Cost Estimation

Cost Estimation is a tool that enables the user to simulate manufacturing costs and is one of the most important steps when deciding whether to manufacture a product and how to price it.

In PANTHEON, Cost Estimation can be simulated for full manufacturing costs of products and semi-finished products that are being produced and put together in the production process. The estimation is run with data from Basic Bills of Materials, where quantities of estimated (normative) costs of materials and work are set. The cost structure can be checked on all levels of the BOM and is expressed with a total cost of the materials and work used to produce the product in a specific currency. The prepared cost estimation can be saved to history, so it can be later compared to a changed BOM or compared to the actual cost (Cost Analysis).

HINT For more information about the Cost Estimation tool, see the chapter Cost Estimation.

The following case describes how to create and print a Cost Estimation.

CASE SUMMARY The person responsible in manufacturing is running a cost estimation of manufacturing costs for a new tent LARA3 for which the company is going to launch production and related semi-finished products. This is done as follows: Opening the Cost Estimation Tool Selecting Report Criteria Calculating Cost Estimation Saving to History Creating the Report

1. Opening the Cost Estimation Tool

The person responsible opens the Cost Estimation tool from the BOM form for item LARA3 (see case Creating a Basic BOM).

Selecting the (Cost Estimation) button or selecting the (Wizards | Cost Estimation) icon opens an empty form with predefined parameters.

2. Selecting Report Criteria

The person responsible selects criteria to be included in the Cost Estimation.

Into the Item field, the person responsible enters the selected item LARA3 and enters the Quantity 1 to calculate the estimate for one product. In the Currency field, the person responsible selects EUR – the currency for the estimated prices.

In the field, the person responsible keeps checked all checkboxes that were marked by default.

2.1. Cost Estimation Type

To run Cost Estimation for one single item, the person responsible selects the Detailed option in the Cost Estimation Type section.

HINT For more information on different types of cost estimation, see the chapters Detailed Cost Estimation and Selecting Summary Cost Estimation.

2.2. Selecting Prices in Cost Estimation

The person responsible wants to use the purchase price of the used materials in the Cost Estimation.

This is defined in the Prices in Cost Estimation section, by selecting the Custom option.

A new Price of Material in Cost Estimation section opens, there the person responsible selects the Purchase price option.

2.3. Selecting Operations Considered in Cost Estimation

In this case, the Cost Estimation will consider preparation times and work operations listed in the BOM.

In the Operation Elements section, the person responsible selects the checkbox Take Into Account Set-Up Time and then Optimum qty. – this means the optimum quantity considered in the estimation is the quantity defined on the BOM.

In the same section, the person responsible also checks the Take Into Account Work Operations checkbox.

In the Price of Operations in Cost Estimation section, the person responsible selects the BOM option.

In the Component Item Type section, the person responsible keeps marked all checkboxes marked by default to consider all item types in the estimation.

Warning By selecting the Formula checkbox in the Price of Operations in Cost Estimation section, you can set your own formula for calculating other costs (e.g. electricity, gas ...) considered when calculating price.

HINT For more information about detailed cost estimation, see the chapter Detailed Cost Estimation.

3. Calculating Cost Estimation

By selecting the Refresh button, the person responsible activates calculation of Cost Estimation according to selected parameters.

Costs are listed in detailed and summarized. PANTHEON shows data about financial costs of materials and work, as well as time costs of work with manufacturing and set-up time.

HINT Detailed Calculation Overview also enables you to view the cost estimation after Work Costs and Pricing Factors.

4. Saving to History

Selecting the To History button, the current estimation is saved to history for future cost comparison. The saved Cost Estimation is, similarly to BOM History, available under the History tab.

Double-clicking the record in history opens a new window with saved data.

5. Creating the Report

Selecting the (Reports) | Cost Estimation | Cost Estimation Report button created a report that the person responsible prints or downloads to a computer in a desired format (e.g. PDF, like in the image below).