe ction, e tc Cooling

Material
Used for a wide range of metal alloys including aluminum and copper alloys, cast irons and
steels. In principle, any non-reactive, non-refractory metal (Tm < 2000K) can be used

b) Costing information
Fixed cost:
Machine n patterns. The cost of a set of identical pattern impressions is given by
C pi =Rt (0.313 N sp
1.27
+ 0.085 A1p.2 )n 0.7
where,
Rt = toolmaking (pattern shop) rate, assume this to be 40 $/h
Nsp = number of surface patches (see below)
Ap = projected area of impressions, cm2 (in2 = 6.452 cm2 )
n = number of identical impressions

Nsp (the number of surface “patches”) is the number or continuous areas on the part, that can be
machined without lifting the tool. For example, a simple disk will have three: the top surface,
the bottom surface, and the edge. A disk with a hole in the middle will have four patches.

Variable costs per pour:

The inputs to the costing model are:
N = number of cavities you will fill per cycle (less than or equal to 100).
n = number of patterns that you manufacture (less than or equal to N).
V = volume of the part to be cast, in in^3.
A = floor area taken up by the box holding the sand and the part. Assume a rectangular box that
has 2” clearance on all sides from the pattern.
ρ = Material density (lb/in^3)
m = dollar cost of material ($/lb)

Materials cost per pour: The material cost for N parts in a pour will 1.03NmρV dollars. This
assumes 2% waste.

Set up N cavities: Charge yourself N/n dollars.

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IPD Product Costing Guidelines Rev Sep 2007

Ladle the molten metal: Charge yourself .03N dollars.

Allow to cool: Charge yourself .008NA dollars

Variable cost per part: Divide the variable cost per pour by N.

Example: You want to make a part out of medium cast iron which costs $.73/lb and has a
density of .258 lb/in^3. The part has a volume of 8 cubic inches and a projected area of the sand
box equal to 36 square inches. Pattern has 1 surface patch. You decide to make 10 parts per pour
(N=10). You machine one pattern (n=1) and intend to set up the sand boxes sequentially using
your one pattern. The sand casting costs for this part will be as follows:

Fixed cost: (40)(0.313·1 +0.085·(36·6.452)1.2) ·10.7 = $2,360

Variable costs per pour of 10 parts:

Materials: (1.02)(10)(.73)(.258)(8) = $15.37.

Set up: 10/1 = $10.

Ladling: (.03)(10) = $.30.

Cooling: (.008)(10)(36) = $2.88.

Total per pour = 15.37 + 10. + .30 + 2.88 = $28.55.

Total per part = 28.55/10 = $2.85.

So for this part you would report a fixed tooling cost of $2,360 and a variable cost per part of
$2.85. If you wanted a nice surface finish or if some aspects of the part had to conform to tight
tolerances, you would have to add the cost of some post-processing machining steps to each part.

If you decided to machine 10 patterns (so n = 10), you would increase the fixed cost to $11,828,
but the variable cost would be reduced by nine dollars per pour (N/1 - N/n = 10 - 1 = 9), and
would equal $19.55 per pour or $1.96 per part.

In this example, if you were making 100,000 parts the optimal number of pattern made would be
11 (or, approximately 10). The figures for various N are as follows.

F (Fixed cost / pattern) = $2,360

T (Total production volume) = 100,000
n* (Optimal pattern made) = (T/0.7F)^(1/1.7)
= 11
Total cost at 100,000
N n* (n* <= N) Fixed Variable
parts

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IPD Product Costing Guidelines Rev Sep 2007

1 1 2,360 2.855 287,860

2 2 3,834 2.355 239,334
3 3 5,092 2.188 223,925
4 4 6,228 2.105 216,728
5 5 7,281 2.055 212,781
6 6 8,272 2.022 210,439
7 7 9,215 1.998 209,000
8 8 10,118 1.980 208,118
9 9 10,987 1.966 207,598
10 10 11,828 1.955 207,328
11 11 12,644 1.946 207,235
20 11 11,828 1.955 207,328
n* = optimal number of patterns to manufacture given that you want to produce 100,000 parts.

c) Design guideline
Bosses, undercuts, inserts and hollow sections are all practical. Shapes are frequently solid but
complex internal shapes can be made using cores. Sand casting is not the best way to go for high
volume parts, since the variable costs are usually high.

d) Data Sources / Sources for further Information

CES (Cambridge Engineering Selector) Ver. 4.5, Software
Geoffrey Boothroyd, Peter Dewhurst, Winston Knight (2002). Product Design for Manufacture
and Assembly. New York, Marcel Dekker.
Robert C. Creese, M. Adithan, B.S. Pabla. (1992). Estimating and Costing for the Metal
Manufacturing Industries. New York, Marcel Dekker.

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IPD Product Costing Guidelines Rev Sep 2007

3.1.2 Investment casting

a) Process description and potential materials

Process description
In investment casting, wax patterns are made by injection molding into a metal die and then
assembled on a tree with feeding and gating systems. The wax pattern is dipped into a refractory
slurry, then covered in a refractory stucco, and allowed to dry for a number of hours. This
procedure is repeated a number of times, usually until about 8 coats of refractory have been
achieved. This is the ceramic investment shell. The wax is then melted out - preferably in a
steam autoclave. The ceramic shell is fired to around 1000C and then the molten metal is cast
into it. Air pressure, vacuum or centrifugal pressure can be used to ensure complete filling of the
mold when complex, thin sections are involved. The mold is broken up to remove the castings.

The process is suitable for most metals with melting points below 2500K. Because the wax
pattern is melted out, shapes can be very complex with contours, undercuts, bosses, recesses, etc.

The process requires precision tooling for making the wax patterns and involves many steps
which are time consuming, and therefore, it is expensive. The process is also known as the Lost
Wax Process.

Process schematic

<Source: CES (Cambridge Engineering Selector) Ver. 4.5>

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IPD Product Costing Guidelines Rev Sep 2007

Process flow chart

Wax patte rn making Patte r n Mate rial Pouring

(Inje ction molding) cooling me lting

Cle aning, Re moval Solidification /

Ins pe ction, e tc Cooling

Material
Suitable for a wide range of ferrous, non-ferrous and special alloys.

b) Costing information
Begin by understanding the sand casting costing method, and then make the following
adjustments.

Fixed cost:
Cost out the tool that makes the wax patterns as if you were injection molding the pattern, using
the injection molding guideline. Take the fixed tooling cost from the injection molding module.
Ignore the variable costs from that module.

Variable costs:
The wax cannot be reused, so n = N.

Add $.25/part for the wax cooling time and handling. Everything else is as in the sand casting
costing guidelines.

c) Design guidelines
Very complex shapes with contours, undercuts, bosses, recesses, etc. Best for small 3-D shapes.
You can get better surface finishes and hold tighter tolerances with investment casting, so that
you may be able to eliminate post-processing operations.

d) Data Sources / Sources for further Information

CES (Cambridge Engineering Selector) Ver. 4.5, Software
Geoffrey Boothroyd, Peter Dewhurst, Winston Knight (2002). Product Design for Manufacture
and Assembly. New York, Marcel Dekker.
Robert C. Creese, M. Adithan, B.S. Pabla. (1992). Estimating and Costing for the Metal
Manufacturing Industries. New York, Marcel Dekker.

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