# Determinating the cost (prize) of one single bolt

1. May 10, 2010

### Andreii

Hi
For some calculations that I am doing before I begin with my diploma project I have to calculate, in our manufactory of bolts, the cost of bolt if I know just the bolt type (for example 3,0 x 15,75). I have tried to ask around to the offices who deal with economic subjects and they told me there is no way they could say this too anyone because its too private subject.
Is there any way to determinate this? I don't have any prizes of anything given (such as wire per one meter, worker's payment per one hour,...). I also asked, in the tooling section, for the tools that are required for bolts to be created but also they don't have any prizes of anything.

I know the prize of one bolt is negligible but I still do need to know how to get it, if is possible?

kindest regards

2. May 11, 2010

### Skrambles

Bolts are typically made by computer-controlled machining tools, so the man labor costs would be very low. You could probably start by pricing the round metal rods that the bolts are made from. The main factor is going to be the price of the equipment and its associated running/maintenance costs. If you can figure out how much it costs to run the equipment for the amount of time it takes to make one bolt, then add your cost for material, you should be very close to the number you're looking for.

3. May 11, 2010

### xxChrisxx

It's meaningless to try to calculate the cost of 1 bolt as manufactured. As the more you make the cheaper per item you can make it. This is why is costs less to buy in bulk. Making 1 bolt will be chronically expensive.

What you want to ask is the production, tooling and manpower costs for a batch of bolts. Then divide price by number of bolts in a batch.

And bolts are ususally cold forged and turned, (they either use an autolathe sort of thing, or a cold rolling motion between threaded plates) I suspect the latter is more common for standard bolts.

EDIT: Further to this, I'd like to clarify that the reason it's meaningless for 1 bolt, is that bolts are not made 1 at a time. At any given time on the production run, there will be several bolts undergoing the same process at once. And multiple processes occuring simultaneously.

Last edited: May 11, 2010
4. May 11, 2010

### Skrambles

As an academic exercise this type of analysis is far from meaningless. And yes, larger volumes would result in reduced material and machine-time costs per unit manufactured, but would not change the method of analysis whatsoever. Depending on how anal the OP's professor is he may also need to take into account the salaries of administrators, overhead costs for the facility, shipping and handling, etc. But since this is an engineering forum and not a business administration forum, I doubt any of that is necessary.

5. May 11, 2010

### xxChrisxx

From a manufacturing perspective you cannot 'add' the costs up to make a bolt (edit: I suppose you could, but it'd be a bloody stupid way of doing it). As they simply aren't made like that. Saying that you need to find the machine time for 1 bolt is totally pointless. As the machine makes many many bolts at the same time. Yout start getting to silly extremes, such as each operation takes .25 seconds. There are 5 operations to make the bolt. So each bolt is made is 1.25 seconds. However of that 1.25 seconds the machine has made 5 bolts. The problem then is that bolts are heat treated, and you don't heat treat a single bolt at a time so you need the batch size.

Thats why I said the more sensible option is to get the overheads (fixed costs such as staffing and building) plus production costs (material and machine time) for a batch. Then devide the batch cost by the number of bolts. et voila cost to make a single bolt.

EDIT: This also requires you to talk someone into giving you real figures if you want to be remotely accurate. You could jsut estimate them.

Last edited: May 11, 2010
6. May 11, 2010

### Skrambles

I agree with you Chris, but I doubt he needs to get into all of the minute details of the manufacturing process for this assignment. He probably just needs to show that he understands the method and can come up with some general formula for estimating the unit cost.

7. May 11, 2010

### xxChrisxx

Yer, it's just you tend to work things that are mass produced in batches backwards to get a unit cost, unlike a machined part which it's easy to work out in a conventional manner.

I kind of wanted you be argue with it, so I can use my making toast analogy for individual vs batch parts. :P

8. May 11, 2010

### Skrambles

Ok, I'll play devils advocate. But only if you can work in tolerances, random sampling, AND you butter both sides of the bread before you toast it.

9. May 11, 2010

### xxChrisxx

Win. The analogy goes a little bit like this. I'll just carry on as im sure that everyone will get the point before I get to the end anyway.

I have a 4 slot toaster and an unlimited amount off free bread you can use to make scrummy toast to sell for a profit. I will give you the bread for free, but charge you #1 evert time the toaster is used.

If you use the 'add up' method to determine unit cost. We get 25p per slice of toast. So to make a profit we add 5p as a cost plus sort of thing.

The first customer comes along and orders 5 slices of toast. We do it and sell for #1.50, but make a 50p loss. As we have used the toaster twice.

The problem is the toaster works in batches of 4, so any incomplete batch costs you money. The method of costing a single item then * by the amount of items can lead to losses. (This can and does happen in industry) So in the bolt case we really should calculate unit cost backwards from bach cost.

If this were a single rack toaster (like the machined part) then the single cost * amount of units = total cost.

Last edited: May 11, 2010
10. May 13, 2010

### Andreii

Chris all bolts aren't heat / thermal treated. This depends what customer wants. Same is for making a screws on the bolts - it all depends on customer's wishes.

Bolt prize about which I was asking and I am still, should be different for every single type of bolt. My purpose of calculating the prize of just one, which is almost negligible, is because of making some quality assurance project for my diploma project.
Lets say we have two boxes with bad (from defects point of view) bolts: in first one are 600 bolts, in second one are 1100 bolts. You cannot say, for sure, that more damage (from econic point of view) was made in the second one just because the number is higher. One of parameters is a mass of one single bolt which is very easy to get. But I need the prize. They have it in the offices but nobody knows it and there is no way I would get the prize for every single bolt type I would want to know. I will already have to bother them for a name of wire's supplier. Cannot bother even more for a prize. So somehow I must determinate this alone.

So chris when you mentoined production, tooling and manpower costs. I cannot get them. Need to do my own research / calculation. People in offices who communicate with (potentional) customers, deal with orders etc won't give me any costs. Costs may be changing depends on which customer ask for whatever order. I need the fixed (at least as close as possible) prize for specific bolt type.

11. May 13, 2010

### xxChrisxx

Well we've told you how to do it, we can't acutally tell you how to aquire the data. All I was saying is that trying to work out a machine time and cost to make 1 bolt on something that is batched produced is likely to give an erroneous unit cost. You work out the cost of a batch, then fint a unit cost from that.

Absolutely no company will give you acutal data on the specific methods and times to make bolts. As that's a security thing, it would be silly for them to give away confidental information. I'm afraid I can't help there.

Also, I realise there is a language barrier here (priobably), but there word you are looking for is price not prize. (sorry im not ususally the spelling police)

12. May 13, 2010

### FlexGunship

Wow... you're kidding right? This is what happens when you put super-academic engineers on the job. Spend a few years in the field designing products to compete with competitors and you'll know EXACTLY how to do this.

1. Find that bolt at a hardware store
2. Estimate markup based on shipping, packaging, and marketing
3. ????
4. Profit

The exercise demonstrates critical thinking and forces you to recognize that there are two ways to find a common answer. From the bottom up, or from the top down.

13. May 13, 2010

### xxChrisxx

That's how anyone would do it in reality. However if you notice, this is for an academic report looking at QA issues. Hence an academic approach. I don't think the end point is to acutally find how much a bolt cost, but to use that information in some way. So for example estimating machine time cost for a scrapped batch, you'd ten have to 'estimate' and break down the final cost into 'sub costs'.

Just like many things are designed by skeg of eye, yet you can't stick that in an academic report. "I made it thicker becuase it just looked too thin".

14. May 13, 2010

### FlexGunship

I appreciate your attitude. But pragmatism often wins the day. I gave this problem to some students in a different form. Essentially the challenge was: "given a SolidWorks drawing of an egg carton, estimate the volume of eggs it can hold using any valid means."

I gave them a drawing of a 12 egg carton. After some of them handed in 14 pages of calculations and estimates. I dropped 12 eggs into a full container of water and measured the displacement.

Sometimes academia will test your ability to use reason, logic, and intuitive problem solving. Not everything is about "finding the right formula."

15. May 13, 2010

### xxChrisxx

Fact is, both you and I don't have a clue what the guy is trying to achieve. We've given him 3 different ways to calcualte the cost of a bolt, depending on what he's goign to do with the information will determine the method used.

To behonest, any way he does this will involve fudging numbers as noone is going to give him real figures for confidentiality reasons. So whether he pulles figures for markup out of his arse or whether he makes up figures for production costs, it's all likely to be wrong anyway.

16. May 13, 2010

### FlexGunship

Yeah, I agree with this.

17. May 14, 2010

### Andreii

I need it for Pareto diagrams for the boxes with bad (dimensional defects and defects that cannot be measured) bolts regarding two different topics:

1. To suggest which worker(s), IF any, should be fired from the company because of too high unnecessary expenses done. This is responsible work and I need to be very careful that I don't do iniquity to anyone. Everything must be stated with correct and good proofes. Steps are the following: first I measure the weight of the box with ''bad'' bolts, then I decrease the number for the mass of the box (for chosen machine) and I get the mass of whats inside (in this case, I ignore the mass of uncleanliness but I still care for it and remove anything bigger). Then I go to more precise measuring tool to get the mass of one single bolt. Next is to divide 1 kg with the mass of one single bolt so I get the number of bolts in 1 kg. Next step is to multiply number of bolts in 1 kg with the mass of whats inside the box. So I get number of bolts (they must be same type) in the box.
Unfortunately for me, this is not the end. With the last step, to get the damage in whichever money currency unit, I am stucked. I should multiply number of bolts in the box with the price of one single bolt but I don't know the price and thats why I am asking. :-(

If you have any better idea then I would please you for it. So far this is the best solution I can think of how to deal with issue that ''higher number of bolts doesn't neccessary mean more unneccessary expenses done''.

2. Similar, also in Pareto analyze tool, I need to take the datas for all three parameters for wires: supplier, material and diameter. I still need to try to think which costs should be included here: costs of wire per XY mass or cost of one bolt.

Its a part of diploma project for university.
Thank you but this is not really what I search for. Those 3 ways require costs of machine running, material etc. As I mentoined; I don't have any costs to work with. So my question remains the same. Probably noone from our company will be willing to give me them - you stated the reasons why already and I do agree with them.

18. May 14, 2010

### xxChrisxx

Well it's a bit of a tricky one then. As to calcualte a cost for something you need the cost of the processes to work forward or the sale cost and then their markup. There really is no way to calcualte the cost of a bolt with no data.

I think I see what you are trying to achieve with knowing the price now. Unfortunately I have little experience with QA stuff, so I can be of little help there, sorry.

19. May 14, 2010

### FlexGunship

The BEST you could possible do is come up with a formula. But given that the formula would be of arbitrary precision (you don't even know the magnitudes of the numbers involved unless you make some serious assumptions), you might as well not bother making it particularly precise.

bolt_cost = material_cost + manufacturing_cost + acquisition_cost

purchase_price = bolt_cost + transportation_cost + markup

There.

Want more detail? Start filling in the blanks. What is material cost based on? What is the manufacturing cost based on? What is the acquisition cost based on? I mean, seriously... you need to go to a hardware store and start filling in blanks.

A hardware store receipt will tell you purchase_price. Ask the owner how much he marks it up. Find a shipping quote based on the weight of one bolt and average shipping distance.

Now you have the cost of a bolt without knowing the material_cost or the manufacturing_cost or the acquisition_cost. And that is EXACTLY what you are asking for.

If this approach isn't acceptable, I sincerely recommend you give up. Cause the constraints you are applying to this problem make it unsolvable. "Determine the cost of something without knowing anything."

20. May 14, 2010

### Skrambles

To figure out which worker is least efficient why can't you just calculate their scrap rate?

Scrap Rate = Mass of Defective Bolts / Total Mass of Defective and Acceptable Bolts

For the Pareto analysis.....that's a lot more complicated. The material supplier may not set their prices by weight. A two foot long piece may not be twice as expensive as a one foot long piece. The material and diameter will also affect which tools can be used and at what speed they can be run.